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Hey, Ozzy Osbourne, and we are about to go on the crazy train talking about preferred equities and Bitcoin-backed securities and MSTR and Bitcoin and all of these fun things.

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We have got the, we've got a crew tonight. We've got a bigger crew than usual, and we're going to have the team just popping in because everybody's got opinions.

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Things are, a lot of things are happening right now and a lot of things to talk about.

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So without further ado, we're going to get into it.

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And so today's agenda, we're going to talk about MSDR leverage update, Q2, Q3.

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We're going to get into this stretch presentation, which will probably be a majority of the time.

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Quintuple threat ATM, Bitcoin back fixed income.

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Where is the market going?

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What does this look like?

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Bears versus bulls, the sentiment right now.

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And we'll do a little pulse check on what's going on.

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And then BTC treasury company landscape, because we've got some unique perspective that we haven't had in the past and it's going to be a good time.

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And we've got the youngsters up in the right hand corner already giggling, having fun by the scenes.

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I think they're going to be roommates. So, you know, who knows what's going to happen there?

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That'll be interesting. And yeah, if this is your first time listening to True North, the investment grade Bitcoin podcast,

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we are here to talk about everything that's happening on the nice edge, the bleeding edge in the Bitcoin treasury landscape.

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the evolution of securitized finance with Bitcoin and everything on that front.

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So without further ado, I'll pass it over to Tim for some not financial advice.

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All right. Happy July, everybody. Almost August.

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What you're going to hear tonight may be amazing, but it's not financial advice.

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Stock market at the all-time high, Bitcoin near all-time highs.

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Back to you, Jeff.

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Thank you, Tim. Yeah, we've got a unique time in the world right now. Everything's at all-time highs. SP500 is at all-time highs. QQQ is at all-time highs. Bitcoin is playing around with all-time highs. And it's almost like Bitcoin has seemed boring at $118. Not a lot of people are talking about it. It's like the price of Bitcoin went up.

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and it's surprising how comfortable everybody feels

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and it's not just like euphoria that I was expecting.

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So it's a bit of a unique time in this space.

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I know there's a lot of bears in the space

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talking about MSTR, its relativity,

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IBIT and how that's performing.

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And maybe we'll get into it.

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We'll talk about it a little bit, MNAV expansion.

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I know Dan's got some opinions on IBIT calls,

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which has gotten some attention in the market.

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And yeah, we'll go through it.

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So without further ado,

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we will jump into the weekly financial leverage update.

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And I will share my screen.

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We go through this every week here.

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So this is the financial leverage.

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So what this is showing is MSDR's assets

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relative to its liabilities on its balance sheet

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and how the assets compare,

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and what is the leverage ratio?

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What is the effective credit rating of the balance sheets?

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We're looking at the goal of showing this

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is to show the financial strength of the company

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and its ability to pay out its liabilities into the future.

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So starting here, 723.25,

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strategy now holds 607,770 Bitcoin.

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At the beginning of 2025, they held 446,000 Bitcoin.

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Today's Bitcoin price about $118,750,

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might be a little bit lower than that.

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So assets held, $72 billion of assets held.

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And you look at the beginning of 25,

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there were $41 billion of assets held.

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So nearly doubled the amount of assets held

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in almost seven months.

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It's an incredibly strong financial position.

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Strategy has $8.2 billion of debt on the balance sheet

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and then $3.5 billion of preferred stock outstanding.

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So the net capital held on balance sheet is $60 billion.

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To put this into perspective,

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I think this is about 180th largest company by market cap.

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If you were to compare the size of that, just the net capital, like the actual financial strength held on the balance sheet.

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If you were to compare that to the market cap, which is a, you know, a valuation metric to other companies in the market,

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it would be around, you know, 170th largest U.S. company in the market.

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So this is a very significant position.

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And thinking back to my past life in the reinsurance world, $60 billion would be like the second largest reinsurance market in the entire globe.

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And I used to work with 100 different counterparties.

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So thinking about the relativity here, this is enormous.

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This is so much money.

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This is so much money.

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This is so much collateral.

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It's hard to kind of wrap your head around it.

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So when you look at the balance sheet and the strength here, you've got $72 billion of assets.

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You've got, what is this on a combined basis? $11.7 billion of debt, if you assume the preferred stock is technical debt.

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And so that gives you a liability to asset ratio, a leverage ratio of 16.3% and the debt coverage multiple of 6.1%.

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But what do we know? We know that $3 billion of the debt, the convertible debt, is currently trading as equity because it is trading significantly in the money.

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And if you were to, on a pro forma basis, pull that debt off the balance sheet, the leverage

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ratio is actually 11.8% and a debt coverage multiple of 8.5.

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So effectively, the Bitcoin price can fall.

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In order for the assets to be worth less than the liabilities, the Bitcoin price can fall

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to $14,000 or effectively an 88% drawdown from here before there's any potential concerns.

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And it's got to, not only does it fall, it's got to stay there and stay there for an extended

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period of time.

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So we like to show this at the beginning because this just lays the stage here.

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A lot of people are bearish right now, but you zoom out and you look at the financial

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strength of this company and they are the strongest financial company by far.

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If you just look at the relativity of the assets relative to debt.

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And certainly the strongest Bitcoin treasury company, and they have more Bitcoin than the

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the next closest company by 11 times and continuing to extend that lead.

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You think about strategy purchased almost 6,000 Bitcoin last week.

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That's more than a majority of the Bitcoin treasury companies that are in the

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space. So a lot of positive things on the horizon.

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And this financial strength is you can't ignore it. This is huge.

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And I'll pause there. Anybody else have anything to add?

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No.

