Before Christmas, MicroStrategy injected a shot in the arm into the recent correction in the cryptocurrency market.

On the evening of December 23rd, Beijing time, MicroStrategy announced that it had purchased an additional 5,262 Bitcoins, continuing to increase its holdings of Bitcoins for the seventh consecutive week. According to a filing with the U.S. Securities and Exchange Commission (SEC) on Monday, the company sold approximately $561 million worth of shares in the equity issuance market and then used the proceeds to increase its Bitcoin reserves, which it purchased last week. Bitcoin price averages about $106,613, just below its all-time high of about $108,500. Now, MicroStrategy holds a total of 444,262 Bitcoins, spent $27.7 billion, and the average price is $62,257, which also means that the company has become the largest corporate holder of Bitcoin.

So, what wealth codes are implied in the micro-strategy digital asset framework? Bitkoala Kaola Finance will analyze and interpret it with you in this article.

Michael Saylor releases digital asset framework including strategic Bitcoin reserves

This week, Micro Strategy CEO Michael Saylor released a digital asset framework, which includes strategic Bitcoin reserves. The framework divides digital assets into six categories: non-issuer digital commodities (such as Bitcoin) supported by computing power, digital securities with issuers, digital currencies, Digital utility tokens, digital NFTs, and digital asset-backed tokens (such as gold, oil-backed tokens). Michael Saylor said that strategic digital assets can strengthen the US dollar, eliminate debt, and make the United States a global leader in the 21st century digital economy.

At a practical level, Michael Saylor recommends limiting asset issuance compliance costs to less than 1% of the size of assets under management, and annual maintenance costs to no more than 0.1%. At the same time, it is proposed to expand the capital market access threshold from the current 4,000 listed companies to 40 million companies by reducing issuance costs (from tens of millions of dollars to one hundred thousand dollars). He specifically recommended the establishment of a Bitcoin reserve, believing that this could create $16-81 trillion in wealth for the U.S. Treasury and provide a new way to offset the national debt.

In fact, the digital asset framework proposed by MicroStrategy is an ambitiousThe ambitious macro plan aims to deeply integrate digital assets with the traditional financial system and provide a clear regulatory framework for the development of the digital asset industry. The framework will clearly define digital assets and distinguish different types of digital assets to provide a basis for supervision. By formulating unified industry standards, it will improve the transparency and credibility of the digital asset market, reduce investment risks, and encourage innovation while standardizing supervision. , to promote the healthy and orderly development of the digital asset industry.

What wealth codes are implied in the micro-strategy digital asset framework?

The digital asset framework proposed by MicroStrategy aims to promote the legalization and regulatory improvement of digital assets. Once implemented, it will bring huge development opportunities to the entire industry. The framework emphasizes the integration of digital assets and traditional finance, and is expected to spawn more innovative financial products and services. As an industry pioneer, MicroStrategy is expected to occupy a favorable position in dividends and industry changes.

In fact, MicroStrategy chose to launch the digital asset framework during the Christmas period. This timing seems to be mysterious, because according to CoinGecko data, from 2014 to 2023 In 2018, the cryptocurrency market experienced a Christmas rally eight out of 10 times after Christmas, with total cryptocurrency market capitalization jumping 0.7% to 11.8% in the week from December 27 to January 2.

Although there is no Christmas rebound after the peak of the 2021 cycle, because by Christmas BTC has fallen approximately 26% from its high of $69,000 and has continued to decline throughout 2022. The difference is that 2021 is the peak year of this cycle, while 2025 is expected to be the peak year of this cycle, following the four-year pattern since Bitcoin’s inception.

Not only that, the cryptocurrency trader "Mister Crypto" also pointed out that after comparing the performance of Bitcoin in previous years, between Christmas and New Year in 2016 and 2020 There have been sharp increases throughout the period (i.e., the years leading up to the peak of the market cycle).

Of course, the crypto market is highly volatile, and investors need to exercise caution.

Bitcoin premium shrinks for micro-strategy stocks

Micro-strategy stocks’ ratioThe Bitcoin premium (measured as enterprise value - which is market capitalization plus net debt - compared to the value of a company's Bitcoin holdings) continues to shrink. Currently, the company is valued at approximately twice the value of its Bitcoin holdings, which hold approximately 439,000 Bitcoins. This ratio has dropped from a peak of 3.5x in November to currently double, indicating that MicroStrategy’s share price has failed to keep up with the recent pullback in Bitcoin prices after breaking above $100,000.

Given that there is still a high Bitcoin premium in the stock, MicroStrategy stock price may face There is more room for downside. The current market value of MicroStrategy is about US$79 billion, of which Bitcoin holdings are worth about US$43 billion. The company is also burdened with debt of US$7 billion. The excessive premium may cause MicroStrategy's stock price to shrink further when the premium shrinks. Easy to call back.

However, analysts remain optimistic about MicroStrategy’s performance, mainly based on the company’s continued strategy of purchasing Bitcoin through equity and debt financing. MicroStrategy has been investing in Bitcoin since the end of October It has raised approximately US$17 billion, mainly through equity financing, and used the proceeds to purchase Bitcoin. Benchmark analyst Mark Palmer gave the stock a "buy" rating and a $650 price target based on his estimate of the company's Bitcoin holdings in 2026. He predicts that the Bitcoin price will reach $225,000 by the end of 2026.

Analysts are also willing to assign a price-to-earnings multiple to the theoretical income generated by micro-strategy through the issuance of stocks or bonds to purchase Bitcoin. Micro-strategy mentioned a so-called Bitcoin Bitcoin “yield” (that is, the ratio of changes in Bitcoin holdings to the number of outstanding shares) has exceeded 70% this year. But this “yield” relies on the company selling its shares at a premium above the value of its Bitcoin holdings, which is not certain.

The high premium of micro-strategy in 2024 is a special phenomenon. In 2022 and 2023, the company's stock price will be almost equal to the value of its Bitcoin holdings, with a premium of approximately 20% at the end of 2023. If the Bitcoin premium continues to diminish and Bitcoin prices experience a significant decline, MicroStrategy stock prices may face further downside risks.

Summary

Bitcoin, as a hard asset, is regarded as an effective hedge against inflation. Tools, MicroStrategy believes that Bitcoin has a value-preserving function similar to gold. With the development of the digital economy, Bitcoin’s status as the underlying asset continues to be consolidated.

Micro strategyThe strategic digital asset framework is a forward-looking strategy and provides investors with a new perspective. However, the digital asset market is still in its early stages of development and is full of opportunities and challenges. When investing, investors should remain rational, conduct in-depth research, and formulate an investment strategy that suits them based on their own risk tolerance.