BTC Refinery in Action: MicroStrategy's 2025 Model Trajectory
Many people said they’d love to see regular updates on our MSTR Fair Value and Ballistic Acceleration Models. So, until we get these models programmed and automated, here goes!
MSTR’s Undervaluation in Numbers
After Friday's news that MSTR will release preferred shares to raise capital trapped in pension funds, the Fair Value and Ballistic oscillators rose from their recent low on 2 Jan 2025.
The table below summarises the current status with BTC at $101,900 and MSTR at $357. Both models show that MSTR is significantly undervalued.
BTC Yield - MSTR's Key to Success
Like clockwork, Saylor announced another purchase of 1,073 BTC on Monday morning, bringing the current BTC per diluted share to 0.00158827.
The chart below shows the actual and projected BTC Yield required to keep pace with the Ballistic Acceleration Model to the end of 2025.
With the high MSTR price, the Saylor was stacking like crazy in November. The recent drop in share price has slowed the ATM, so they’re currently under the trend line. However, this may pick up if/when the mNAV rises again and they get other funding sources flowing more freely (e.g. convertible bonds, preferred shares and retail bonds through Strive, etc.).
The current trend BTC Yield is 0.43% per day, equating to 3.1% per week or 384% per year, which is way above the 6-10% per year they proposed in their Q3 earnings call.
BTC Yield is the number to watch and MSTR’s #1 KPI. Although the ATM might dampen MSTR’s price in the short term, it maximises long-term shareholder value.
Bitcoin’s 2025 Trajectory
Bitcoin has been taking a well-earned break over the Christmas break when many de-risk after a big run-up to the US election and harvest tax losses. But things are warming up again, with traders back in the office ready to kick off 2025. If the previous halving, election and annual cycles, BTC may reach $343k in October 2025.
The log-log trend for Bitcoin (power law) gives us some insights into the long-term trajectory, but this time will be different (we just don’t know how).
Extreme euphoria and FOMO are usually followed by a nasty dump. So, my ideal scenario is that BTC will continue to grind up with the US inauguration, implementation of a Strategic Bitcoin Reserve, and ongoing nation-state adoption as game theory plays out.
MSTR’s BTC Value Per Share
When we combine the future BTC trajectory and the forecast BTC per share, we get MSTR’s BTC value per share, shown in the chart below. This currently sits at $160 per share but could rise to more than $2000 later this year if BTC per share and Bitcoin continue their current trajectory.
MSTR’s mNAV Evolution: From ETF to Refinery
The multiple of net asset value (mNAV) tends to swing wildly with fear and greed but is trending upwards as more people understand that MSTR is not just another Bitcoin ETF but a Bitcoin refinery. While the mNAV will likely experience severe swings (remember volatility = vitality), it will likely continue to expand, allowing MSTR to harvest more fiat and grow the BTC Yield.
What’s Next for MSTR? Key Catalysts to Watch in 2025
The next few months for MSTR will be fascinating, with some key catalysts on the horizon:
· Market makers seem to be clamping down on leverage on MSTR trades to minimise the damage with the upcoming 17 January 2025 options expiry.
· 20 January 2025 is the US inauguration and the MLK public holiday, after which the Bitcoin community will draw a big sign of relief.
· 21 January 2025 is the first day the options traders can buy to cover their share liabilities from the options trades, so many expect a substantial jump around then.
· While the exact date of the next MSTR earnings call hasn’t been announced (Trading View shows 4 February 2025), it’s likely that MSTR will be observing an ATM blackout period when they won’t be selling shares into the market from around 22 January 2025, which is also bullish. This period and other upcoming events could potentially lead to a substantial jump in MSTR's price.
The arrows on the chart below show where the price might go if the MSTR price bounces from the 5th percentile of the fair value range ($404) to the 95th percentile of the Fair Value Model range at the end of the blackout ($1150).
The model has many moving parts, particularly the trajectory of BTC price, which will drive BTC Yield, so nothing is certain. It will be fascinating to see how this story plays out, but 2025 just might be a very good year for MSTR bulls.
What’s your take on MicroStrategy’s moves and Bitcoin’s future in 2025? Share your thoughts in the comments below!