It's the Michael Saylor Economy — And We Just Live in It

In our most recent SPC Premium Quarterly Roundtable, crypto expert (and onetime Bitcoin (BTC) miner) David Zeiler stopped by to give us an early look at a new and growing trend: Public companies that are ditching cash reserves in favor of Bitcoin.

MicroStrategy Inc., which changed its name to Strategy $MSTR ( ▲ 5.24% )  has been a pioneer with this approach. In fact, CEO Michael Saylor just purchased an additional $550 million worth of Bitcoin between April 14 and April 20; its total stash is now 538,000 bitcoin (a total value of $46.78 billion as of this writing).

As Bitcoin rallied in November thanks to President Donald Trump’s crypto-friendly positioning, investors piled into MSTR, sending shares up 112% between Nov. 4 and Nov. 20.

Other companies took notice …

GameStop Inc. $GME ( ▲ 1.4% )  was one of them: Back in March, it said it would acquire $1.3 billion worth of Bitcoin in a private offering.

In any business, there are innovators … and there are imitators.

There’s a roster of “crypto-accumulators” that have already sprung up. And you can bet we’ll see more executives emulate Saylor’s strategy in an attempt to make their own share prices increase.

But if you understand Saylor’s end game, you’ll see the opportunity.

When Innovators Outgun Imitators

Saylor is following a true strategic vision that is positioning his company as one of the largest holders of a financial asset that will experience demand growth from individual investors, other companies, and even governments.

Saylor highlights a key demand driver: the rising Bitcoin price against the declining value of the U.S. dollar.

He sees a future (without a specific timelines) where Bitcoin reaches $500,000 and then jumps all the way to $5 million per coin.

Saylor’s milestones seem a long way off. But he’s using a generous splash of “financial engineering” (a mix of debt-and-equity financing) to own as much Bitcoin as possible because of that belief that the dollar is a diminishing asset.

“The only difference [between] the U.S. dollar and the [Argentine] peso is, whereas it takes 20 years to lose your family's fortune in the peso, it takes about 90 years to lose your family's fortune in the dollar,” Saylor said on the PBD Podcast in 2024.

In fact, just this past week, the value of the U.S. dollar dropped to a three-year low.

It remains to be seen if the Bitcoin buying spree will pay off, but what we do know is, as witnessed from the GameStop example, Saylor is already shifting the “status quo” for how businesses view (and manage) their cash assets.

And more than any of the “crypto copycats,” Saylor is also fueling an entire “investment economy” around his company …

In a recent interview hosted by StockTwits, crypto writer and consultant Adrian Morris said Saylor is going to take Strategy and “scale [it] to a level that people are not ready to appreciate.”

It’s worth watching the entire episode.

But, for a quick takeaway, the most powerful comments were made around the 39-minute mark.

Morris said that Strategy isn’t just a stock; the company is “its own market, ecosystem and economy.”

That ecosystem comment is a powerful one.

It’s not quite the same as the ecosystem you have with Apple Inc. $AAPL ( ▲ 0.44% ), where you’ve got an iPhone, an iPad, a Macbook and an Apple Watch that all work together.

But the Strategy ecosystem is more a network of interconnected investment vehicles.

Let me show you.

No Middle Ground in the Michael Saylor Economy

Please understand: This is a simplified look at the “Strategy Economy.” So it’s not a company on our Farm Team, in our Model Portfolio or in our Special-Situation Portfolio.

But it’s a new financial development, which we like to keep our readers educated about to help get them “ahead” by staying informed. In fact, as part of our focus on education, we thought this could also provide a starting point for your own detailed research.

Perhaps that research will be enough for you to want to invest yourself. Or perhaps you conclude that the risk level is high enough for you to avoid it completely.

That’s the nature of endeavors like this: The risk levels are significant, which is why a payoff could be substantial, but the losses could be equally considerable.

Understanding that is the key.

So let’s look at how Saylor’s vision has created its own ecosystem:

1. Strategy — Offers an indirect investment in Bitcoin through Strategy’s holdings.

2. MicroStrategy 8% Perpetual Strike Series A Preferred Shares $STRK ( ▲ 0.96% )  — Holders of STRK shares have the option to convert them into MicroStrategy's Class A common stock at a specified conversion rate. It pays an annual 8% dividend.

3. MicroStrategy 10% Perpetual Strike Preferred Shares Series A $STRF — Holders of STRF can not convert their shares into Class A common stock, but do receive a higher dividend payout at 10% annually.

4. YieldMax MSTR Option Income Strategy ETF $MSTY ( ▲ 3.06% )  — Invests primarily in Strategy and generates income by selling/writing call options on MSTR. As of this writing, the yield is 77.37%. While that sounds alluring, the stock price is very volatile, trading between $16.80 and $46.47 over the last year. That means those dividend payments may not make up for the loss in share value.

5. YieldMax MSTR 2X Daily Leveraged ETF $MSTU ( ▲ 10.61% )  — This fund is designed to deliver 2x the daily returns of MSTR. So it MSTR increases by 1% in a day, MSTU aims to increase by 2%. Conversely, if MSTR decreases by 1%, MSTU would decrease by 2%. So that means you can achieve outsized gains when MSTR goes up, you will also achieve outsized losses when it goes down.

6. The Defiance Daily Target 2X Long MSTR ETF $MSTX ( ▲ 10.25% )  — This is the same concept as MSTU above.

7. Bitwise MSTR Option Income Strategy ETF $IMST ( ▲ 2.21% )  — This just launched at the start of April, but it also plans to pay out monthly income by selling/writing call options on MSTR.

In addition, you also have a more “liquid” options market for MSTR, MSTU and MSTX — offering investors 10 “financial instruments” in that Strategy ecosystem.

It wouldn’t be an exaggeration to refer to it as a “mini economy.”

And that brings us back to the U.S. dollar’s erosion.

On one hand, from a skeptical viewpoint, you could look at this and say: “Saylor is using Bitcoin to leverage his stock price.”

And that’s true that it has …

But if Saylor’s goal is to prevent the cash on the balance sheet from becoming a “declining asset” tomorrow, his aggressiveness today is absolutely warranted.

So what makes this situation difficult to evaluate is its seemingly binary nature.

Saylor’s Bitcoin bet is either right … or it’s wrong.

The bottom line: Investors who own a piece of the “Saylor Ecosystem” today could make a fortune … or lose their ante.

Even if Saylor is correct, there’s still another nuance: Once the “if” Saylor is right is resolved to the affirmative, the next question to answer is “when.”

When will this fully play out? How long will investors have to wait? How volatile will it be until that day comes? Will investors have the stomach to ride it out?

It’s a situation we’ll keep monitoring and analyzing for you.

Take care,