E183 | MicroStrategy, the Meme Stock: A Capital Game of Premium Issuance
Summary
MicroStrategy’s core product is not “cheap Bitcoin,” but a high-volatility BTC proxy that requires no investor leverage, has no margin calls, and offers exceptionally deep options liquidity. Institutions barred from buying IBIT, mandate-constrained pensions, and hedge funds seeking leveraged upside all support the premium; Michael Saylor’s pitch is blunt: “I’m a very good gambling instrument,” and “the selling point is volatility.”
The capital-game loop is straightforward: borrow and lever up when the premium is low, then use ATM issuance when the premium is high to swap expensive company stock for relatively cheap Bitcoin. The “420 plan,” approved in late October 2024, included roughly $21B of equity capacity and $21B of debt capacity; the previous cycle peaked at roughly 300% premium, while this cycle briefly exceeded 100%, creating ample room for issuance arbitrage.
MicroStrategy’s divergence from Bitcoin in November–December 2024 was not a market malfunction; the company itself had become the largest seller of its stock. Over roughly 50 trading days, it sold about $15B of stock through ATM issuance, or roughly $300M of net selling per day; that cash was then converted into approximately $300M of daily net BTC buying, creating a “Bitcoin must be rising while MicroStrategy must be falling” premium-hedging trade.
In February 2025, financing shifted from ATM issuance toward convertibles, which was relatively favorable for MicroStrategy shareholders all else equal but weakened Bitcoin’s largest marginal source of demand. Leverage was around 15%, versus a long-term target of 20%–30%; using 25% as the target implies another $4B–$6B of debt issuance. But arranging banks, finding investors, and pricing a convertible takes at least a month, so the pace of BTC purchases was materially slower than under ATM. The episode also noted that on March 10 the company applied to issue $21B of perpetual preferred stock, pushing the annualized rate to 8%.
The key to near-term liquidation risk is not whether BTC falls below the roughly $66,000 average cost, but when hard debt obligations become due. The guests judged that most repayment pressure had been rolled into 2028–2029, while the interest on many bonds was close to zero; even if the company again fell into negative net assets, it would not be forced to sell BTC without near-term maturities or an approved liquidation demand. The real stress test is BTC remaining below roughly $10,000 in 2028–2029 while financing channels are closed.
The latest BTC selloff cannot be blamed on MicroStrategy alone; the guests identified tariffs, stagflation, and recession expectations as the more important macro variables. The 10-year Treasury yield fell from roughly 4.85% to 4.3%, while rate-cut expectations recovered from one cut this year to two, signaling growing concern about growth. Meanwhile, the annualized historical return on the basis trade of long IBIT and short CME futures reached roughly 15%; if that spread compresses to around 4%, it approaches the cost of financing and could trigger unwinds that produce ETF outflows.
Investors should focus on issuance catalysts, the premium, and the BTC represented by each share—not the absolute price at which Saylor buys Bitcoin. Liu Feng’s analogy is that even if MicroStrategy buys BTC at $100,000, it is still “selling a high-premium asset to buy an undervalued asset” if its stock trades at an implied coin price of $250,000; once the premium returns to roughly 150%–200%, company announcements and Saylor’s social media become ATM warning signals that every bull must monitor.
MicroStrategy is difficult to replicate because its moat is not simply hoarding coins, but the combined network effect of US equity-market liquidity, financing capacity, brand, and Saylor’s “cult-leader” sales ability. Japanese and Hong Kong-listed imitators often trade at a discount; they sell themselves as value stocks, while Saylor has precisely positioned MicroStrategy for speculators. A low-premium, re-leveraging phase is therefore “worth putting on the radar,” but the guests explicitly did not frame it as a buy recommendation.
Deep dive
1. Bitcoin Can Rise Without MicroStrategy Following
Hong Jun opened with the contrast: MicroStrategy climbed from roughly $60 to a peak of $400–$500, delivering a maximum gain of about 8x last year, before halving along with BTC to the low $200s; as of February 21, 2025, the company held nearly 500,000 BTC worth more than $40B.