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you know i'm looking forward to getting into this yeah okay i'm a i'm a vol junkie so i'm like pump

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those numbers up like i like the funny more strings but yeah i want a little more leverage

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give me more leverage i think that's why you're seeing these new instruments come to market right

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they've they've gotten to a 16 leverage ratio and they identified that the convertible bonds

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aren't the most effective form of leverage because it's a significant amount of dilution right away

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and you have these vol junkies that are trading and are being the convertible bond and the stock

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back and forth every day. So it's a significant amount of volume and algorithms that are trading

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within the market. So now you're seeing the innovation here by finding these different

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capital pools that are going to hold these products long term, whether that be the retail

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market or pension funds or banks or anything like that. And that innovation is leading to

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more effective leverage.

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And it's

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difficult to get those numbers up, right, as they're

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continuing to add more assets to the balance sheet.

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They're

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providing these new products and their ability

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to issue more of these is a function

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of what the market can bear.

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Yeah, and

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I kind of thought

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they were going to do the

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ATM on the common, and that

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was good because it was accretive.

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And we got the convertible bonds, and that

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was good because it was accretive.

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And then we got the preferreds and those were good because it was even more creative.

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But I think what I was thinking was going to happen was just rattling off a bunch of more convertible bond deals.

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And we were just going to see this leverage ratio shoot up.

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But it seems like it's maybe going to be more of a slow grind.

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They're going to ramp it up, you know, 12, 13, 14.

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So I'm not sure if we're going to see the vol spike.

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say that i didn't broke up there yeah yeah i'm not sure if we're gonna see like this massive vol

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spike without a pump from bitcoin itself i mean unless they can just get these rolling super like

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faster than we imagine they're going to get you know the liquidity rolled out

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i don't think they can go ahead go ahead go ahead yeah no i don't think they can they want to roll

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at the converts quickly right now, just because you have to balance it out with the short interest

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it's going to create on the equity itself. So they want the volatility, they want the extra

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leverage, but if it's going to come at the expense of increasing short interest, they really do have

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to weigh that out over time. And I think to your point, they could be waiting for Bitcoin to ramp

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up to give them that volatility spike, which is in all likelihood going to happen before the end of

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Q4 this year. We're probably going to see a new all-time high, a decisive all-time high in Bitcoin

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before Q4. And they may be just spitballing. They may be weighing the risk of

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the potential short interest that would create by issuing you converse at this time.

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So it's a balancing act. They want the volatility, but if they're going to get a volatility spike,

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and then it's just going to subside, and then they have all that additional potential short

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interest i don't know if it's necessarily worth it at this time without seeing what bitcoin is

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going to do first that's just what i'm guessing yeah if the volatility is volatility is vitality

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though i think we need that leverage to be higher to really we need speculation you've got people

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that are shorting stock relentlessly uh that are speculating that this isn't going to continue to

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exist so you need kind of this perfect storm of all of these things happening in the market and

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people getting caught off sides right but volatility is vitality but we remember we can't dictate the

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direction of that volatility so that's true inadvertently create a situation where there's

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more volatility to the downside versus it being a balance and and that's kind of what i'm getting at

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um if the new bitcoin cycle does what we think it's going to do and we're at what 150 175 by

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october or something like that right their their situation looks decidedly different the stock price

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is going to react it's just a matter of how much it reacts and i think if we do see a decisive

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outbreak in bitcoin that isn't like you know us going from 100 to 110 then 110 to 120 but if we

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see something like a 120 to 140 120 to 150 i think that's when the volatility spike will happen and

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they probably assess things a little bit differently right now i just think if they do a convert of any

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size they're just going to disproportionately increase short interest on the stock without

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having that bitcoin breakout um but again i'm sweet balling i don't i don't know better than

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what they're doing i'm just saying what i think could be happening yeah they could be just done

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with the converts completely and we just got to wait for the preferreds to ramp up

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yeah and after watching the year-end review video and the stretch ipo video i mean they're

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done with the conference they've literally said them are they said it so strife will be the top

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um highest in the capital stack instrument and the rest will be junior to it so 100 and on the

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volatility thing i think that's wicked important like the volatility the whole thing with bitcoin

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that's so so valuable this idea that volatility increases as the price increases that's why we

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see these big bubbles, these big spikes. That's why trading is so cool. That's why options behave

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in such an incredible way. And I think it's really important that strategy continues to maintain that

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high leverage ratio in order to have that upside volatility spike. And that's why I've been vocal

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about the ATM being kind of a thing. But recently, the dynamics are such that the upside volatility

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has been limited due to certain periods of ATM issuance, which I believe to be kind of the reason.

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But whereas downside volatility has been extremely steep as a result of it falling in line with

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bitcoin which is good you want that downside volatility you also need that upside volatility

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i think that would be extremely help it would be helped a lot by having more leverage ratio and i

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think they're trying to do that the other thing i give them a lot of credit they're issuing as much

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press as they can as fast as they can leverage ratio up right now they're limited by liquidity

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and that's something we can only wait for the liquidity will build we will push these prefs

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and it will will come but um you know that takes time and they're not going to do conference so i'm

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totally cool with that i think things are going well for the prefs and i think stretch which we'll

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talk about in a second is the next step and probably will likely be the single most important

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product in their entire account like by orders of magnitude more than any other products like

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far and wide we can talk about that in a second yeah i mean i like the evolution um you know with

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the with the press i think probably being the most accretive solution that they've come up with

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so i'm definitely down with that and and if we were headed into a bear market this leverage ratio

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would probably be the perfect you know way to go but um if we got a couple of more spikes in bitcoin

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left in in this cycle i just i need some more juice 100 and i think everyone's thinking the

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same thing and that's actually not really good for the common because we need that ecosystem to be

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working on something adrian said a lot too we need the msty ecosystem to be working we need msty to

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blow out the key is we need vol sellers to get smoked on an upside move key here because that's

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the only way to maintain unpredictability in the stock price and performance which which is

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unpredictability is just another word for volatility which allows the options premiums

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to be extremely high we need them to be 1.52x that of bitcoin we need the iv to be that high

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relative so you need to blow out the long or the short call holders so i think it's really

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really really really important for the future of mstr for the next during the next movement bitcoin

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mstr has to smoke the call sellers so it has to be in volatility and the only way for mstr is

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volatility to expand to the upside during a rally in bitcoin is for the mnav to expand that is the

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single only way for volatility to increase on the upside is the expansion of mf we've seen the

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contraction m and that's decreased that's increased volatility on the downside we need it in both

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directions for it to can you to be a viable product yeah well so i i know what i'm going to

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say people disagree with but i think that um so the reason why i keep saying that m nav is is highly

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sentiment driven and it's a sentiment indicator and it's not something that can be levered up or

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levered down or be allowed to run is because in my view if volatility is vitality then sentiment

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and subjectivity is a fuel for reflexivity.

