JPMorgan Chase: Issuing debt to buy Bitcoin will increase the risk of bubbles! MicroStrategy issues another 500 million convertible bonds

MicroStrategy (MSTR), a software development company whose main business is Bitcoin, issued convertible bonds for the second time this month, and the conversion price has reached as high as US$2,327. MicroStrategy’s continuous issuance of debt to purchase Bitcoin has also made JPMorgan Chase very worried, believing that this kind of leverage behavior will exacerbate the risk of bubbles.

MicroStrategy issued bonds for the second time this month

MicroStrategy announced that it will issue convertible senior notes due in 2031 with an aggregate principal amount of US$525 million to qualified institutional buyers. Private placement, issuance conditions are as follows:

• Maturity date: Due on March 15, 2031
• Coupon rate: 0.875%
• Interest payment date: every Interest is paid semi-annually (March 15 and September 15 each year)
• Conversion price: USD 2,327.21
• Can be sold back at the original price (100) after 2028/9/15 Sell ​​Back Notes

Although the coupon rate of this convertible bond is slightly higher than the last time of 0.625%, the conversion price has reached as high as US$2,327, and the conversion price of the last issuance was US$1,498.

JPMorgan Chase warns that micro-strategy leverage exacerbates bubble risks

According to Decrypt, JPMorgan Chase issued a report concerned about the way micro-strategy buys Bitcoin: Micro-strategy’s debt-financed Bitcoin purchases Adding to the leverage and frothiness of the current cryptocurrency rally, and increasing the risk of more severe deleveraging during potential future downturns!

MicroStrategy has accumulated 205,000 Bitcoins, which is worth approximately $14 billion at current market prices. That’s not far off the $15.9 billion net asset value of BlackRock’s Bitcoin spot ETF IBIT. With the micro-strategy style, once the bond issuance plan is successfully completed, it will definitely go to the market to buy more Bitcoins. This kind of borrowing to buy Bitcoin is the leverage and bubble risk that JPMorgan Chase is worried about. Graduation Micro Strategy In the crypto bear market, when the price of Bitcoin was low, the stock price hovered at US$140 for a long time, which was the same as yesterday’s closing price of US$1,782. The difference is more than ten times.

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