Zheng Di corrected the first misconception: “Bitcoin rises, so its stock rises too” is true only some of the time. After late November 2024, BTC was still climbing while MicroStrategy was already falling; the real change was the rapid compression of the company’s premium to its BTC net asset value.
The opening position disclosures set the context: Hong Jun said he held no MicroStrategy, while Liu Yiming said he held a very small amount of stock; Zheng Di and Liu Feng did not disclose positions here. The discussion focused on structure, risk, and trading mechanics rather than offering investment advice.
2. Capital Barred From ETFs Created the First Layer of Premium
Zheng Di cited a typical constraint among some Chinese investors: certain brokers’ TRS products can buy overseas stocks but are prohibited from buying Bitcoin ETFs such as IBIT. MARA, Coinbase, and MicroStrategy remain eligible stocks, making MicroStrategy a natural BTC proxy.
Overseas institutions, including Korean pensions, may likewise be unable to allocate directly to ETFs while still being allowed to buy MicroStrategy or Coinbase. When Hong Jun asked whether this was merely a foreign-institution issue, Zheng Di said US institutions face their own Mandate constraints as well, not just regulatory restrictions.
A state pension adding IBIT might need to amend its Mandate, obtain internal approval, and even overcome skepticism about BTC from its manager; existing authorizations, however, typically do not prohibit an ordinary US stock. This institutional gap—stocks permitted, coins or ETFs prohibited—continues to create artificial demand.
3. Saylor Sells the Most Liquid Implied Call Option
Even investors who can buy IBIT may still be persuaded by Saylor to buy MicroStrategy: BTC’s gains could moderate in each successive bull market, but investors seeking more upside elasticity need price leverage, and MicroStrategy packages company-level leverage into an ordinary stock.
Investors who directly hold the stock are not borrowing money themselves, so they face neither the margin calls nor forced liquidations common in over-the-counter leverage. Zheng Di summarized the pitch: “You yourself are not levered,” yet you still get something resembling the convexity of a BTC call option.
In the Black-Scholes framework, volatility raises option value. The guests said that even the combined options volume of BTC-related stocks such as MARA and Coinbase is smaller than that of MicroStrategy alone. Its deep liquidity and high volatility make it a rare market for an implied BTC option.
This is also why the company takes pride in its “volatility and cyclicality”: without violent moves, why would speculators buy it? What Saylor is really selling is not stable value, but “I’m a very good gambling instrument.”
4. Financing Capacity Is the Real Moat of the Coin-Hoarding Model
Zheng Di argued that companies around the world can use cash to buy a batch of BTC, but the process ends when the cash is gone. MicroStrategy can repeatedly issue stock, issue debt, and buy more coins; financing capacity is “the core of the core of the business model.”
More liquidity creates a higher premium, and a higher premium creates cheaper capital, ultimately producing a Matthew effect in which the strong grow stronger. Even imitators that copy the balance-sheet mechanics cannot easily reproduce the trading depth already concentrated in MicroStrategy.
The loop also requires the leader to stand at the front of the stage. Saylor has spent years on YouTube, at public speeches, and in continuous marketing, selling the idea and the stock “like a preacher”; Zheng Di therefore called him a “cult-leader-level salesman.”
5. MicroStrategy Evolved From Software Cash Flow to Zero-Coupon Convertibles and ATM
In the previous cycle, the company primarily used cash on hand, conventional bonds, and some convertibles to buy BTC; its software business still generated tens of millions of dollars in positive annual cash flow, enough to pay interest. Analysts once valued the software business at roughly $500M–$1B, while sell-side estimates in the previous cycle reached about $1.2B.
In this cycle, software cash flow deteriorated and occasionally turned negative, while cash reserves were largely depleted. The company therefore stopped relying heavily on interest-bearing conventional debt and shifted toward convertibles with zero or near-zero coupons.
The other key upgrade was ATM issuance: once authorized by a public company, brokers continuously sell newly issued stock at secondary-market prices without first having to assemble a group of targeted investors. This allowed MicroStrategy to sell more than $10B of stock quickly when demand was strong.
Liu Feng added that the true turning point came in 2020: the company first used cash from its enterprise-software business to buy BTC, then in February 2021 issued roughly $1B of long-term convertible debt at zero interest, maturing in 2027, formally turning the balance sheet into a BTC financing vehicle.