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And what I mean by that is the market sentiment

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is what's going to drive the MNav.

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That's what's going to drive it higher.

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And the sentiment is going to shift

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when broader macroeconomic trends shift,

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which they have been.

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We are seeing more clarity with regards to tariffs,

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probably.

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We're seeing more liquidity come into the market.

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All of that's going to have an effect on sentiment

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and all of that's going to have a downstream impact

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on Bitcoin and on MSDR.

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are. And I think that people are trying to treat MNAV as a lever when MNAV is a function

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of the market. It's a multiple, right? So because it's a multiple, and if we just think

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about the market and just think about all the market as a whole, what justifies a multiple?

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I always challenge people to try to justify multiple without sentiment and without future

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expectations And all future expectations are is sentiment Even algorithms when they they trade the market as someone that actually designed or written algorithms and I went to school for it I know for a fact that algorithms react to the market They don lead and push the market So everything is downstream from

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sentiment and then from liquidity and then from broader macroeconomic conditions. So we just need

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to just let the market play out. What we're seeing right now, we had that run up in November.

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We went to 543 and you saw things slam down, right? And everyone started talking about the

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nav and everyone's talking about atm again but no one paid attention to the fact that global

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liquidity went off a cliff at the end of november and we're seeing global liquidity trend back up

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right now and the trend is slowly but surely taking up and bitcoin tends to lag that so in my

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view i think dan to your point m nav absolutely needs to to expand but it's not something that

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that strategy can teeter up and teeter down by issuing the atm on the preferreds versus the common

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if we have enough sentiments we have enough volume and we have enough liquidity it's not

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going to matter what they do the market will take care of the rest yeah i mean all right jack go ahead

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i just there's a few things going on in the market right now right we're in the middle of

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summer we're in the dog days of summer right this is generally the least liquid time in all

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public equity markets sideways summer sideways summer it's just it's just the way it goes it's

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It's the least liquid time.

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All of the rich people that manage money are out of their Hamptons house.

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They're out at the lake.

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They're driving their boats.

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They're doing things with their families and their kids.

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They're doing summer camps and all those things.

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People generally aren't working in a summer.

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I'm going to throw that out there.

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Two, we're also coming on the single largest catalyst probably in MSTR's history with their earnings report.

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their Q2 earnings report. This is the first time in history that they're going to post a positive

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earnings report as a result of FASB fair value accounting. And the number is absolutely massive.

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Like their largest earnings report ever in company history was like $400 million. And that was in

245
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21 as a result of some of the Bitcoin accounting. But now we're talking about a 10 to $11 billion

246
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dollar net income and that's going to be announced in the end of this month seven days from now

247
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and that's going to create significant buzz it'd be the first time qualifying for the s p 500

248
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technically after an earnings report and there's going to be people that are going to turn their

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heads to this and i i personally think this is this is an enormous event that is on the horizon

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that is going to change the narrative and the landscape of the space does it reprice instantly

251
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No idea. I don't think so.

252
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But it's the continuous noise.

253
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It's the news cycle.

254
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It's getting in front of people.

255
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It's like, oh my God.

256
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Everybody here on Twitter,

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everybody following us right now,

258
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watching this video,

259
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everybody in the X space

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thinks that the entire world

261
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knows what's going on here.

262
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The reality is 99.99% of people

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have no fucking clue.

264
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They have no clue.

265
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Like, go talk to somebody about this stuff.

266
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Nobody has any idea.

267
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You talk about Bitcoin back credit.

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Nobody has any idea. You talk about BitBonds, you talk about MSDR, right? 99.99% of people have no

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idea what's going on here. And that's going to change. And what is the catalyst to make a change?

270
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It's an enormous earnings press release, right? It's not MetaPlanet, you know, adding 5,000 Bitcoin

271
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to their balance sheet. I love MetaPlanet, but it's not them adding 5,000 Bitcoin to their balance

272
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sheet, it's strategy posting a $10 billion gain in a single quarter that blows out 99.5%

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of the companies in the entire United States. Where did that come from? That's this kind

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of Adrian, to your point, this like sentiment driver, like you're going to have new buyers

275
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coming to the scene here as a function of this. And I think that's where some of this

276
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happens, right? Like think about back to November and QQQ, right? There was a ton of excitement.

277
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apparently a ton of people bought the top because people are big people are big men and you know

278
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what actually i'm i did a little analysis maybe we'll start with this before we go into the stretch

279
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presentation so this is uh this is the number of days uh that's in the last um

280
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within the last 1244 trading sessions there have only been 30 days that have closed above 400

281
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So all of those other days, if you would have invested in all of those other days, you'd be in the green.

282
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So, you know, we're talking, what is this?

283
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2.4% of the trading days in the last 1,244 trading days.

284
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This isn't Bitcoin, right?

285
00:21:02,286 --> 00:21:04,946
Buying an MSTR is not Bitcoin, right?

286
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If you just want Bitcoin exposure and one Bitcoin is one Bitcoin, then just buy your Bitcoin and get out of here.

287
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If you're buying a publicly traded equity, it's not going to have a 100% correlation to Bitcoin.

