Why is MicroStrategy betting big on Bitcoin? An in-depth analysis of its financial operations and risk management

Source: WEB3 101

Organizer: Lyric, ChainCatcher

Editor's Note: In this interview, Silicon Valley 101 podcast host Hongjun Jane, researcher Liu Yiming, and guests Zheng Di and Liu Feng mainly discussed topics such as: Is MicroStrategy facing liquidation risk? How to view MicroStrategy's Bitcoin investment strategy, and is it worth imitating? How to view the U.S. intention to siphon global liquidity with dollar stablecoins? ChainCatcher has organized the text, hoping to inspire readers.

There may be slight errors in the audio transcription. Please listen to the complete podcast:

WEB3 101:

https://web3101.fireside.fm/49

1. How to view MicroStrategy as a stock?

Zheng Di's view: MicroStrategy is essentially a speculative stock, its selling point is not the stock value, but the volatility. The company relies on a combination of stock and bond financing, primarily depending on bond issuance and cash reserves in the previous cycle, with software business cash flow being decent enough to support bond interest payments. In this cycle, due to poor cash flow, it has turned to issuing a large amount of convertible bonds with very low interest rates, and has utilized a special mechanism in the U.S. stock market—ATM to issue new shares, selling directly in the secondary market at market price without needing to find specific investors. Its capital market operation logic is: when leverage is low, the premium is low; by borrowing to buy Bitcoin and increasing leverage, it attracts two types of investors: those who cannot buy Bitcoin ETFs and hedge funds seeking volatility and expecting larger gains. After leveraging, during a Bitcoin bull market, the company's valuation premium rises, reaching a maximum of 300% in the last bull market and exceeding 100% in this round. However, as the market discovered its large stock issuance, the stock price gradually fell, running inversely to the coin price, and the premium narrowed, leading to a decrease in leverage.

2. How does MicroStrategy finance itself? What is the underlying mechanism?

Zheng Di's view: MicroStrategy finances itself through a combination of stocks and bonds. In the previous cycle, it primarily relied on bond issuance and cash reserves, also issuing some ordinary bonds and convertible bonds. At that time, its software business had good cash flow, sufficient to pay bond interest. Analysts had valued its software business at between $500 million to $1 billion, with an estimated valuation of about $1.2 billion in the last cycle. MicroStrategy used its own cash flow to pay bond interest.

However, the situation has changed dramatically in this cycle, with cash flow being poor or even negative, and cash reserves depleted. Therefore, this cycle it no longer issues ordinary bonds but instead issues a large amount of convertible bonds with very low interest rates. At the same time, MicroStrategy has extensively used the ATM (At-The-Market) mechanism to sell stock. The U.S. stock market allows listed companies to issue new shares directly in the secondary market at market price after obtaining approval, with investment banks or brokers assisting in sales. At the end of October last year, MicroStrategy was approved to issue $21 billion in new shares, with its 420 plan including $21 billion in bonds (mainly convertible bonds and perpetual preferred stock) and $21 billion in stock (mainly ATM).

MicroStrategy's capital market operation logic is: when leverage is low, the premium is relatively low because investors buy MicroStrategy stock for its leverage. Before a bull market, it must aggressively increase leverage, i.e., borrowing to buy Bitcoin. After leveraging, if Bitcoin rises, its valuation premium will increase. In the last bull market, its premium reached a maximum of 300%, and in this round, it exceeded 100%. The rise in premium is due to two types of investors: those who cannot buy ETFs and those seeking volatility, especially hedge funds. However, when the leverage ratio reaches a certain level, the sustainability of debt becomes a concern, and the market will worry about its ability to continue issuing debt.

In this round, MicroStrategy smartly used ATM; during the Bitcoin upcycle, stocks are easy to sell, allowing for the quick sale of large amounts of stock to buy Bitcoin. However, this leads to a gradual decline in stock prices, running inversely to the coin price, causing the premium to decrease and leverage to lower.

3. Why is MicroStrategy's stock popular? What is its selling point?

Zheng Di's view: First, although Bitcoin ETFs have been approved, many institutions and individuals still cannot purchase them. For example, domestic RMB funds cannot buy Bitcoin ETFs through total return swaps (TRS) but can purchase stocks like MicroStrategy. Institutions like Korean pensions are in the same situation. Therefore, MicroStrategy provides an indirect way for these investors who cannot directly purchase Bitcoin ETFs to participate in the Bitcoin market, which is one reason for its premium formation.