6. The 420 Plan Turned Low-Premium Debt and High-Premium Equity Into an Algorithm
The roughly $42B plan approved in late October 2024 was split into $21B of equity capacity and $21B of debt capacity; the former was mainly for ATM issuance, while the latter could be filled through convertibles, perpetual preferred stock, and similar instruments.
Zheng Di’s version of the loop was: when leverage and the premium are low, borrow first and buy BTC, increasing the stock’s elasticity to the coin price; once a bull market drives the premium higher, sell stock to reduce leverage, swapping overvalued equity for more BTC.
Investors buy MicroStrategy precisely for its leverage. If the company issues large amounts of stock, raises net asset value, and lowers leverage, the stock’s elasticity to BTC also declines, so the premium the market is willing to pay naturally falls.
7. The Premium Has No Fair Value, but It Has Danger Zones
The guests’ rough calculation starts with the company’s market cap, debt, cash, software-business value, and the potential conversion impact of in-the-money convertibles, then estimates the market-implied valuation of its BTC holdings and divides it by the actual market value of the BTC.
Zheng Di recalled that the premium peaked at roughly 300% in the previous cycle; this cycle it exceeded 100%, while the level during the earlier phase of the program’s research was around 50%–60%, and may later have fallen further. The number is “bought” by constrained capital and traders chasing volatility; there is no fixed reasonable level.
Historical peaks provide only a risk reference: a premium approaching 300% was extremely dangerous, while after the market learned how ATM works, investors may begin anticipating issuance at 150%–200%, or even just above 100%.
8. The $15B ATM Simultaneously Pressured the Stock and Lifted Bitcoin
Zheng Di placed the turning point after the authorization passed in late October 2024 and issuance accelerated in mid-November. He already felt the stock was “a little off” and advised friends to exit; some holders sold above $500.
Over roughly 50 trading days in November and December, the company sold about $15B of stock, adding approximately $300M of net supply to the market each day. “How is this market supposed to absorb it? So the stock price had to fall.”
Meanwhile, the cash raised through ATM became roughly $300M of average daily net BTC buying. ETFs have subscriptions and redemptions every day, but Zheng Di said MicroStrategy buys and does not sell, making it an exceptionally strong one-way marginal buyer during this period.
This was the “premium-hedging game” the guests repeatedly emphasized: when a dollar of assets is priced by the market at two dollars, the company naturally sells stock aggressively; the stock premium is crushed while new BTC purchases support the coin price. The divergence is not a contradiction, but two sides of the same trade.
9. The February Earnings Report Announced a Slowdown in the ATM Frenzy
The market was briefly optimistic in January because the Christmas and New Year holidays, followed by the quiet period before the February 4 earnings report, temporarily prevented the company from operating continuously. Zheng Di had expected the “buy, buy, buy” to resume after February 5.
But the fourth-quarter presentation showed that roughly $15B of the $21B ATM capacity had already been used, leaving about $6B; only several billion dollars of debt capacity had been used, leaving more than $10B. The company therefore clearly shifted its financing focus toward debt.
The deeper reason was that two months of issuance had materially reduced both the premium and leverage. By the company’s measure, leverage was around 15%, versus a long-term target of 20%–30%; using 25% implies another $4B–$6B of debt.
Subsequent instruments included roughly $500M of perpetual preferred stock, which the guests estimated could carry a rate of around 10% with a conversion price near $1,000; the company also issued approximately $2B of convertibles with a conversion price around $430 and quickly used the proceeds to buy BTC at an average price near $97,000.
10. Debt Protects Per-Share Leverage but Takes Away Bitcoin’s Fastest Buyer
ATM stock can execute continuously into strong demand; convertibles require banks to be arranged, specific investors to be lined up, and pricing to be completed, taking at least about a month from start to finish. After one purchase in February, the next might not happen until March or even April, and the market immediately felt the difference in pace.
For MicroStrategy shareholders, reducing issuance and restoring leverage is positive all else equal. For BTC, it is not: the largest marginal buyer has shifted from an endless flow of purchases to discrete financings followed by discrete purchases.
