Benzinga - by Murtuza Merchant, Benzinga Staff Writer.
MicroStrategy (NASDAQ:MSTR) executive chairman Michael Saylor in an interview discussed the unique advantages that MicroStrategy has over its competitors.
What Happened: According to Saylor, MicroStrategy can, unlike ETFs, leverage its stock, offer options and issue convertible debt.
Thanks to its operational flexibility and financial instruments, MicroStrategy thus enjoys a unique advantage over Bitcoin (CRYPTO: BTC) ETFs.
“ETFs got approved and people thought, oh, ETFs are approved. That may not be good for you because you’re trading in a premium. But in fact, the opposite was true because we have a lot of Bitcoin and we’re an operating company,” Saylor explained in an interview.
MicroStrategy’s approach involves using its corporate structure to enhance investor returns on Bitcoin investments.
The company's strategy includes issuing convertible debt which appeals particularly to convertible arbitrage investors looking for volatility, liquidity, and transparency.
This allows investors to hedge out exposure while benefiting from potential upside in Bitcoin’s value. MicroStrategy has been aggressive in its Bitcoin acquisitions, reinforcing its commitment to not only hold but also increase its Bitcoin holdings.
Saylor noted, “We’re levered Bitcoin. With a passionate shareholder base—120 to 140, 150 something, but more than 100 in volatility. If you know the Black-Scholes equation, if you plug volatility in, it makes the option more valuable.
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Moreover, the ability to issue debt and equity offers MicroStrategy a way to raise capital without the immediate sell-off risks associated with ETFs, which are typically arbitrated back to net asset value.
“They really can’t trade at a premium. They can’t issue convertible debt,” Saylor added, contrasting MicroStrategy’s capabilities with the limitations faced by Bitcoin ETFs.
MicroStrategy has also capitalized on its operational capabilities to attract a diverse range of investors—from public company investors seeking Bitcoin exposure to Bitcoin maximalists looking to invest their 401(k) savings in a crypto-linked asset.
The flexibility offered by the company's financial maneuvers allows it to cater to investors who desire to leverage Bitcoin's potential through various financial products.
Saylor's strategies highlight a proactive approach to using corporate finance tools to bolster investment in Bitcoin, providing a blueprint for how companies can effectively operate within the crypto space.
What’s Next: This innovative approach will be a topic of interest at the upcoming Benzinga’s Future of Digital Assets event on Nov. 19, where financial experts will discuss the evolving landscape of digital asset investments and the innovative financial strategies companies like MicroStrategy are employing to maximize their returns in the cryptocurrency sector.
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