Secondly, another major selling point of MicroStrategy is its leverage effect. Its stock price increases far exceed that of Bitcoin itself, attracting investors seeking higher returns. Michael J. Saylor pointed out that even if investors can buy Bitcoin ETFs, they should choose MicroStrategy because MicroStrategy essentially acts as an asset with an implied option. The higher its volatility, the higher the value of the implied option. In the U.S. stock market, it is difficult to find an asset like MicroStrategy that has high liquidity and high volatility. Therefore, it is viewed as a quality Bitcoin call option.

MicroStrategy's success also lies in its strong financing ability. The company can continuously finance and purchase Bitcoin, and this model is not simply about Bitcoin investment but relies on strong financing capabilities, which stem from the sales ability of its leader. Michael J. Saylor, as the company leader, can spread his ideas like a missionary and sell stocks. This unique business model and leadership make MicroStrategy difficult to imitate globally, forming the core of its unique advantage.

4. Does MicroStrategy face liquidation risk?

Liu Feng's view: MicroStrategy began purchasing Bitcoin in 2020, using several hundred million dollars of free cash from its commercial software business. In February 2021, the company issued $1 billion in zero-coupon convertible bonds with a six-year term to continue purchasing Bitcoin. At that time, the market had entered a bull market, and MicroStrategy's move sparked controversy, but the company still acted boldly. By the end of 2022, Bitcoin's price fell from $70,000 to less than $20,000, putting the company under immense pressure. Nevertheless, the company financed itself through stock issuance to buy low-priced Bitcoin, indicating their strong confidence in Bitcoin.

MicroStrategy's liquidation risk mainly depends on its debt structure and Bitcoin price. The company's rigid debt maturity dates are in 2028 and 2029, with debts of $1 billion and $3 billion, respectively. As long as the company can repay these two debts, there is no liquidation issue. Although Bitcoin prices are highly volatile, considering its cyclicality, the company still has time to respond. Even if Bitcoin prices fall below $60,000 or lower in the future, the company still has a chance to recover in the next bull market. Therefore, at present, MicroStrategy's debt risk is not significant, and its long debt maturity provides the company with room for dynamic adjustments.

The decline in MicroStrategy's stock price may affect its financing ability, but traders do not price stocks solely based on net assets. If the market suddenly discovers that Bitcoin prices are extremely low when debts are due in 2028 and 2029, it may have a significant impact on stock prices. However, at present, a sharp decline in Bitcoin prices will not fundamentally affect the company's operating model. Creditors typically do not demand liquidation due to a drop in Bitcoin prices, as this would lead to losses for both parties.

Zheng Di's view: In the last bear market, MicroStrategy faced more severe problems than now, with the company's net assets being negative and the market in extreme panic. However, initiating liquidation procedures is not easy; negative net assets are not a rigid condition. The company's rigid debt maturity dates are far off, and no creditor can force the company to liquidate immediately. Additionally, Michael J. Saylor holds nearly 48% of the voting rights in the company, making it difficult for any liquidation proposal to pass. Although shareholders may have incentives to propose liquidation in certain situations, Saylor's voting power advantage makes such scenarios unlikely.

Market confidence in MicroStrategy also stems from the trend of Bitcoin as a reserve asset. Although some U.S. states have rejected Bitcoin reserve proposals, sovereign funds globally have begun entering the Bitcoin market. For example, Abu Dhabi purchased hundreds of millions of dollars in Bitcoin ETFs. This trend has just begun, and more institutions and sovereign funds may consider Bitcoin as a reserve asset in the future. Therefore, MicroStrategy will not face the risk of forced liquidation or forced sale of Bitcoin, as its main debt maturity dates are far off, and the market still has confidence in its future.

5. How to view MicroStrategy's strategy, is it worth imitating?

Zheng Di's view: MicroStrategy's strategy is unique and difficult to replicate. Although Japan's MetaPlanet and some companies in the Hong Kong stock market have attempted to imitate it, none have reached MicroStrategy's premium level, and many are even at a discount. One main reason is that MicroStrategy is located in the U.S. stock market, enjoying the largest liquidity globally, which allows its premium to be pushed up by the market. In contrast, the Japanese and Hong Kong stock markets are regional markets with limited liquidity, making it difficult to replicate such high premiums. The second most important reason is that MicroStrategy has Saylor as its leader, who actively spreads his ideas through roadshows, broadcasts, and long videos on YouTube, attracting a large number of investors with his high personal brand influence. He can be considered an IP, a cult-like sales leader. Other imitators lack such a powerful leader with significant influence.

