The Bitcoin Bet, The Bear Market & The Bottom of the Discount
The Great Revelation (2020)
The story begins in the summer of 2020. Michael Saylor, the long-time CEO of MicroStrategy, had experienced a spectacular rise and crash during the Dot-com boom, making him hyper-aware of monetary risk. His solution to cash devaluation was Bitcoin, which he championed as a superior form of treasury reserve.
On August 11, 2020, MicroStrategy made its first historic move: 21454 BTC for 250 million. Saylor built the "Bitcoin Flywheel": use low-cost capital (debt and equity) to acquire Bitcoin, driving the stock price up, which allowed for more capital raising and more BTC accumulation. As Bitcoin soared toward its 69000 high in late 2021, MSTR stock traded at an enormous premium (an mNAV of 2x to 3x), a powerful endorsement of Saylor's leveraged bet.
The Onset of the Crypto Winter (2022)
The cycle shattered in 2022 as global central banks reversed course. The resulting liquidity crunch and interest rate hikes triggered a crypto industry meltdown.
- May 2022: The 40 billion Terra (LUNA)/UST collapse initiated the systemic shock.
- June 2022: Contagion spread as major funds like Three Arrows Capital (3AC) defaulted, causing Bitcoin to plummet.
- The Margin Call Crisis (June 2022): MSTR stock and Bitcoin crashed, and the media spotlighted the company's 205 million collateralized loan. Saylor faced intense scrutiny over a potential margin call, but he successfully reassured the market that MSTR was over-collateralized and had the reserves to prevent liquidation, stating that BTC would need to fall to 3562 before the crisis point was reached.
- August 2022: Saylor stepped down as CEO to assume the role of Executive Chairman, signaling his singular, unwavering focus: to accelerate the Bitcoin acquisition strategy and capital markets initiatives.
The Bottom of the Discount
In the depths of this crisis, as Bitcoin found its low near 15500, the market’s fear translated into MSTR’s valuation.
The mNAV ratio—MicroStrategy's market value divided by its net Bitcoin value—sank not just below 1x, but reached its nadir at 0.7x. This was the moment of peak disbelief. Investors were pricing the entire company at a 30% discount to its net Bitcoin holdings, effectively valuing the core software business as worthless or worse.
This discount was a challenge to Saylor's entire thesis. It was the market's declaration that the leverage was too risky, the management was a liability, and the BTC was better held directly.
The Vindication and The New Flywheel (2023 Onward)
The 0.7 mNAV was quickly recognized as a gross undervaluation by savvy investors. This period of deep discount was followed by a strategic masterclass from Michael Saylor, proving the resilience of the Bitcoin Flywheel.
Q1 2023: Bitcoin begins slow recovery from its lows as the wider market stabilizes.
MSTR's stock price tracked BTC closely, escaping the deep discount as liquidation fears subsided. The mNAV recovered quickly back above 1x.
Mid-2023: The Return to Aggressive Accumulation.
MSTR resumes significant buying. After a cautious 2022 (only 8109 BTC added), the company added 56650 BTC throughout 2023. This massive accumulation—at lower average prices—was a direct result of the market rewarding the company's resilience. It proved the flywheel was spinning again.
Sept 2023: Major Purchase Announcement.
MicroStrategy acquired 5445 BTC for 147.3 million at an average price of 27053. | These regular, substantial purchases were funded through a combination of cash flow and a disciplined use of its At-The-Market (ATM) equity program. The market was once again happy to buy MSTR stock, providing the capital for more BTC.
Q4 2023 / 2024: Convertible Notes Issuance.
MSTR strategically issued new Convertible Senior Notes (debt with an option to convert to equity at a premium). This was Saylor's preferred way to raise non-dilutive capital. | This capital raising—often oversubscribed—confirmed that major institutional investors were buying into Saylor's long-term leveraged strategy, fueling an even faster pace of Bitcoin acquisition.
The survival of the 0.7 mNAV period was the ultimate validation. It proved that MicroStrategy’s leveraged structure could endure the worst financial crisis in crypto history. Saylor's conviction was not only intact but was the engine for a fresh, powerful accumulation phase, cementing MSTR’s status as the world's leading corporate Bitcoin treasury.
