MicroStrategy disrupts private equity! $21 billion creates a permanent Bitcoin capital engine

Saylor issued another Tracker message on January 4th, expecting to reveal increased holdings data this week. MicroStrategy owns 672,497 Bitcoins, with a cost basis of $50.4 billion and a market value of $61.4 billion. In 2025, MicroStrategy plans to raise $21 billion through digital equity and credit to convert Bitcoin into institutional-grade collateral.

Permanent Capital Engine: Redefining the Private Equity Playbook

MicroStrategy’s innovative model completely disrupts the traditional private equity operating logic. Jain explains that over the past decade, private equity has attempted two main goals: directly raising funds from retail investors and establishing ongoing or perpetual funds. However, most attempts have failed because the closed-end structure of private equity funds inherently limits liquidity and capital sources.

MicroStrategy has successfully achieved these goals by obtaining permanent capital through listing securities on NASDAQ. The core advantage of this approach is that it bypasses the cyclical capital raising challenges of traditional private equity. Traditional private equity funds typically have a 7 to 10-year lock-up period, during which they cannot raise new capital at will. MicroStrategy, however, can continuously issue stocks and bonds in the open market, creating a perpetual capital inflow mechanism.

More importantly, this model democratizes access to alternative investment products. Traditional private equity funds often set minimum investment thresholds of several million dollars, excluding retail investors. As a publicly listed company, MicroStrategy allows any investor to participate in Bitcoin investments by purchasing its stock, enjoying leveraged Bitcoin exposure. This “retail accessibility” is something traditional private equity cannot offer.

From a capital efficiency perspective, MicroStrategy’s model also demonstrates significant advantages. Private equity funds typically pay high management fees (usually 2%) and performance fees (usually 20%), whereas MicroStrategy benefits from lower costs of financing through public markets. More importantly, the liquidity of public markets allows MicroStrategy to flexibly adjust its financing pace according to market conditions—accelerating purchases when Bitcoin prices are low and moderating when prices are high.

Digital Equity and Digital Credit: The Institutional Transformation of Bitcoin

Jain describes 2025 as the “Year Zero” for digital credit, focusing on establishing, launching, and expanding Bitcoin-backed credit products amid Bitcoin market volatility. Digital equity and digital credit are the two pillars of MicroStrategy’s model, repositioning Bitcoin as an institutional-grade collateral.

Digital equity allows investors to leverage Bitcoin exposure through MicroStrategy’s capital structure. When investors buy MicroStrategy stock, they are essentially purchasing a leveraged version of a Bitcoin investment portfolio. Since MicroStrategy uses debt and preferred stock financing to buy Bitcoin, its stock price is far more sensitive to Bitcoin price movements than directly holding Bitcoin. This leverage amplifies gains when Bitcoin rises but also magnifies losses when it falls.

Digital credit offers Bitcoin-backed lending services, which is a more innovative area. Traditional financial institutions generally do not accept Bitcoin as collateral due to high volatility and regulatory uncertainty. MicroStrategy’s capital structure innovation effectively transforms Bitcoin into an asset capable of supporting credit issuance. This transformation is profound because it opens up entirely new financial applications for Bitcoin.

Three-tier Financing Structure Supports Continuous Buying

Common Stock Issuance: Continual issuance of common stock through ATM (At-The-Market) programs to raise funds without significantly impacting market prices. This method allows MicroStrategy to adjust its issuance pace flexibly based on market conditions.

Preferred Stock Issuance: The $2.5 billion perpetual preferred stock issuance in 2025 was one of the largest single transactions in an IPO in the US that year. Perpetual preferred stock has no maturity date, reducing MicroStrategy’s repayment pressure while providing investors with stable dividend income.

Convertible Bonds: Issuance of low-interest or zero-interest convertible bonds to attract investors optimistic about Bitcoin’s long-term prospects. These bonds can be converted into MicroStrategy stock at maturity, reducing cash repayment pressure.

As of the time of writing, MicroStrategy has accumulated approximately $15 to $16 billion in financing through debt and preferred stock, with extremely high leverage exposure to Bitcoin. This explains why analysts believe the company could trigger the next “Black Swan” event in the crypto space in 2026. If Bitcoin prices drop sharply, MicroStrategy may face debt repayment pressures and a chain reaction of stock price crashes.

2026 Year Zero and the Unresolved MSCI Risk

Jain defines 2026 as MicroStrategy’s “Year Zero,” marking the transition from experimental to full deployment phase. This shift reflects increased Bitcoin liquidity, improved market infrastructure, and growing familiarity among investors with crypto-supporting financial instruments. MicroStrategy is no longer just a software company or alternative investor but the world’s largest corporate Bitcoin asset manager.

However, the issue of MSCI potentially excluding MicroStrategy remains an unresolved concern. MSCI’s consultation document regarding the listing of Digital Asset Trusts (DAT) could lead to MicroStrategy being excluded from major indices. If this occurs, large passive funds may be forced to sell MicroStrategy shares, triggering a sharp decline in its stock price. This systemic risk is the biggest external threat to MicroStrategy’s model.

The upcoming release of the increased holdings data this week will provide important clues about MicroStrategy’s latest strategic direction. If the increase is significant, it will confirm Saylor’s strong confidence in Bitcoin’s long-term prospects; if the increase slows, it may indicate the company is waiting for more favorable market conditions or facing financing pressures. Investors should closely monitor the Tracker updates, as they not only influence MicroStrategy’s stock price but also serve as an important market sentiment indicator for Bitcoin.