The Breakdown - MicroStrategy’s Big Buy Raises New Questions

Episode Date: December 10, 2025

Today’s episode examines Washington’s increasingly public admission that the market-structure bill is stuck, with key senators signaling that negotiations have become frustrating and unlikely to resolve this year. From there the focus turns to MicroStrategy’s return to large-scale Bitcoin purchases, the funding mechanics behind it, and the growing debate over whether the company is executing long-term strategy or edging into risk. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Tuesday, December 9th, and today we are talking about a micro-strategy by, some banking controversy, all the normal things in crypto. Before we get into that, however, if you're enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, let's follow up today with some coverage on the lack of progress for the market structure bill from Monday's show. Senator Bernie Moreno has said that the negotiations have become, in his words,

decently frustrating. Moreno appeared at the Blockchain Association event on Monday to give a status report on the bill. Democrats and Republicans are set to meet again today, but Moreno doesn't seem hopeful. He said, we'll see where their heads are at, but it's been decently frustrating in the last couple weeks. His comments align with views recently expressed in the industry stating, What I don't want to do is promulgate a bad bill just to say that we pass something. No deal is better than a bad deal. From the Democrat side of the House, Eleanor Territ, the host of Crypto in America, spoke with Senator Mark Warren on Monday. Warner told her it would be, quote, very hard to get market

structure to a mark appearing by the end of the year. He blamed the White House, stating that Congress is waiting on acceptable language around ethics and quorum. He quipped, at some point, our Republican colleagues are going to have to decide if this is a White House bill or a congressional call. Still, Warner commented that staff and lawmakers are meeting every day for hours, and that a bill will get done, they just need to, in his words, get it right. Pretty clear that this is not happening this year. Now they're officially saying it, don't hold your breath is my take. Moving back to one of the most perpetual stories of Bitcoin in the last few years. After several months of undersized Bitcoin buying, Micro Strategy is returning to the market in size. Micro Strategies Bitcoin buying slowed down in

recent months as the stock price tanked and funding became scarce. Last week, Micro Strategy announced that they had instead raised money to fund a $1.4 billion cash reserve that would ensure they could meet their dividend and debt obligations for the next two years. At the same time, they reduced their targets for the end of this year, now aiming to produce between 22 and 26% Bitcoin yield. The stock has recovered slightly, but more importantly, the market believed the cash reserve would guarantee dividend payments were made on preferred stock. The stretch perpetual shares are now trading at 98.5 cents on the dollar after falling as low as 92 cents in late November. With a bit of funding power restored, Micro Strategy went wild last week.

They bought $962 million worth of Bitcoin their largest purchase since July. SEC filing said the purchase was funded from at-the-market share sales of common stock, as well as shares of the Stride Preferred stock. The Stride Preferred are the highest-risk securities in Micro Strategy's stack. They offer a 10% fixed-rate dividend, but MicroSratology doesn't guarantee that they'll catch up on payments if they miss a quarterly distribution. A distribution has never been missed, but the market is currently valuing these securities at 80 cents on the dollar. 928 of the $963 million was raised by selling common stock, so it's not as though Micro Strategy is stretching to their risky instruments for high-cost

funding in bulk. Still, it is interesting to see them tap the relatively high-cost funding that gives them the lowest consequence ability to default. Even more interesting, Micro Strategy stock is currently trading at just 1.1 times the value of their Bitcoin Treasury or MNAV, so they're pushing the limit on shared dilution. Former city crypto lead Joseph Ayu wrote, only six months ago, Saylor said purchases would only occur above 2.5 MNAV. Continued share dilution would push MNAV below one, increasing the likelihood of Bitcoin sales and share buybacks. The hubris is astounding. Daniel Movdi, the head of markets at Quant Fury wrote,

I will rephrase this. Every stretch stock he sells gives Saylor the obligation to pay 10% with more likely micro-strategy stock every year, perpetually. This increases the risk of selling Bitcoin at some point. Aside from buying almost a billion in Bitcoin, Michael Saylor was on stage in Abu Dhabi at the Bitcoin Mina event to lay out the next step in his plans. Sailor suggested that countries should create Bitcoin reserves and issue credit instruments against them to create high-yield bank accounts. So essentially, micro-strategy preferred stock but for nation states. Sailer described reserves with 80% Bitcoin, 20% fiat currency, and a 10% cash reserve buffer to reduce volatility. He suggested these high-yield credit instruments could be offered through a regulated bank

and over-collateralized 5-1 with a sovereign treasury entity. Sailer said the accounts could attract 20 to 50 trillion in inflows and make any country that adopts them the, quote, digital banking capital of the world. You'll note that this digital bank idea mirrors micro-strategy's capital stack almost exactly. However, micro-strategy only holds around 2% of their treasury and cash as a buffer. Legacy, internet, and infrastructure are brittle, plagued by downtime, coverage gaps, and outdated financing models. Communities and builders are left behind while capital sits locked out. Althea is changing that. Since 2018, their technology has powered resilient, sustainable networks across the U.S. and abroad.

