Replying to Avatar Lyn Alden

I keep seeing people try to predict what the MSTR premium over NAV “should” be, as a valuation question.

However, the answer doesn’t truly exist, because it’s recursive. The current state of it is an input back to itself. It’s arbitraged, in other words. As long as there is a sizable premium, MSTR will continue issuing securities until demand is saturated for a period of time.

A high premium tells MSTR to keep issuing more securities, which in the long arc of time pushes the premium back down. A low premium tells MSTR to slow down or halt security issuance until a premium re-emerges.

And gm.
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Tim Bouma 1y ago

Same with issuing fiat currency to buy bitcoin? Recursive. So long there is a difference, keep issuing fiat to buy?

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Lyn Alden 1y ago

Fiat currencies are not currently valued based on a country’s bitcoin holdings.

Whether a country wants to print currency to buy bitcoin is mainly a question of how much they want to devalue their citizens’ cash savings and transfer that value to the state.

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Tim Bouma 1y ago

Not out of the realm of the possibility for an institution that is inherently conflicted and prone to moral hazard. Walter Bagehot knew that from the outset.