288
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It's not Bitcoin.

289
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You're buying a company that is collateralized on Bitcoin and has the largest Bitcoin back balance sheet in the entire world.

290
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That's what you're buying. And what can they do with that? What's the optionality that they could do with that?

291
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That's what you're buying. And I think people are confused by that.

292
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You look at the daily price. Who cares? Who cares?

293
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This is a fundamental change in how companies can be designed and capitalized into the future.

294
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I say this story all the time. I don't want to be that uncle or that grandparent that sold Apple in 1989 when you could just hold it forever. And I think people are very short-sighted and not necessarily thinking about the magnitude of this story and how big this is.

295
00:22:04,686 --> 00:22:21,286
I agree because people, I think the mistake people are making is that they're trying to act like this is a 2x ETF on Bitcoin. It's not. It's an equity and it's going to move the way an equity moves. And it's not guaranteed to give you 2x on every single day of Bitcoin's price movement. It's designed to give you 2x or more over time.

296
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Bitcoin. So when people talk about, well, for the last one month, three months, six months,

297
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it's been underperforming Bitcoin. My response to them is, okay, it's not supposed to track 2X

298
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like a 2X ETF. So it's the performance over time. And when you go over nine months to a year to 18

299
00:22:39,706 --> 00:22:44,986
months and so on and so on and so forth, it's outperformed by hundreds, if not thousands of

300
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percent. So I think you're right that we have a lot of people that bought the top in November

301
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or near November and they're pissed, but that's with any equity. People bought NVIDIA earlier

302
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than me and I'm not pissed at them. So I don't really look at it in the same fashion. I'm looking

303
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for a longer term investment that I hold. And that's what I've been doing. And I also think

304
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that if my DMs are any guide, a lot of people are getting blown up on options still somehow.

305
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So we have a lot of people that are rather pissed off with how the market's going because of how

306
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they're acting in the market. Yeah. And to that point, Adrian, I did some math here just to show

307
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some perspective and we'll go 275. Right. If Saylor comes out and says, hey, MSTR is going to be

308
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2x Bitcoin on the year. Right. Okay. So if it's going to be 2x or 3x Bitcoin on the year,

309
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what does it look like on the daily? Right. If you average this out of the time and I just took

310
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365 days throughout the year and just say, okay, well, Bitcoin is going to return 17 bps a day

311
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percentage gain going from 66,000 to 121,000, just give or take, right? That size and scale.

312
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And to where MSTR is today was a 408, I don't know, it's 412, 415, something like that.

313
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Starting at $150, that's 28 bps. So on a daily multiple, it's supposed to be about 1.6

314
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in order to get to 2x Bitcoin on the annual basis.

315
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So people that are thinking it's like it's 2x on the daily basis.

316
00:24:20,066 --> 00:24:23,726
Again, you also have a non-correlation, right?

317
00:24:23,806 --> 00:24:28,566
It's what is Bitcoin and MST are what, like 75, 80% correlated?

318
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It's been between 0.69 and 0.81.

319
00:24:31,666 --> 00:24:32,246
Okay, yeah.

320
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Okay, about 70 to 80% correlated.

321
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So it's not going to be one-to-one.

322
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Again, why is that?

323
00:24:37,666 --> 00:24:42,946
because there are different capital providers that are buying these equities in passive ways

324
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that are accessing this capital differently, right?

325
00:24:46,126 --> 00:24:50,226
You've got people that are buying QQQ.

326
00:24:50,486 --> 00:24:54,546
Anybody that buys QQQ or sells QQQ, anytime there's a transaction there,

327
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they are selling, if they buy QQQ, they're buying MSTR shares.

328
00:25:00,206 --> 00:25:02,606
That is no pressure on Bitcoin, right?

329
00:25:03,106 --> 00:25:04,826
It doesn't impact Bitcoin at all.

330
00:25:04,826 --> 00:25:07,506
If they're selling QQQ, that has impact on MSTR.

331
00:25:07,666 --> 00:25:13,566
So you've got all these different buyers that are passively buying and selling MSTR via algorithms.

332
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And that's what breaks the correlation between the two.

333
00:25:16,126 --> 00:25:23,106
So if you're expecting them to be daily, you know, 100% correlated, you got to wake up to the fact that they're not.

334
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They're not daily 100% correlated.

335
00:25:25,506 --> 00:25:29,966
It's just not the way it works because there are different buyers buying the different instruments at different times in the market.

336
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And, you know, I think that might make sense to bring this up as well.

337
00:25:34,206 --> 00:25:38,766
is this concept of like the algorithms

338
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that are gonna be built on this.

339
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And you think about the future,

340
00:25:41,906 --> 00:25:44,606
I don't know, something like 75 to 80% of the market

341
00:25:44,606 --> 00:25:45,826
is traded via algorithms.

342
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And there are going to be different trading pairs

343
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where you're gonna find ARB opportunities

344
00:25:53,626 --> 00:25:55,026
to go to balance in between

345
00:25:55,026 --> 00:25:56,566
all these individual different products.

346
00:25:56,666 --> 00:25:59,746
Like you could go from MSTR to STRF,

347
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STRF to STRC, STRC to Bitcoin,

348
00:26:02,686 --> 00:26:10,606
Bitcoin to STRD, STRD to STRK. There's different trading pairs in different ways and formulas

349
00:26:10,606 --> 00:26:15,486
of portfolio composition to ARB different pieces of all of these different components.

350
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And I'm only showing six things here. This is happening across all cryptos,

351
00:26:21,146 --> 00:26:28,026
all cryptos, all Bitcoin treasury companies, all of these instruments, and people are going in and

352
00:26:28,026 --> 00:26:32,826
out bouncing around and all of that's happening and like there's just going to be a breaking

353
00:26:32,826 --> 00:26:38,986
correlation so i just want to put that out there as people don't seem to get that it's crazy

354
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but also yeah i mean oh go ahead yeah i love talking and i think that's super important and

355
00:26:48,586 --> 00:26:52,906
we talk a lot about how these different fixed income products will be targeting different markets

356
00:26:52,906 --> 00:26:57,786
and one thing we've been noticing a lot am i still there am i good yeah yeah yeah you're good

357
00:26:58,026 --> 00:26:59,346
I just I'm moving to the other side.