The episode was recorded on February 27, and an update was added before publication: on March 10, MicroStrategy applied to the SEC to issue $21B of perpetual preferred stock, with the annualized rate rising to 8%. This debt-equity hybrid is intended to keep expanding its ability to raise capital and buy BTC, but the cost of capital is now visible.
11. Convertible Terms Push Cash Repayment Pressure Into the Next Cycle
For the roughly $2B of new convertibles issued in February 2025, if the stock remains below approximately $430, investors can first require the company to repurchase them at par in March 2028. Until then, they are not obligations that must be repaid immediately.
Once the conversion conditions are met, the company can also force conversion after the agreed period. This right is critical: many specialist CB funds are constrained by their Mandates and must immediately sell if the bonds convert into common stock. If the company cannot force conversion, they may continue holding the debt, leaving a potential repayment obligation.
The guests listed earlier debt including roughly $600M due in 2025, approximately $1B of zero-coupon debt due in February 2027, and about $1B due in September 2028. A number of the old 2025–2027 bonds had already been rolled over through new debt, while more new maturities fall after 2029.
In late January, the company also increased its maximum authorized shares from 300 million to 10.3 billion. If conversion eventually fails, it could theoretically sacrifice the stock price and continue using ATM to repay debt; this is a powerful dilution reserve and shows that creditor protection and common-stock value are not the same thing.
12. Falling Below Cost Does Not Automatically Trigger Liquidation; 2028–2029 Is the Hard Test
At the time of recording, BTC had fallen from roughly $110,000 to below $80,000, while the company’s average cost was about $66,000. The guests stressed that falling below cost—even falling into negative book net assets—does not mean creditors can immediately initiate liquidation.
When BTC fell from roughly $70,000 to below $20,000 in 2022, MicroStrategy briefly became technically insolvent but was not forced to sell coins. The key was the absence of hard near-term maturities. Liquidation depends on covenants, creditors, and shareholder procedures—not on whether a single accounting figure is positive or negative.
If the stock trades at a discount to BTC net assets, common shareholders would theoretically favor liquidation to recover more assets; but Saylor controls close to 48% of the voting power, making such a proposal difficult to pass.
The truly extreme stress test is BTC remaining below roughly $10,000 when debt comes due in 2028–2029. The discussion cited potential pressure from two obligations of roughly $1B and $3B. A short-term drop to $60,000, $40,000, or even $30,000 would first damage financing capacity rather than automatically trigger coin sales.
13. Macro Stagflation Fear Explains the BTC Pullback Better Than MicroStrategy’s Slowdown
Zheng Di ranked the tariff war, stagflation, and slowing growth as the primary causes, with MicroStrategy’s slower buying pace second. BTC remains strongly correlated with the Nasdaq, and it is difficult for Bitcoin to keep rising independently when US equity risk appetite is falling.
The University of Michigan inflation expectation rose from roughly 3% to above 4%, but the guests argued that higher egg prices caused by avian flu and stronger energy demand from a cold winter could both be one-off factors. Fed officials may also agree that the move is temporary, but “do not want to take any risk on this issue.”
At the market’s most pessimistic point, investors expected only one rate cut for the year, around September or October. At the time of recording, expectations had recovered to two cuts, with the probability of a June cut above 50%; by the following January, a third cut was possible, reflecting the coexistence of recession and inflation concerns.
The 10-year Treasury yield fell from roughly 4.85% to 4.3%, consumer confidence weakened, and capital shifted toward relatively cheap Chinese assets. Zheng Di viewed Chinese assets at the time as a potential long opportunity or safe haven; that rotation also pulled risk capital away from US equities and BTC.
14. ETF Outflows Also Reflect a Basis Trade Whose Yield Has Been Flattened
Arthur Hayes noted that some ETF holdings may not represent long-term bullish positions, but hedge-fund basis trades: buy IBIT or spot BTC while shorting higher-priced deferred CME futures to capture the forward premium.
BTC and gold generate no yield, so in a normal bull market deferred futures often trade above nearby contracts. CME futures are cash-settled and cannot be perfectly locked through physical delivery, but spot and futures have historically converged, and funds have been willing to bear limited basis risk.
