The "crazy rise" MSTR has invented a new term: BTC yield

After experiencing a recent surge, Bitcoin has been played with in new ways. A brand new concept has emerged—“BTC Yield.”

MicroStrategy introduced this unusual term to investors in August. For those unfamiliar, “BTC” refers to Bitcoin, while “yield” is the ratio of the returns obtained from an investment to the principal amount invested.

However, “BTC Yield” is not that simple. As the company explained, it is the percentage change in the number of Bitcoins owned by MicroStrategy per share between two dates.

Since the beginning of this year, the company's stock price has soared by 650%, far exceeding the increase in Bitcoin prices. If Bitcoin prices fall, MicroStrategy will suffer a fatal blow. Whether “BTC Yield” can withstand the test of the market remains to be seen.

“BTC Yield”: A Brand New Concept

MicroStrategy uses “BTC Yield” as a metric to measure its Bitcoin acquisition strategy. The company explained in its documents that the concept of BTC Yield refers to the percentage change in the number of Bitcoins owned by the company per share between two dates.

Specifically, as of November 17, assuming all of the company's convertible debt has been converted into stock, every 1,000 shares of outstanding stock will own 1.29 Bitcoins. This ratio has increased by 41.8% compared to December 31 of last year, when each 1,000 shares owned only 0.91 Bitcoins. MicroStrategy refers to this 41.8% increase as the “year-to-date BTC Yield.”

This yield can be calculated over different time periods, such as quarterly or year-over-year, or by choosing any two dates with available data for comparison.

Recently, BTC Yield has shown a rapid upward trend. Just a week ago, MicroStrategy announced in a press release that “the year-to-date BTC Yield has reached 26.4%,” a significant increase from 17.8% on September 30.

When MicroStrategy first adopted BTC Yield as a key performance indicator, the company ambitiously stated that starting next year, they would strive to raise this metric to a range of 4% to 8%.

If Bitcoin Prices Fall, MicroStrategy's Stock Price Will Suffer a Fatal Blow

Since 2020, MicroStrategy has set its sights on Bitcoin, with the company's co-founder and executive chairman Michael Saylor becoming a fervent supporter of Bitcoin and embarking on large-scale purchasing actions.

To continue increasing its Bitcoin holdings, the company has not hesitated to continuously sell stocks to cash out. The value of the Bitcoins held by MicroStrategy is nearly four times that of the total of ordinary investors.

Last month, MicroStrategy announced once again that it would raise $42 billion over the next three years for large-scale Bitcoin purchases However, the cycle of "selling stocks and buying Bitcoin," while boosting the company's stock price, also faces enormous market risks. According to the latest data, the company holds 331,200 Bitcoins, with a market value of up to $31.2 billion.

MicroStrategy's stock price has seen an even more astonishing increase, soaring 650% this year, far exceeding the price increase of Bitcoin. This reflects investors' fervent enthusiasm for the company's Bitcoin investment strategy.

This strategy of "betting on" Bitcoin has raised market concerns. Analysts point out that MicroStrategy's software business is not particularly outstanding, and its high corporate debt also increases financial risk. If Bitcoin prices fall, the company's stock price will suffer a fatal blow.

Jonathan Weil, a reporter for The Wall Street Journal, stated:

"If you are optimistic about the future of Bitcoin, directly purchasing Bitcoin may be a more effective choice. While your judgment of market trends may not be more accurate than others, at least you can directly participate in the market.

Choosing to invest in MicroStrategy, on the other hand, is betting on an inefficient market, making it even less efficient."