358
00:26:59,546 --> 00:27:00,046
Cool.

359
00:27:00,146 --> 00:27:03,726
One thing we've been talking about a lot is targeting different investors in

360
00:27:03,726 --> 00:27:06,286
different markets and tapping into different pools of capital.

361
00:27:06,586 --> 00:27:10,786
Now, we've seen the volatility in strike and strife be extremely high.

362
00:27:10,826 --> 00:27:11,086
Right.

363
00:27:11,086 --> 00:27:12,426
I haven't actually measured the volatility.

364
00:27:12,426 --> 00:27:14,006
It's actually on the strategy tracker website.

365
00:27:14,206 --> 00:27:17,706
The volatility has been very, very high relative to traditional fixed income

366
00:27:17,706 --> 00:27:20,126
products. And so that's been scaring away investors.

367
00:27:20,126 --> 00:27:25,246
And that's something Sailor and Fong talked about in the most recent STRC

368
00:27:25,926 --> 00:27:26,726
release video.

369
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And that's why this STRC offering is so attractive to so many fixed income investors.

370
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Let's say you want to hold a cash position.

371
00:27:33,606 --> 00:27:39,386
It's actually quite nerve wracking that you've got all this sell pressure and different kind of fluctuating principal amounts,

372
00:27:39,746 --> 00:27:42,826
especially if you have a large, large position in strife or strike.

373
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And so I think it's going to be a product that attracts a monster pool of capital,

374
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especially with the initial offering, plus the cumulative dividends.

375
00:27:51,366 --> 00:27:56,066
We've seen that there's clearly a demand for cumulative dividends over non-cumulative dividends.

376
00:27:56,066 --> 00:27:59,746
if you'd seen like stride hasn't even traded up to its liquidation preference which is quite frankly

377
00:27:59,746 --> 00:28:06,866
incredible right so i think this strc offering is so extremely compelling uh for for those above

378
00:28:06,866 --> 00:28:10,866
reasons especially because it's so applicable in a world in which stable coins are becoming like a

379
00:28:10,866 --> 00:28:16,786
exponentially increasing transactional layer and in the traditional capital markets t-bills are used

380
00:28:16,786 --> 00:28:22,626
as the short duration non-interest rate sensitive store value asset and now that we're attacking like

381
00:28:22,626 --> 00:28:29,106
a real real real market um with a product that has low low low volatility i think um it's going

382
00:28:29,106 --> 00:28:32,226
to be super interesting to see the receptiveness of of such an instrument

383
00:28:36,306 --> 00:28:41,746
completely agree sure jump into it it's funny you look in the chat and everybody's still just

384
00:28:42,386 --> 00:28:46,786
bears there are bears everywhere which is so funny the sentiment feels even more bearish than

385
00:28:47,586 --> 00:28:51,826
like when the etf was launched in february 24. people forget that there was actually a

386
00:28:51,826 --> 00:28:57,986
$2 billion ATM that Saylor used without transparency and 400, that 4 million shares that

387
00:28:57,986 --> 00:29:03,946
Saylor sold in 2024, like the ATM, like this existed in 24.

388
00:29:04,846 --> 00:29:09,146
I'd argue the non-transparency of the ATM was a better way to do it.

389
00:29:09,246 --> 00:29:09,746
It was better.

390
00:29:10,026 --> 00:29:10,726
Not having it.

391
00:29:11,646 --> 00:29:13,766
Unpredictability, I think, is super key here.

392
00:29:13,866 --> 00:29:14,986
And that's not to be a bear.

393
00:29:15,126 --> 00:29:16,366
It's just, it's interesting.

394
00:29:16,506 --> 00:29:20,886
I think the unpredictable nature of the ATM increases all.

395
00:29:20,886 --> 00:29:28,406
and it's all a question of vol like uh yeah just quarterly reporting quarterly reporting your

396
00:29:28,406 --> 00:29:33,766
your atm purchases yeah i mean we can we can say that but the thing is if you're watching the daily

397
00:29:33,766 --> 00:29:36,966
there's guys that are watching daily trading volume and that are making assumptions when the

398
00:29:36,966 --> 00:29:42,246
atm is being issued and when it's not so i think that sailor kind of created a i don't think even

399
00:29:42,246 --> 00:29:46,566
created i think by announcing to the market that the atm is going to be a way that they facilitate

400
00:29:46,566 --> 00:29:50,566
bitcoin purchases the market's constantly looking for when it's going to be issued regardless of

401
00:29:50,566 --> 00:29:55,286
if he would make an announcement or not so i think that genie is kind of maybe out of the bottle i

402
00:29:55,286 --> 00:30:02,646
don't know but to the people that are still talking about m nav it's just strange to me because with

403
00:30:02,646 --> 00:30:10,006
the kind of volume we were seeing last year like around october november 2024 i just don't understand

404
00:30:10,006 --> 00:30:14,966
how people could be saying to themselves so if sailor has stopped selling shares that magically

405
00:30:14,966 --> 00:30:19,366
would have made the market decide to make the m nav run higher because that by itself would have

406
00:30:19,366 --> 00:30:24,806
shifted sentiment not the other 90 to 95 percent of trading volume and then increased liquidity

407
00:30:25,366 --> 00:30:31,206
and so on and so forth yeah but what do you say about passing flows i mean yeah yeah the

408
00:30:31,206 --> 00:30:38,566
it's price and sensitive and sensitive flows right so anything coming from a any kind of funds