The trade once generated annualized returns as high as roughly 15%, highly attractive against financing rates of about 4.5% and Treasury yields above 4%. If the spread compresses to around 4% as arbitrage capital floods in and forward optimism fades, it approaches both financing and opportunity costs.
The theoretical confirmation would be simultaneous large ETF net outflows and the unwinding of CME deferred futures shorts. Zheng Di considered the explanation plausible but only partial; the “more important reason” remained tariff-war and stagflation fears.
15. The Short-MicroStrategy, Long-BTC Trade Often Dies Before the Catalyst
Shorting MicroStrategy and going long BTC at a high premium looks like a value-arbitrage trade, but Zheng Di said many funds “died horribly”: the premium has no stable mean, and market irrationality can persist until shorts run out of margin.
The trade may have performed well from November 2024 through the time of recording because ATM issuance genuinely created stock supply. But investors who put on the same trade before October were often forced to cover before the premium began to contract.
The durable lesson is: “If he set a 100% or 200% premium, there was a reason for it at the time.” A spread only matters when investors analyze why the demand exists and when it will reverse; otherwise, “value” becomes nothing more than a more expensive naked short.
16. Once the Market Learns ATM, the Premium Ceiling May Fall Permanently
MicroStrategy is inherently cyclical: borrow and lever up at low premiums, issue stock and delever at high premiums. The company treats violent volatility as a selling point, so it cannot be analyzed like a company with stable net asset value.
Zheng Di’s formulation was that Saylor may have learned from the previous cycle: “Instead of letting you people short me, I’ll short myself.” Once the premium is driven high, the company can apply for ATM issuance and become the “biggest short” of its own stock.
The market was unprepared the first time it encountered $15B of issuance over two months. After seeing it once, bulls will monitor company announcements and Saylor’s Twitter earlier. A premium of roughly 150%–200%, or even just above 100%, could trigger front-running.
17. The Purchase Price Is Not the Core Variable; BTC Per Share Is
Hong Jun asked whether buying BTC near $100,000 meant the company had bought at the top. Zheng Di replied that “the absolute value is not important”: MicroStrategy profits from the spread between its equity premium and spot BTC, not from guessing the short-term low of every BTC purchase.
Liu Feng made the math more intuitive: even if BTC trades at $100,000, the company is “using an asset sold at 2.5x to buy an asset at 1x” as long as the stock implies a BTC price of $250,000.
For long-term shareholders, the key is whether the amount and value of BTC represented by each share are increasing. The company packages this metric as BTC yield: about 2.9% as of February 2, with a 2025 target of increasing it to 15%.
Zheng Di therefore described the period as “worth putting on the radar”: the premium had fallen materially and the company was re-levering. That was not an immediate buy signal, but compared with the clearly negative issuance window of October–November 2024, the research value had improved.
18. In an Extreme Bear Market, the Company Still Has Two Financing Routes
Zheng Di added that Saylor watches not only the stock premium but also whether BTC itself is cheap. In the previous bear market, even with the stock premium extremely low and bonds difficult to issue, the company was still willing to sell stock and buy BTC at lower prices.
MicroStrategy had also pledged BTC to Silvergate and borrowed roughly $200M. When Silvergate entered crisis, the market worried whether the collateral could be recovered; the company later said it had retrieved it.
Zheng Di said that during the previous cycle’s excessive competition, BTC-backed loans once reached LTVs above 90%, causing many participants to fail. A more common structure was around 70%: borrow $70 against $100 of BTC, with a roughly 30% price decline requiring additional collateral.
In the guests’ example, if BTC were pledged at roughly $73,000, the borrower would not need to add collateral until the price fell to around $50,000. MicroStrategy owns more than $40B of BTC and can continue adding collateral. It might be able to borrow several billion dollars, but that would introduce more margin risk than it has previously carried.
19. Imitators Lose Because the Market, Narrative, and Buyer Base Are Different
Japan’s Metaplanet, the so-called Hong Kong-listed MicroStrategy, and various shell companies have tried to copy the model, but none has achieved a comparable premium. Some even trade at discounts while citing the fact that BTC holdings account for 70%–80% of market cap as evidence that they are undervalued.
