Remember when your friend convinced you that buying crypto was “basically free money”? Well, MicroStrategy (MSTR) is that friend, except they bet the entire company on it. And now? Things are getting spicy.
Here’s the deal: Back in 2020, CEO Michael Saylor had what seemed like a brilliant idea. Instead of keeping boring old cash on the books, why not buy Bitcoin? Lots of it. Like, 649,000 Bitcoin worth of “lots.” The plan was simple: Bitcoin goes up, company looks like geniuses, everyone gets rich.
And for a while? It totally worked. MSTR became the ultimate Bitcoin proxy stock – when crypto mooned, so did they. Investors who couldn’t figure out how to buy Bitcoin directly just bought MSTR instead. Genius, right?
Plot twist: Bitcoin doesn’t only go up.
Now Bitcoin’s sitting around $83,000 (down from $126,000 last month), and suddenly that leveraged strategy doesn’t look so clever. MSTR is down 67% from its peak, and here’s where it gets really interesting – they might get kicked out of major stock indices.
MSCI, the company that decides which stocks go into those big index funds your 401k probably owns, is basically saying “Hey, you’re not really a software company anymore, you’re just a Bitcoin fund with extra steps.” Their new rules would boot companies where crypto makes up more than 50% of their business. Guess who that targets?
If MSTR gets the boot on January 15th (yes, there’s an actual deadline), here’s what happens: All those index funds that automatically own MSTR? They have to sell. We’re talking about $2.8 billion in forced selling from MSCI alone, potentially up to $9 billion total if other index providers follow suit.
Think of it like musical chairs, except when the music stops, there aren’t enough buyers for all those shares.
The irony is delicious. Saylor spent years saying every Bitcoin dip was a “buying opportunity” and doubling down with more debt. But leverage is like tequila – amazing when things are going well, absolutely brutal when they’re not.
Warren Buffett has this saying: “It’s only when the tide goes out that you discover who’s been swimming naked.” Well, the tide’s going out, and MSTR might be about to find out if their Bitcoin strategy was visionary brilliance or just really expensive skinny dipping.
The bigger question? This could chill the whole “corporate Bitcoin adoption” trend. Other companies watching MSTR’s potential faceplant might think twice about following the same playbook.
January 15th isn’t just another date on the calendar – it’s when we find out if MicroStrategy’s Bitcoin empire was built on solid ground or if it’s just another house of cards waiting for a strong wind.
Sometimes the difference between genius and madness is just timing. And right now, time might not be on MSTR’s side.