Bitcoin Investment Strategy • Portfolio Management • Risk Optimization
BTC-Centric Thesis
Cold Storage + Tactical Exposure = 80/20
Portfolio Composition
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80% BTC (Cold Storage)
Long-term asymmetric bet on Bitcoin as pristine collateral and digital gold.
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20% Tactical Allocation
- Split between MSTR, MSTU (2x long MSTR), and MSTX (2x long MSTR from Defiance)
- Potential satellite exposure to BMAX for yield and convexity via BTC-related convertibles
Strategic Logic Behind the Allocation
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80% BTC (Cold Storage)
Objective: Preserve wealth over the long arc of monetary debasement cycles.
Cold Storage Thesis:
- Immunity to exchange risk
- Self-custody aligns with sovereign individual principles
- “Don't trust, verify” layer of the thesis
- Bitcoin remains the base layer of digital trust and the denominator of this strategy
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20% MSTR / MSTU / MSTX
Leverage on BTC without selling BTC
| Ticker | Role | Benefit | Risk |
|---|---|---|---|
| MSTR | Spot BTC proxy with operational leverage | Long exposure to BTC with embedded optionality via Saylor's strategy and BTC on balance sheet | Company-specific risks, dilution |
| MSTU | 2x daily long MSTR | Tactical tool for bullish conviction surges | High risk due to daily rebalancing decay |
| MSTX | Alternative 2x long MSTR | Competes with MSTU, possibly better fees or options liquidity | Similar decay and compounding effects |
Purpose of Leveraged MSTR ETFs (MSTU, MSTX):
- Enhance upside during BTC bull trends without liquidating BTC holdings
- Tactical exposure tool for expressing short-term directional conviction
- Use sparingly, ideally with stop-loss automation or delta hedging to manage risk
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Optional: BMAX – Income + BTC-Linked Exposure via Convertibles
Thesis:
Exposure to BTC-tied companies' convertibles offers:
- Yield from corporate credit
- Embedded call options (convertibility)
- Convex exposure to upside while earning passive yield
Complement to MSTR/MSTU:
- Helps smooth out portfolio volatility
- Earns yield while still aligned with BTC-heavy firms like MicroStrategy
- Could be especially useful in sideways markets where volatility premiums are high
Investment Narrative Summary
“This portfolio anchors 80% in cold-stored BTC—your core asset of conviction and sovereignty. The remaining 20% dynamically tracks Bitcoin's upside through leveraged equity exposure (MSTR via MSTU/MSTX), enhancing gains during bull markets without needing to sell BTC. BMAX offers a yield-bearing hedge that aligns with BTC thesis via convertible debt from BTC treasury-rich firms.”
BTC Tactical Barbell Allocation Strategy (80/20 Model)
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Core Allocation (80%)
- Asset: BTC (cold storage)
- Objective: Long-term capital preservation and appreciation
- Notes: Sovereign-grade asset, self-custodied, zero counterparty risk
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Tactical Allocation (20%)
| Ticker | Type | Yield | Volatility | Upside | Role in Portfolio |
|---|---|---|---|---|---|
| MSTR | Common Stock | 0% | High | High | BTC proxy with operating leverage |
| MSTU/MSTX | 2x Leveraged MSTR ETFs | 0% | Very High | Very High | Short-term bullish BTC proxy |
| MSTY | MSTR Option Income ETF | ~35% TTM | Medium | Moderate | Income + moderate BTC upside |
| IMST | Synthetic Covered Call ETF (MSTR) | ~3% SEC Y | Medium | Limited | Conservative income from MSTR exposure |
| STRK | MSTR 8% Preferred Shares | 8% Fixed | Low | None | Income stability, lower volatility |
| STRF | MSTR 10% Preferred Shares | 10% Fixed | Low | None (Callable) | Higher yield, callable risk |
| BMAX | BTC Treasury Convertibles ETF | Variable | Medium | Moderate | Yield + BTC-tied bond convexity |
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Suggested Tactical Allocation Breakdown (20%)
| Category | Allocation | Purpose |
|---|---|---|
| High Conviction Beta (MSTR/MSTU/MSTX) | 5% | Capture BTC upside with leverage |
| Yield + Beta (MSTY + IMST) | 6% | Generate income, maintain MSTR linkage |
| Stability / Cashflow (STRK + STRF) | 5% | Downside protection, fixed yield |
| Strategic Convexity (BMAX) | 4% | Bond-style BTC exposure with upside |
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Rebalancing Framework
| Market Condition | Allocation Strategy |
|---|---|
| BTC Bull Market | Tilt to MSTU/MSTX, reduce IMST/STRF |
| Sideways BTC | Favor MSTY, IMST, STRK |
| BTC Volatility Spike | Rotate into STRF, IMST, reduce leverage (MSTU/MSTX) |
| Post-Earnings MSTR | Hold MSTU/MSTX short-term to capture drift |
| Macro Risk Event | Increase BMAX, STRK; reduce leverage |
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Summary Thesis
“Store 80% in cold BTC as sovereign-grade collateral. Deploy the remaining 20% dynamically across high-beta, yield-enhancing, and downside-protected instruments. Use MSTR as a liquid BTC proxy, MSTU/MSTX as turbo leverage, MSTY/IMST for yield, and STRK/STRF/BMAX for defensive positioning.”
The Infinite Money Glitch Strategy
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Individual Approach
- Own Bitcoin
- Secure low-interest DeFi loans using Bitcoin
- Buy MSTY during optimal market conditions
- Use MSTY dividends to repay the loan
- Take out another low-interest DeFi loan
- Repay the new loan ~2x faster (with roughly double the MSTY shares)
- Repeat until achieving desired passive income
Strategy: Arbitrage low DeFi loan rates against MSTY dividends. NAV erosion is irrelevant since you're using borrowed capital.
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LLC Protection Strategy
- Form a L.L.C.
- L.L.C. Own Bitcoin
- L.L.C. Secure low-interest DeFi loans using Bitcoin
- L.L.C. Buy MSTY during optimal market conditions
- L.L.C. Use MSTY dividends to repay the loan
- L.L.C. Take out another low-interest DeFi loan
- L.L.C. Repay the new loan ~2x faster (with roughly double the MSTY shares)
- L.L.C. Repeat until achieving desired passive income
Key Benefit: L.L.C. protects Individual if L.L.C. goes bankrupt.
Important: This strategy involves significant risks including but not limited to:
- DeFi protocol risks and smart contract vulnerabilities
- Interest rate fluctuations
- MSTY dividend variability
- Market volatility and liquidation risks
- Regulatory considerations