The first difference is that US equities offer the world’s deepest liquidity; regional Japanese or Hong Kong stocks cannot absorb the same capital. Zheng Di compared this with how global on-chain liquidity helped some projects reach roughly $70B in FDV: market depth is itself an asset.
The second difference is the target buyer. Asian imitators mostly talk about value investing, while Saylor understands that the core buyers of crypto and BTC concept stocks are speculators, hedge funds, and trend traders. He sells leverage, volatility, and the possibility of outperforming BTC directly.
A later entrant would at minimum need a decision-maker willing to roadshow for years and build a personal IP. Zheng Di generalized the point into a broader trend: “For a good company, its leader has to find a way to become an opinion leader.”
20. Saylor Turned an Aging Software Company Into an Institutional-Grade BTC Brand
Liu Feng recalled that Saylor graduated from MIT and founded MicroStrategy in 1989. The company was once a major provider of enterprise information-analytics software and operated a large R&D center in Hangzhou; its legacy software business still generated more than $400M in annual revenue, but growth faltered after 2019.
Hong Jun mentioned that Michael Saylor had an accounting scandal in 2001. Zheng Di did not verify that detail here, saying only that Saylor’s reputation had indeed been quite poor in the past. After 2020, Saylor bought BTC with his own funds, issued long-term zero-coupon convertibles, and survived the 2022 bear market, completing a full-cycle proof of the strategy; in February 2025, the company changed its name to Strategy, removing “Micro.”
Saylor has said he would destroy his personal BTC private keys after death, permanently removing the coins from supply; the company’s hundreds of thousands of BTC, however, are not held personally by him. The guests said most are custodied by Fidelity, with a smaller amount at Coinbase Custody. A public company holding everything in self-custody would not easily obtain an auditor’s sign-off.
Before ETFs existed, MicroStrategy was already an ETF-like vehicle—and one that “only buys and never sells.” Saylor also publicly urged Musk to convert corporate cash into BTC; Tesla subsequently bought roughly $1.5B, and SpaceX bought some as well. There is no proof that he caused all of those purchases, but the effect of his public advocacy is clear.
21. Saylor’s Policy Ambition Has Expanded From a BTC Reserve to “Putting Everything On-Chain”
Zheng Di said Saylor had met with people associated with the SEC’s crypto action group, discussing a framework that included both a US strategic BTC reserve and digital-asset regulation led by figures such as Hester Peirce, “Crypto Mom.”
The most surprising part was that he did not talk only about Bitcoin. He argued that the US should become the global leader in the digital economy: “Everything can go on-chain.” Culture, entertainment, and a wide range of assets could be tokenized and turned into RWA, with a potential market in the “hundreds of trillions.”
Zheng Di inferred that the Trump administration might seek to build an on-chain version of US equities or an on-chain Nasdaq, using digital assets to siphon global liquidity. Saylor is no longer showing simple Bitcoin maximalism, but a broader vision for US-led on-chain finance.
Stablecoins are the fiscal interface. Dollar stablecoins stood at roughly $200B at the time, and USDT had already been described as the 18th-largest holder of US Treasuries. If the market reaches $5T or $10T, users around the world holding those coins would effectively be financing the US government automatically.
22. On-Chain Finance Could Weaken Capital Controls but Still Needs Sovereign Backing
Zheng Di’s question was whether brokers and CEXs can control assets through identity checks, licenses, and gateways, while self-custody wallets are difficult to shut down. If US equities and other assets move fully on-chain, China, the EU, and Korea would find it harder to track how many dollars their residents hold or prevent capital outflows.
Liu Feng placed this vision within Balaji’s concept of network states: the users and influence of major internet companies already exceed those of many countries, while technology, communities, crypto, and stablecoins could give rise to network states. It is “an upgraded version of anarchism,” and experiments in non-sovereign territory already exist.
Reality has compromised with the original anti-establishment ideal. Crypto in the US rapidly changed from “a universally condemned rat crossing the street” into a “hot commodity” in the eyes of the Trump administration. An industry that once sought to escape the sovereign order now wants to use the world’s strongest state to accelerate its expansion.
