October2024 - BTC | Bitcoin Structured Products

Based on Microstrategy’s offerings different risk profile investors can use different products

Low Risk Products:

• Fixed Income Bonds
  • Target: Conservative investors seeking steady returns
  • Features: Fixed interest rates around 7%
  • Lower volatility (5-10%)
  • Senior position in capital structure
  • Suitable for fixed income funds and retirees
• Convertible Bonds
  • $4.2 billion issued at 0.8% interest
  • Offers ~50% of Bitcoin upside with limited downside
  • 4x overcollateralized
  • Appeals to risk-averse investors wanting some Bitcoin exposure

Medium Risk Products:

• MicroStrategy Stock (MSTR)
  • Core offering with 150% Bitcoin exposure
  • Trades at premium to Net Asset Value
  • 50-80% volatility
  • Permanent capital structure
  • Targeted at long-term Bitcoin believers

High Risk Products:

• Derivative Products (MSTU/MSTX)
  • 2-3x leverage on MicroStrategy stock
  • Approximately 3x Bitcoin exposure
  • Higher volatility than underlying stock
  • For sophisticated investors seeking amplified returns
• Options Market
  • Up to 10-20x leverage
  • $40 billion in open interest
  • Extremely high volatility
  • For “degenerate traders” seeking maximum exposure
  • Both long calls and short puts available

This spectrum allows MicroStrategy to serve as a “Bitcoin securities company” that can transform “crude” Bitcoin capital into various financial products matching different risk appetites and regulatory requirements in traditional finance.

The diagram illustrates:

• A gradient background representing increasing risk levels from left to right
• Five main product categories organized by risk level
• Key characteristics and metrics for each product
• Arrows showing the progression and relationships between products
• Clear separation between low, medium, and high-risk offerings

The visual layout helps demonstrate how MicroStrategy has created a complete ecosystem of Bitcoin-based financial products catering to different investor profiles, from conservative fixed-income seekers to aggressive traders seeking maximum leverage.