409
00:30:38,566 --> 00:30:46,646
qqq potentially s p right this is this is kind of josh man's whole idea of if you didn't atm it it

410
00:30:46,646 --> 00:30:53,046
would just levitate it would just go higher because there is demand that is you know not

411
00:30:54,246 --> 00:31:01,446
determined by yeah at all they're like capitalizing on the excess demand they're like yeah they're

412
00:31:01,446 --> 00:31:07,366
understanding the static demand yeah i'm not sure if there's a if there's a pop in demand they're

413
00:31:08,166 --> 00:31:13,846
capitalizing on it and buying bitcoin exactly and what's well what's the and that's something i

414
00:31:13,846 --> 00:31:17,266
I've been thinking about it. What are the treasury operations worth? Jeff, I think you're right. I

415
00:31:17,266 --> 00:31:22,006
think the treasury operations, the preferred issuance, all of that, the Bitcoin yield is

416
00:31:22,006 --> 00:31:27,566
incredibly valuable, more so valuable than any sort of income generating activities of any Mag7

417
00:31:27,566 --> 00:31:32,106
company. I think they're massively accretive. Bitcoin gain, in my opinion, especially Bitcoin

418
00:31:32,106 --> 00:31:38,506
gain derived from convertible product, sorry, from preferred products, should be awarded a 30x at

419
00:31:38,506 --> 00:31:45,306
least multiple on the us dollar game however that has to be realized in the stock price so i'm i'm

420
00:31:45,306 --> 00:31:51,466
i'm not selling at three nav i'm not selling it for nav if the company's not selling at four now

421
00:31:51,466 --> 00:31:55,866
so that's the and look it's not that black and white that's the point josh is making i'm not

422
00:31:55,866 --> 00:32:01,546
sure if he's totally right or whatever but but at but if the stock is running to three nav

423
00:32:02,346 --> 00:32:05,706
i'm not a seller right i don't think you're a seller we're the market makers right we're

424
00:32:05,706 --> 00:32:06,966
We're the owners of the equity.

425
00:32:06,966 --> 00:32:09,186
And so we are the buyers, the margin.

426
00:32:09,186 --> 00:32:11,746
If the passive flows are also adding buy pressure,

427
00:32:11,746 --> 00:32:12,686
that NAV will run.

428
00:32:12,686 --> 00:32:16,066
And I've come to realize that I think that is true

429
00:32:16,066 --> 00:32:27,732
because I thought originally it was just Bitcoin yield So if Bitcoin yield is falling the NAV wouldn expand It would just be a closed ended fund But I starting to realize that both the active treasury management coupled

430
00:32:27,732 --> 00:32:33,012
with the operating cashflow covering the liabilities, which no longer is the case,

431
00:32:33,012 --> 00:32:37,892
but then also the shareholders and the passive flows and the ability to be included in ETFs

432
00:32:37,892 --> 00:32:42,932
makes it special Bitcoin and something which the MNF could go really high. And I think that's kind

433
00:32:42,932 --> 00:32:45,892
of the point. And if it did go up, it's important to remember that would be

434
00:32:46,612 --> 00:32:51,972
insanely creative if they were to atm let's say hypothetically to pay dividends or

435
00:32:53,972 --> 00:32:58,132
i got one for you let's let's think about the scale here right so we're talking about

436
00:32:58,132 --> 00:33:04,852
these preferred instruments having a total addressable market of 600 trillion right enormous

437
00:33:05,492 --> 00:33:12,132
massive and they've issued 4 billion to date and we think that that number can 100x

438
00:33:12,932 --> 00:33:20,292
400 400 billion you probably go higher so if if you think bitcoin's going to double from here

439
00:33:20,292 --> 00:33:27,332
you you've got 70 billion dollars of uh assets and if it doubles you got 140 billion if you lever that

440
00:33:27,332 --> 00:33:33,892
up 30 you can issue 43 billion dollars with this stuff so every dollar of asset that you bring in

441
00:33:33,892 --> 00:33:41,812
the door early, understanding that with the idea that Bitcoin is going to move higher,

442
00:33:42,612 --> 00:33:47,892
gives you that much more ability to capitalize on the leverage and make the thing move faster.

443
00:33:48,932 --> 00:33:53,812
The ability to capitalize on the fixed income side of the market, understanding what's going on.

444
00:33:53,812 --> 00:34:03,172
I think the demand here, there's probably 1%, I'd say between 1% and 10% of the fixed income market,

445
00:34:03,172 --> 00:34:09,892
that $600 trillion of total addressable market can buy unrated perpetual preferred equity.

446
00:34:10,092 --> 00:34:11,852
I'd probably say 1%, maybe less.

447
00:34:13,132 --> 00:34:17,592
So we think that if these instruments get rated, that number 100 Xs,

448
00:34:18,612 --> 00:34:21,552
the number of people that could buy these instruments, 100 Xs.

449
00:34:22,632 --> 00:34:27,192
So you're talking going from $4 billion of perpetual preferred equity

450
00:34:27,192 --> 00:34:30,072
to $400 billion perpetual preferred equity,

451
00:34:30,912 --> 00:34:32,692
people that can potentially buy this instrument.

452
00:34:33,172 --> 00:34:36,772
And you need the assets to support it.

453
00:34:36,772 --> 00:34:41,172
No, totally. I think that's a good point. No, completely, completely.

454
00:34:41,172 --> 00:34:44,972
But I do think, yeah, I think that's a really good point.

455
00:34:44,972 --> 00:34:49,172
But like people in the short term, if you're looking in the short term, yeah.

456
00:34:49,172 --> 00:34:54,172
But ATM on the common stock adds pressure, right?

457
00:34:54,172 --> 00:34:57,172
It's more liquidity in the market. There's more shares trading.

458
00:34:57,172 --> 00:34:59,172
There's more shares that could be ARB.