Zheng Di judged that cyberspace without major-power backing would remain small. If the US supports it while international coordination collapses under conflict, it could instead flourish on an unprecedented scale. Russia’s embrace of BTC mining and payments because its foreign reserves can be frozen shows that as confrontation intensifies, countries may collectively need a medium outside the old system.
23. Gold’s Fractional-Reserve Structure Makes a “Gold MicroStrategy” Difficult
Drawing on his experience as a gold analyst, Zheng Di said roughly 90% of accounts in the London gold market use unallocated, pooled custody, while only about 10% are allocated and separately stored. Much of the trading is merely book-entry gold; inventory constraints emerge only when physical delivery is demanded.
Even when BTC is held through pooled custody at Fidelity, Coinbase, or elsewhere, it can still be tracked by on-chain firms such as Arkham; exchanges also broadly adopted proof of reserves after FTX. Gold has no on-chain record or Merkle tree, while central banks do not disclose how much physical gold remains after leases and swaps.
Physical delivery is also more cumbersome. Gold held in shared vaults such as the New York Fed can be settled by moving bars from one truck in Britain to another in France; cross-border transport introduces time, security, and authenticity risks.
Gold can also be mixed with tungsten or iridium, with liability difficult to establish if the problem is discovered after the bars leave the bank counter. BTC’s authenticity can be verified once it is withdrawn from a CEX onto the chain. Zheng Di therefore called BTC “a better form of gold” in traceability, transparency, transferability, and payment performance.
24. Gold Is Not a Safe Haven in a Liquidity Crisis; Central Banks Are Its Market Maker of Last Resort
Zheng Di recalled that in February 2020, gold “suddenly fell 7% when it was supposed to rise,” while gold lease rates spiked, suggesting institutions were borrowing gold to sell. In November 2008, the rate at which central banks lent gold also rose from the normal roughly 0.1% to a historical high of about 2.5%.
His conclusion was that in a liquidity crisis, both gold and BTC become ATMs. The true safe havens are usually short-term US Treasuries and the yen. The yen is heavily borrowed in normal times and must be repaid during a crisis, while gold falls under the pressure of cash demand and lease-driven selling.
Global central banks nominally hold roughly 33,000 metric tons of gold, enough to act as lender of last resort: when banks or market participants cannot deliver, central banks can lend reserves to prevent a localized run from becoming a systemic default, making it difficult for a single hoarder to corner the market.
In 1979–1980, the Hunt brothers borrowed money to accumulate silver, driving the price from roughly $3 to $50 and accounting for 60%–70% of trading volume before rules and government intervention broke the move. Position-reporting requirements were strengthened afterward. The guests concluded that anyone trying to drive gold or silver higher using the MicroStrategy model would be entering the deep waters of traditional finance.
25. BTC’s Advantage Comes From Consensus, but Quantum Computing, Paper BTC, and Alternatives Remain Long-Term Constraints
BTC’s short-term advantages are algorithmic scarcity, on-chain authenticity, and instantaneous transfer. Gold is scarce only on Earth, while the asteroid belt may contain enormous resources. The guests also warned that traditional finance does not yet have enough vested interest in BTC; if the price reaches $800,000–$1M, more off-chain “paper BTC” could emerge.
Zheng Di identified quantum computing as a risk that gold does not face: in his view, a quantum computer capable of attacking existing elliptic-curve cryptography could emerge within 10–15 years. BTC can be upgraded, but miners may delay because of sunk mining-machine costs, potentially waiting until the hypothetical 2035 threat is near before accepting a hard fork.
Applying the same corporate-finance techniques to hoard ETH, SOL, or other assets is not impossible, but they resemble technology stocks and must contend with fees, traffic, use cases, and competition. ETH has also been diverted this cycle by SOL and Meme activity. Limited supply alone is insufficient: LTC, BCH, and other similar designs have not replicated BTC’s consensus.
Institutional adoption remains early. Zheng Di would first use GPT, Grok, and DeepSeek to research the facts and demand sources, then look at the real-money trend on Polymarket. Before the vote on Microsoft’s reserve proposal, the relevant probability had already fallen to roughly 12%. The probability of a US national reserve had also declined; he leaned toward it being “a two- or three-year matter,” potentially beginning with state-level reserves.