What Happens When an "Infinite-Money Machine" Unravels

3 days ago

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The most reliable way to make money is by creating highly desirable products like Coca-Cola or Birkin bags.
Investing in appreciating assets like real estate or stocks (e.g., S&P 500) can yield significant returns over time.
Michael Saylor and MicroStrategy adopted Bitcoin as a long-term investment, accumulating over 447,470 bitcoins by 2024.
MicroStrategy's stock surged as Bitcoin's value rose, creating an 'infinite-money machine' effect where stock gains outpaced Bitcoin's growth.
MicroStrategy leveraged debt and stock issuance to amplify Bitcoin exposure for shareholders, attracting both supporters and skeptics.
In 2024, Bitcoin's rally under Trump's pro-crypto policies boosted MicroStrategy's valuation, but later declines exposed risks.
MicroStrategy's stock fell sharply, erasing its premium over Bitcoin's value, leading to concerns about its financial strategy.
The company built a $1.4B reserve to reassure investors but may sell Bitcoin if its value continues to underperform.
Competition from Bitcoin ETFs and other firms holding Bitcoin has reduced MicroStrategy's unique market advantage.
Skeptics like Jim Chanos argue against overpaying for assets, signaling the end of MicroStrategy's 'infinite-money' strategy.

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