Compared to general marketing strategies, MicroStrategy's strategy is very unique; it does not emphasize value investing but highlights its volatility and speculation. It emphasizes that even if investors can buy Bitcoin ETFs, they should choose MicroStrategy because it has leverage and implied options, with trading volumes far exceeding other related markets. This strategy attracts a large number of speculators and hedge funds, rather than traditional value investors.

6. How did Michael J. Saylor go from infamy to Bitcoin guru?

Zheng Di's view: Michael J. Saylor had a poor market image over the past 20 years; in 2001, he became infamous due to an accounting scandal, and MicroStrategy fell into trouble as a result. However, he successfully transformed his image by vigorously marketing the Bitcoin business, becoming a leading figure in the Bitcoin field.

Saylor became one of the major buyers in the market by purchasing large amounts of Bitcoin through MicroStrategy, even more influential than Bitcoin ETFs. MicroStrategy's strategy of only buying and not selling has placed it in an important position in the Bitcoin market. Saylor has also stated that he will destroy the private keys of the Bitcoin he holds after his death, an act seen as a contribution to the Bitcoin industry, even though the Bitcoin he personally holds was purchased at an average price of about $10,000 in the last cycle.

In terms of regulation, the Bitcoin held by MicroStrategy is primarily custodied with Fidelity Investments and Coinbase, complying with the regulatory requirements for listed companies, ensuring compliance. Before Bitcoin ETFs appeared, Saylor had already positioned MicroStrategy as a product similar to an ETF, establishing its industry status. He actively promotes the value of Bitcoin, accepting interviews everywhere and advocating the idea of hoarding Bitcoin, making significant contributions to the Bitcoin bull market and industry development.

Despite Saylor's past controversies, his contributions to the Bitcoin field cannot be ignored. He once persuaded Musk to invest Tesla and SpaceX's cash in Bitcoin, and Tesla ultimately purchased $1.5 billion in Bitcoin. Additionally, Saylor met with the SEC's crypto action team to discuss Bitcoin's status in the U.S. national reserve, demonstrating his influence at the policy level. Although he is known as a Bitcoin maximalist, recent talking points indicate that he holds an open attitude towards cryptocurrencies outside of Bitcoin.

7. What are Michael J. Saylor's future plans?

Zheng Di's view: Michael J. Saylor is not only focused on Bitcoin; he advocates that the U.S. should become the global leader in the digital economy. He believes that almost everything in the future can be put on-chain and tokenized, including assets from many fields such as culture and entertainment, which can be transformed into real-world assets (RWA) and put on-chain. This market has enormous potential, with a scale that could reach trillions of dollars. To achieve this goal, Saylor advocates for lowering the barriers to putting everything on-chain and tokenizing RWAs in the U.S. to promote the development of related markets, thereby positioning the U.S. as a global leader in the next stage of the digital economy.

From Saylor's statements, it is clear that his vision has transcended Bitcoin itself, beginning to focus on the widespread application of blockchain technology and its profound impact on the global economic landscape. He emphasizes that the U.S. should actively promote the development of blockchain technology, leveraging its advantages to recreate a chain-based version of the U.S. stock market or Nasdaq, siphoning global liquidity on-chain, and further consolidating the U.S.'s dominant position in the global economy.

8. When will Bitcoin guru Michael J. Saylor buy BTC?

Zheng Di's view: Michael J. Saylor's strategy is to profit through premium arbitrage. He sells MicroStrategy's stock to buy Bitcoin, using the high premium of the stock to achieve arbitrage. The key to this strategy is that only Saylor knows when he will sell a large amount of stock, making him the biggest potential "short" of MicroStrategy. Other investors wanting to short MicroStrategy's premium should wait for the company to act before following suit, or they may incur losses.

Saylor typically sells stock when the premium exceeds 100%, using the proceeds to buy Bitcoin. While it may seem that he buys Bitcoin when prices are high, he is also selling stock when prices are high. Therefore, he is not buying at peaks but selling stock at peaks to obtain funds. From the perspective of asset enrichment, Saylor has earned a significant amount for the company. For example, when the premium reached 150%, he raised funds by selling stock, while the current premium may be less than 50%, indicating that he has profited from the premium high point.