With Althea L1, they built the world's first blockchain purpose-built for utilities and telecom, turning infrastructure into a transparent, investable asset class. Through liquid infrastructure, networks can now be financed in real time, operated more efficiently and scaled to meet the $3 trillion telecom and utilities market. This is fintech for infrastructure, connecting capital directly to builders and returning revenue seamlessly to funders. No middlemen, no bottlenecks, just sovereign, resilient infrastructure that works for people, communities, and investors alike. Learn more at Althea.net and find them on Crackin to join the future of infrastructure finance.

Now, this isn't necessarily just an idle idea, especially when it's presented to a crowd in Abu Dhabi. Sailor said, I've been meeting with all the sovereign wealth funds, 100 different hedge funds in family offices, people who run banks. I've been meeting with regulators in every jurisdiction. My message is very straightforward. We now have digital capital. Bitcoin is digital capital, digital gold. On top of digital capital, we have a new asset class called digital credit. Digital credit strips the volatility from the capital and provides yield.

And while there are still a ton of micro strategy believers, for others the story is getting a little old. TXMC trades tweeted, shameful nonsense. I'm kind of glad we have Sailor because he's a great litmus test for deciding who in this space can be taken seriously and who is a mouth-breathing clown. The Sailor lens is sort of truth-teller. Now, ultimately, the micro-strategy story isn't about narrative. Saylor is presenting credit instruments that purport to pay 10% per year forever due by monetizing their

Bitcoin stack. All the narrative in the world doesn't matter if micro-strategy can't hit that mark. James Butterfield, the head of research at coin shares recently wrote about the deflating bubble in crypto treasury companies, or DATs, with his core point being that this is the moment where the bad ideas are getting sorted from the good. He wrote, Dats were born from a sensible idea, corporate's diversifying treasury reserves away from fiat currencies and toward digital assets. But the rapid expansion of token treasuries, shareholder dilution, and the pursuit of token per share growth at all costs have diluted that purpose. As the bubble deflates, the market is re-evaluating which companies genuinely fit the DAT model and which we're simply riding momentum.

The future of DATs lies in returning to fundamentals, discipline treasury management, credible business models, and realistic expectations about the role of digital assets on corporate balance sheets. The next generation of DATs will look far more like the companies envisioned at the beginning, stable, global businesses using digital assets strategically and not opportunistically. Ultimately, that's the question being posed in the market. Is Michael Saylor a master strategist thinking in generations, or an opportunist who flew a little too close to the sun? Now, switching to a more normal version of crypto banking, the OCC has said that there is no reason to discriminate against crypto institutions when issuing bank charters.

During an appearance at the Blockchain Association Policy Summit in D.C., OCC head Jonathan Gould acknowledged that crypto banks could be viewed as offering novel services. However, he added, custody and safekeeping services have been happening electronically for decades. He added, there is simply no justification for considering digital assets differently. Additionally, it is important that we do not confine banks, including current national trust banks, to the technologies or businesses of the past. Now, of course, in the previous era, crypto banking was seen as risky enough to be disqualifying. There are only two banks involved in crypto that have managed to attain federal banking charters.

Anchorage Digital, who obtained their charter in 2021, before the Biden administration turned hostile, and new startup bank, Aribor who received their preliminary approval this October. The big takeaway from the speech was that crypto banks don't need new rules or special hurdles, they just need charter approval and the same regulatory standards as everyone else. Goal said the OCC currently has 14 new applications to start a bank, including some that are engaged in crypto activities, which likely include Circle, Coinbase, and Ripple, along with several other fintechs and crypto institutions. Now, of course, the banking industry is no fan of all of this, although Gull noted that they

are hearing from traditional banks on a nearly daily basis to discuss regulatory approval for new fintech and crypto products, and honestly signs for approval. on these new charters are getting more encouraging. Gould concluded, All of this reinforces my confidence in the OCC's ability to effectively supervise new entrants, as well as new activities of existing banks in a fair and even-handed manner. Now, while the OCC doesn't see any special risk in crypto banking, Fitch Ratings doesn't view it the same way. The ratings agency has warned that it may reassess banks with significant crypto exposure negatively. In a new report, they argued that although crypto integrations can

add yields and efficiency, they also pose a, quote, reputational, liquidity, operational, and compliance risk. The report has echoes of statements from banking regulators in the past. Reputational risk, for example, was specifically banned as a criteria for bank examinations earlier this year and stripped from the handbooks. Fitch also seems to be lumping all crypto activities into the same bucket. A bank that offers tokenized deposits in stablecoin settlement, say, for example, J.P. Morgan, is being painted with the same brush as a bank that's holding Bitcoin as a reserve asset. Fitch highlighted that JPMorgan Chase, Bank of America, City Group, and Wells Fargo are all getting involved in the crypto sector, seeming to deliver a

warning that they would be reassessed. Now, a downgrade can raise the cost of funding or even make it impossible to issue investment-grade bonds. And while access to capital for these megabanks, will likely never be a problem, and Fitch probably isn't going to downgrade J.P. Morgan for settling in stable coins, if Fitch decides to start downgrading smaller banks for touching crypto, it could cause a significant chilling effect just as adoption gets started. I don't know, man, I think that as much as many parts of the business world have come over to crypto, this cycle never really recovered the narrative all that much from the destruction of 2022. And it feels like there could be some tough times ahead. We will have to see, but for now, that's going to do it for today's

breakdown. Appreciate you listening as always. And until next time, be safe and take care of each other. Peace.