459
00:34:59,172 --> 00:35:04,692
ARB. You also have $5 billion of convertible ARB that's like in the high gamma zone of these people

460
00:35:04,692 --> 00:35:10,052
that are trading back and forth between the price of the convert in the secondary market. So you've

461
00:35:10,052 --> 00:35:15,592
got like this massive amount of pressure that's bigger than it's ever been, $5 billion of convertible

462
00:35:15,592 --> 00:35:21,552
bonds. And you've got ATM capitalizing on the assets coming in the door at the same time. So

463
00:35:21,552 --> 00:35:26,372
yeah, I mean, it's a weird time. And on top of low liquidity in summer months,

464
00:35:26,372 --> 00:35:30,252
and we're in this period of time where nobody knows what the earnings are,

465
00:35:30,332 --> 00:35:32,552
even though everybody that's paying attention knows what the earnings are.

466
00:35:32,872 --> 00:35:34,212
It hasn't hit mainstream media,

467
00:35:34,432 --> 00:35:38,012
which is exactly what I was talking about when the quarter closed.

468
00:35:38,692 --> 00:35:42,992
There was a lot of buzz for a day and it hasn't been brought up again.

469
00:35:44,092 --> 00:35:45,272
And I think it will, like,

470
00:35:45,332 --> 00:35:46,372
Sailor's going to be on CNBC.

471
00:35:46,552 --> 00:35:47,492
There's going to be news cycles.

472
00:35:47,612 --> 00:35:50,812
This thing is going to hit Wall Street Journal.

473
00:35:50,932 --> 00:35:52,172
It's going to be all over the place.

474
00:35:54,032 --> 00:35:55,352
My view is that.

475
00:35:55,352 --> 00:36:10,372
So yeah, that's all true. But my view is that I think all this is an assumption. The ATM is an easy thing to point to. And I just based on my own personal view, and Jeff, your camera's kind of blurry. I don't know if you have something on it right now. There you go.

476
00:36:10,372 --> 00:36:18,752
I don't know if it's just a matter of when people bought in and who loudest voices are right now,

477
00:36:18,952 --> 00:36:25,612
but the impact of broader market trends are definitely weighing on this more, in my view,

478
00:36:26,212 --> 00:36:32,532
than the ATM or the converts or anything to that nature. That's just my opinion. And I think that

479
00:36:32,532 --> 00:36:37,212
people need to stop looking for the easiest explanation and start doing some deep diving on

480
00:36:37,212 --> 00:36:41,952
what can actually be pushing this trade because the bitcoin per share bitcoin yield all that is

481
00:36:41,952 --> 00:36:48,552
a function of the different atms that they do so it's it's all based on a model that needs the atm

482
00:36:48,552 --> 00:36:56,052
to run not just the mnav run go ahead i just think there's a lot of people who have been in

483
00:36:56,052 --> 00:37:00,592
this thing for a really long time and are just trying to figure out you know performance and

484
00:37:00,592 --> 00:37:05,092
volatility so i think it's unfair to say that most people just got in at a high mnav in the fall

485
00:37:05,892 --> 00:37:11,812
well i don't think most got in i said i think those are loudest voices okay yeah i think those

486
00:37:11,812 --> 00:37:17,572
are loudest voices and and so because from my perspective when i got into this trade bitcoin

487
00:37:17,572 --> 00:37:22,452
per share was not a thing bitcoin yield was not a thing that was being discussed yeah it was not

488
00:37:22,452 --> 00:37:29,172
like well this company has a monopoly on bitcoin and since then none of this was being discussed

489
00:37:29,172 --> 00:37:34,292
right and i think that to your point dan people are trying to make sense of it but in trying to

490
00:37:34,292 --> 00:37:39,252
make sense of it i think that many are looking for the simplest easiest most quick and expedient

491
00:37:39,252 --> 00:37:45,652
explanation the the fact of the matter is is that markets traded multiple jeff this is something

492
00:37:45,652 --> 00:37:51,332
you've said all the time you have companies like nvidia and tesla and we're trading at ridiculous

493
00:37:51,332 --> 00:37:56,452
multiples you just said dan that you think the dollar amounts justify what a 30x multiple

494
00:37:56,452 --> 00:38:05,332
I think the smaller Bitcoin gain generated by preferred equity issuance deserves a 30x plus multiple.

495
00:38:06,052 --> 00:38:12,772
Right. So let's say that's a forward expectation of what you're expecting, right? The market needs to

496
00:38:13,332 --> 00:38:19,972
essentially, I think we need two things to happen. Bitcoin adoption needs to scale. And as Bitcoin

497
00:38:19,972 --> 00:38:24,292
adoption scales and as the price of Bitcoin runs, the price of the strategy equity is going to run,

498
00:38:24,292 --> 00:38:29,012
then all these other factors are going to start running along with it people are treating mstr

499
00:38:29,012 --> 00:38:35,332
like it's a equity and this this economy that exists somehow is separated from bitcoin as

500
00:38:35,332 --> 00:38:40,212
bitcoin goes strategy is going to go so so you just said but then you just say that that's not

501
00:38:40,212 --> 00:38:44,532
the case that we have to we have to not look at the correlation too closely and that this is an

502
00:38:44,532 --> 00:38:49,172
equity and i shouldn't trade one-to-one with bitcoin yes but because it doesn't trade one-to-one

503
00:38:49,172 --> 00:38:54,452
with bitcoin it's not going to it's not that bitcoin is going to go up and then the adoption

504
00:38:54,452 --> 00:38:57,252
is going to go up and everything's going to go up and then strategy must go up with it

505
00:38:57,252 --> 00:39:00,052
there are too many moving parts in the strategy because it's an equity

506
00:39:00,852 --> 00:39:05,012
okay because because it's an equity because now we have all the preferreds now and we have the

507
00:39:05,012 --> 00:39:11,092
common stock there are too many moving parts that are taking place for it to just say that that is

