How Michael Saylor Made $1 Billion Without Trading

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A quote from Michael Saylor did the rounds recently: “We sold $1.5B of stock backed by $500M of Bitcoin We bought back $1.5B of Bitcoin, capturing a billion-dollar gain in the arbitrage.”

At first glance, it sounds confusing.  At second glance, it sounds impossible.  And at third glance, many assume it must simply be Bitcoin “going up”.

It wasn’t.

This wasn’t about predicting price.

It was about understanding where the market was mispricing value. 

Before we go further: two simple definitions

Let’s strip the jargon away first.

What is a premium?

A premium exists when something is selling for more than the value of what’s underneath it.

For example:

  • If an asset is worth £100 

  • But people are willing to pay £150 for access to it

  • That extra £50 is the premium

People often pay premiums for:

  • Convenience

  • Familiarity

  • Simplicity

  • Or because something is easier to buy

What is arbitrage?

Arbitrage is simply:

Buying something where it’s cheap and selling something where it’s expensive — at the same time.

It doesn’t rely on:

  • Market timing

  • Price predictions

  • Or hoping something “goes up”

It relies on price differences that shouldn’t exist — but do.

What most people think happened (and why it’s wrong)

Many people assumed: “Saylor made a billion dollars because Bitcoin went up.”

That’s not what happened.

Bitcoin’s price movement was not the main driver here.

The gain came from market psychology, not market direction.

What actually happened (in simple terms)

Strategy (formerly MicroStrategy) holds a large amount of Bitcoin on its balance sheet.

Let’s simplify the numbers.

Step 1: Bitcoin on the balance sheet

The company had roughly:

  • $500 million worth of Bitcoin

Step 2: The market values the shares more than the Bitcoin

Because:

  • Many investors can’t (or won’t) hold Bitcoin directly

  • Buying shares is easier than managing wallets and custody

  • Institutions like regulated exposure

The company’s shares traded at a premium.

In effect:

  • $500M of Bitcoin exposure

  • Was valued by the market at $1.5B in shares

That extra $1B is the premium.

Step 3: Sell the expensive thing

MicroStrategy issued:

  • $1.5B of new shares

They did not sell Bitcoin.
They sold shares that investors were overpaying for.

Step 4: Buy the cheaper thing

They then took the $1.5B raised and:

  • Bought $1.5B of actual Bitcoin

Step 5: The arbitrage appears

They started with:

  • $500M of Bitcoin

They ended with:

  • $1.5B of Bitcoin

The $1B difference came from arbitrage — exploiting the gap between:

  • What investors were willing to pay for easy access

  • And the real value of the underlying asset

The real lesson isn’t Bitcoin

This wasn’t clever trading. It wasn’t leverage on Bitcoin itself. And it wasn’t a bet on short-term price.

It was a lesson in where people overpay.

Markets regularly:

  • Overprice convenience

  • Overprice simplicity

  • Underprice assets that require effort or understanding

We see this everywhere:

  • In property refinancing

  • In packaged financial products

  • In income vs growth assets

  • And increasingly, in digital assets

The risk (because strategy always has limits)

This only works while the premium exists.

If:

  • Sentiment changes

  • The share premium disappears

  • Or investors decide to buy Bitcoin directly

The arbitrage opportunity closes.

That doesn’t make the strategy reckless — it makes it situational.

Good strategists don’t assume conditions last forever.  They use them while they exist.


This story isn’t really about Michael Saylor. It’s about learning to ask a better question: Where is the market currently overpaying — and why?

Because wealth isn’t built by guessing direction. It’s built by understanding structure, incentives, and behaviour.

And those patterns repeat far more often than most people realise.

Learn more about arbitrage in Arbitrage for Wealth Building



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