Liu Feng's view: Saylor's business model involves selling high-premium assets to purchase undervalued assets. He obtains funds through various means, including issuing bonds, selling stock, or mortgaging Bitcoin. He needs to compare the cost of obtaining funds with the price of purchasing Bitcoin to determine which method is the most cost-effective. Although he may buy Bitcoin at high prices, he might do so by selling assets worth three times their value to purchase Bitcoin worth one time its value, thus achieving asset appreciation.

9. How to view the recent decline in Bitcoin prices in relation to MicroStrategy?

Zheng Di's view: In mid-November last year, I noticed an abnormal trend in MicroStrategy's stock, as the company received authorization for $42 billion and began to issue a large amount of stock through the ATM mechanism for financing. This strategy was used by Michael J. Saylor to maintain the high premium of the stock and sell large amounts of stock at prices above asset value. From November to December, the company sold about $15 billion in stock, equivalent to a net sale of $300 million per trading day. This large-scale stock sale made it difficult for the market to absorb, inevitably leading to a decline in stock prices. Despite the rise in Bitcoin prices, MicroStrategy's stock price fell because the company shifted to financing through stock sales rather than bond issuance, leading to a decrease in its valuation premium and making it difficult for the stock price to sustain.

From another perspective, the significant rise in Bitcoin prices was due to MicroStrategy's daily net purchase of $300 million in Bitcoin, which had a significant impact on the market. However, by January, although MicroStrategy continued to buy Bitcoin, its buying speed noticeably slowed down. Starting January 4, the company entered a quiet period for financial reporting and could not continue large-scale purchases. By February 4, after the company released its financial report, it clearly stated that it would reduce the intensity of stock financing and shift to bond financing. The reason for this shift was that after two months of stock sales and Bitcoin purchases, MicroStrategy's valuation premium had significantly decreased, and its leverage ratio had also dropped to 15%, far below its long-term target of 20% to 30%. Therefore, the company needed to increase leverage through bond issuance.

On February 5, the company returned to the market and began financing through bond issuance, which meant that its buying speed for Bitcoin would slow down. Unlike issuing new shares through ATM, bond financing requires more time to arrange and execute. This led to market expectations that MicroStrategy's buying speed would slow down, negatively impacting Bitcoin prices. The shift to bond financing may be a positive signal for the company's stock price, but it is a negative factor for Bitcoin prices, as the buying speed of one of the largest marginal buyers in the market has slowed down, limiting the upward potential for Bitcoin.

10. How to view the U.S. intention to siphon global liquidity with dollar stablecoins?

Zheng Di's view: The U.S. is attempting to siphon global liquidity through dollar stablecoins, aiming to recreate a market similar to the U.S. stock market or Nasdaq on-chain. Korean regulators have expressed concerns about dollar stablecoins, believing that their large-scale promotion essentially amounts to lending money to the U.S. government. The funds received by dollar stablecoins are typically used to purchase U.S. Treasury bonds. Currently, the scale of dollar stablecoins has reached $200 billion, which is relatively small, but has made USDT the 18th largest holder of U.S. Treasury bonds. If the scale expands to trillions of dollars in the future, it will have a huge impact on the U.S. Treasury bond market, filling funding gaps and reducing financing costs.

The promotion of dollar stablecoins effectively means that the world is lending money to the U.S. government, reducing the U.S.'s reliance on traditional financing channels, such as no longer needing the Treasury Secretary to frequently lobby other countries to purchase U.S. Treasury bonds. This is also the reason why the EU is promoting euro stablecoins. The Korean government is also aware of and concerned about dollar stablecoins.

From the perspective of capital controls, traditional methods such as restricting brokerage account openings can effectively control capital outflows. However, in an on-chain market, especially with the emergence of a U.S.-led on-chain stock market, capital controls become extremely difficult. Individuals can freely trade U.S. assets through wallets, making regulation challenging. The proliferation of self-custody wallets makes capital controls nearly impossible, allowing funds to flow across borders easily.

Combined with the Trump administration's policies that undermine global coordination and promote protectionism, it holds a welcoming attitude towards the arrival of the on-chain economy era. If the U.S. leads the on-chain economy and digital economy era, it will siphon global liquidity, consolidating its financial hegemony and posing challenges to the financial stability and capital controls of other countries.

11. What might the future financial landscape look like?

Zheng Di's view: From history and the current situation, the probability of a global cyberspace emerging before companies or giants become powerful enough to ignore sovereign governments is relatively low. Although U.S. tech companies are strong, this trend has not yet formed. For example, although Musk has strong resource control capabilities, he still needs to collaborate with the establishment to achieve technological accelerationism. Therefore, the importance of sovereign governments remains significant, especially regarding the leadership of the U.S.

The development of cyberspace relies on the support of strong nations. If supported by strong countries like the U.S., cyberspace may prosper; without the support of major powers, its development will be limited. Currently, the U.S. is in a chaotic period, inclined to use cyberspace to siphon global liquidity. Historically, there have been proposals for the G8 to jointly strangle Bitcoin, but in the context of escalating global conflicts and a lack of international coordination, such proposals are difficult to implement. On the contrary, cryptocurrencies like Bitcoin have become new mediums to bypass traditional financial systems in the context of increasing confrontation. The recognition of Bitcoin by countries like the U.S. and Russia indicates that, in the face of heightened confrontation, all parties need new financial mediums.

The U.S. hopes to dominate the new financial system, while other countries should compete for leadership within it rather than starting anew. Establishing a new global consensus system is extremely challenging, and grassroots support is also difficult to guarantee.

Liu Feng's view: The concept of network states has been popular for two years, proposed by Balaji Srinivasan, who was the CTO of Coinbase. This concept can be seen as an upgraded version of anarchism, advocating that large internet companies combined with new technologies may give rise to new forms of states based on networks. This theory is based on technological progress and the rise of cryptocurrencies, especially stablecoins, empowering more community and technology-driven financial applications. In recent years, many groups have attempted to establish non-sovereign territories.

However, the background of cryptocurrencies and the concept of network states is that they have been rejected by the government and regulatory agencies in the U.S. But after the new U.S. government took office, the regulatory and policy framework underwent dramatic changes, shifting from rejection to embrace. This reflects a compromise between ideals and reality: cryptocurrencies, originally anti-establishment and departing from sovereign states, now hope to develop with the help of U.S. policies.

12. What secrets does the gold market hold?

Zheng Di's view: One of them is its partial reserve system. Many investors buy and sell gold that is not physical gold but paper gold. In the London gold market, about 90% of accounts use non-segregated storage, while only 10% use segregated storage. Non-segregated storage means that investors' gold is mixed with others', resulting in lower management fees but posing moral risks, as it is impossible to accurately supervise whether the gold truly exists. This partial reserve system is relatively common in traditional financial markets, but in the cryptocurrency field, due to the transparency of blockchain technology, such operations are much more difficult.

Therefore, the fluctuations in gold prices are also influenced by tacit agreements among various central banks and governments. Gold prices cannot rise too high, or it would undermine trust in the global fiat currency system, leading to funds being withdrawn from the fiat currency system. Thus, gold prices need to maintain a balance at certain times, allowing for increases but not too rapidly. This balance partly stems from the gold leasing and swapping operations of custodians and central banks, which do not require public reporting, making it difficult to verify the true situation of gold reserves.

During liquidity crises, gold prices typically drop significantly. For example, at the end of February 2020, gold prices suddenly fell by 7% when they should have risen, indicating that a large amount of gold was being borrowed and sold in the market. Similar situations occurred after the collapse of Lehman Brothers in November 2008, when gold leasing rates rose unusually to 2.5%, far above the normal level of 0.1%. This indicates that a large amount of gold was borrowed by central banks and sold in the market, causing prices to plummet. Whether the borrowed gold is returned is unknown. The global gold reporting system only reports nominal reserve amounts, lacking transparency, making it nearly impossible to verify all gold reserve warehouses.

13. How to choose between Bitcoin and gold?

Zheng Di's view: From a delivery perspective, gold delivery is complex and inconvenient. For example, when the UK delivers gold to France, it is not transported directly but completed through internal transfers at the New York Federal Reserve. This sharply contrasts with Bitcoin, which can be delivered instantly on-chain, offering higher traceability, transparency, and payment capabilities, making it a superior "digital gold."

Identifying the authenticity of gold is challenging, and adulteration is difficult to detect with the naked eye, whereas Bitcoin does not have this issue. As long as Bitcoin can be brought to a wallet or on-chain, it is definitely real. Additionally, while gold is scarce on Earth, it is not scarce in the solar system, as there is a vast amount of gold in the asteroid belt. If humanity were to colonize Mars in the future, Mars could develop heavy industry using resources from the asteroid belt, changing the scarcity of gold.

Although Bitcoin excels in many aspects compared to gold, it also faces risks from quantum computing. In the next 10 to 15 years, quantum computers capable of breaking existing encryption algorithms may emerge. Upgrading Bitcoin to resist quantum algorithms requires a decision from the miner conference, but miners may delay the upgrade due to sunk costs and interest groups, which is a unique risk for Bitcoin. However, in the short term, Bitcoin still outperforms gold.

During liquidity crises, the true safe-haven tools are short-term U.S. Treasury bonds and yen, rather than gold or Bitcoin. The yen is often borrowed in large quantities, and during a crisis, it needs to be repaid, leading to price increases. Short-term U.S. Treasury bonds also rise during crises; for example, during the pandemic, the yield on one-year U.S. Treasury bonds rose to 0.8%. In contrast, gold and Bitcoin are typically sold during liquidity crises because they essentially act as ATMs.

14. How to view the imitation of MicroStrategy's large accumulation of non-Bitcoin assets?

Liu Feng's view: The question can be broken down into two parts: first, whether other companies might adopt MicroStrategy's strategy to purchase cryptocurrencies other than Bitcoin; second, why there are no similar companies in the gold sector. The gold market recently experienced a rush due to rumors that Trump might impose taxes on gold imports, leading to delivery delays in the London gold market, highlighting its partial reserve system. Historically, the Hunt brothers hoarded silver, even accounting for about 60% of the entire silver market's trading volume at the time, prompting U.S. government intervention and the creation of a large position reporting mechanism. If someone attempts to hoard gold or silver to replicate MicroStrategy's model, they may face government crackdowns. Even if someone successfully hoarded a significant portion of the market's trading volume in gold, global central banks hold 33,000 tons of gold reserves, which can be borrowed at any time to calm market panic. The cryptocurrency market is currently relatively transparent, and the traditional financial system's interests within it are still small, not reaching the scale of the gold market. If Bitcoin or other cryptocurrencies' prices rise significantly until they match the entire volume of gold, the traditional financial system may adopt similar operations to the gold market, such as creating fake Bitcoins or paper Bitcoins to suppress prices.

Zheng Di's view: While other cryptocurrencies may be subject to large-scale accumulation, achieving the widespread consensus that Bitcoin has is challenging. Bitcoin is seen as digital gold, requiring less consideration of cash flow issues, while other cryptocurrencies must consider use cases, transaction fees, and revenue, for example, Ethereum faces competition from Solana and the current meme market's impact, limiting its growth. MicroStrategy's success relies on Bitcoin's strong consensus, which other cryptocurrencies find difficult to replicate. If latecomers want to imitate MicroStrategy, they need to choose the right asset, which must have sustained growth potential. The consensus around Bitcoin has formed, making it difficult for other cryptocurrencies to surpass it. Of course, there are successful examples, such as Litecoin, which once touted the slogan "Bitcoin is gold, Litecoin is silver," and its current status is primarily due to defining itself as a follower. Imitating MicroStrategy's approach may succeed to some extent, but reaching its heights is challenging.

15. How to use AI tools for industry research?

Zheng Di's view: There are now many research tools, and I recommend that everyone use AI tools like GPT, Grok, Deeppseek, etc. Many research tasks do not require deep personal involvement; I often complete them on my phone, which previously required dedicated research on a computer. Because I frequently move, I force myself to learn new tools to conduct research anytime and anywhere. For example, I can ask GPT to draw or provide insights, such as information on how MicroStrategy custodies Bitcoin; large models can find this information. Although constant corrections are needed, requiring it to provide data sources and cross-lingual searches to obtain answers. Besides large models, Polymarket is an excellent tool, but it is banned in several countries, such as Singapore and France. Polymarket opens markets with real money, allowing people to predict event probabilities. A week before Microsoft's shareholder vote, Polymarket opened a betting market, with bets of one to two million dollars predicting only a 12% probability of the Bitcoin reserve proposal passing, which continued to decline, allowing me to know in advance that this proposal was unlikely to pass. My research method is to first conduct preliminary research using large models, then correct it with my framework, training the model to significantly improve research efficiency. Secondly, I check Polymarket betting markets, where the important aspect is the trend of betting probabilities rather than specific values. For example, if the probability of the U.S. passing the national reserve continues to decline on Polymarket, it indicates that the market is bearish.