508
00:39:11,092 --> 00:39:17,892
only going to be correlated to bitcoin bitcoin needs to move yes but the strategy economy ecosystem

509
00:39:17,892 --> 00:39:25,252
needs to scale out and it needs to stabilize the the the the matter of the 2x multiple or 3x or

510
00:39:25,252 --> 00:39:29,732
whatever it's going to be in time that's going to stabilize with time but it it's not just a

511
00:39:29,732 --> 00:39:33,332
matter of sailors hitting the atm and it's preventing the atm the m now from running

512
00:39:34,132 --> 00:39:39,972
that's that's too simplistic okay but i think it seems like the market has stabilized around a fixed

513
00:39:41,412 --> 00:39:46,132
you know it seems like it's stabilized around a fixed msdri ratio you look at the msdri bit

514
00:39:46,132 --> 00:39:50,212
around 6.5 and it's been pinned there it's been absolutely pinned there it's been there for like

515
00:39:50,212 --> 00:39:55,092
yeah and there's some there's algorithms right i went to school for algorithms as well and there's

516
00:39:55,092 --> 00:39:59,972
some algorithm that is pinning it there right there's there's traders out there that are sticking

517
00:39:59,972 --> 00:40:05,092
it there and how are they doing it right it gets up they sell they sell they borrow at a very low

518
00:40:05,092 --> 00:40:09,892
borrow cost because the shares are not scarce they sell and then they buy it back but instead of

519
00:40:09,892 --> 00:40:14,852
having to buy it back from uri they buy it back in a block trade from the equity and it's a very it's

520
00:40:14,852 --> 00:40:19,252
a very um what do you say it's a very profitable trade for them they sell millions hundreds of

521
00:40:19,252 --> 00:40:23,732
millions make a nice couple million that day and buy it back in a block trade that doesn't have any

522
00:40:23,732 --> 00:40:27,812
new buy pressure in that single day is it a creative to common shareholders as a form of

523
00:40:27,812 --> 00:40:33,892
bitcoin yield absolutely 100 but is it kind of pinning the price and dampening the volatility yes

524
00:40:34,532 --> 00:40:39,412
it is quite frankly because that mcri bit ratio is pinned there the market likes it so i think again

525
00:40:39,412 --> 00:40:44,292
that is what we're looking for unpredictability perhaps so let me ask you the question

526
00:40:45,492 --> 00:40:49,012
are you saying that the trading activity is what's pinning the multiple

527
00:40:50,372 --> 00:40:54,692
i think it's a large portion of it yeah well obviously some form of trading activity is

528
00:40:54,692 --> 00:41:02,292
pinning the multiple right that's the definition of of like trading well okay so what what i'm

529
00:41:02,292 --> 00:41:10,052
trying to say is i think the market doesn't understand the trade and the multiple has not

530
00:41:10,052 --> 00:41:19,252
been defined retail retail retail well institutional capital i mean it's a lot of

531
00:41:19,252 --> 00:41:23,252
capital doesn't understand the trade a lot of capital needs to trade market yeah i didn't want

532
00:41:23,252 --> 00:41:27,012
to i didn't want to pin on one or the other because then someone's gonna get pissed off right but what

533
00:41:27,012 --> 00:41:31,492
what i'm what i'm saying is we've all just given opinions and our sentiment around where we think

534
00:41:31,492 --> 00:41:39,732
the multiple can go and what i'm saying is the market right now everyone's focused on it as if

535
00:41:39,732 --> 00:41:46,292
mstr is going to trade at a multiple regardless of broader market trends and what i'm saying is

536
00:41:46,292 --> 00:41:50,852
there's going to be a flow of activity we need broader macro economic

537
00:41:51,652 --> 00:41:56,532
broader macroeconomic trends to cooperate we need market sentiment to cooperate we need liquidity to

538
00:41:56,532 --> 00:42:00,532
cooperate what we're seeing right now is the function of the fact that we don't have all

539
00:42:00,532 --> 00:42:05,092
three of those operating in tandem yet all of that's going to impact the sentiment on the equity

540
00:42:05,092 --> 00:42:14,692
yeah yeah said multiple times in interviews that he he thinks mstr should trade at a premium

541
00:42:14,692 --> 00:42:22,312
always right he and he was even asked i think was it the the joe burnett interview or

542
00:42:22,312 --> 00:42:29,372
he was asked do you think it will go to one and he said no and i think i think he what was that

543
00:42:29,372 --> 00:42:34,732
in the context of a bear yeah bear market yeah i i think in the context i think another one you're

544
00:42:34,732 --> 00:42:43,772
talking about yeah yeah yeah yeah so i i think i think if we think uh bitcoin yield deserves a

545
00:42:43,772 --> 00:42:52,192
multiple then there there needs you need to allow a multiple to occur and i think that's what people

546
00:42:52,192 --> 00:42:58,032
are really frustrated about and i think what dan is saying is that the shorts are getting exit

547
00:42:58,032 --> 00:43:03,032
liquidity essentially from the ATM. So it's kind of a-

548
00:43:03,032 --> 00:43:08,032
Shirts are getting exit liquidity, but it's adding assets to the balance sheet.

549
00:43:08,032 --> 00:43:16,132
Yes. Yes. So it's chicken or egg. Maybe it's like long term. And to Ryan's point, I do

550
00:43:16,132 --> 00:43:20,532
want to just say the stock can trade at $10 to $20 billion a day. No form of buying and

551
00:43:20,532 --> 00:43:25,392
selling activity included. ATM is singularly influencing the price. That 1% nowadays dollar

552
00:43:25,392 --> 00:43:29,412
value of ATM total liquidity, like Dan said on Josh's face, that might be 1% of the trade

553
00:43:29,412 --> 00:43:33,692
volume. So the ATM may only be 1% of trade volume. 100%, I totally agree. That is so

554
00:43:33,692 --> 00:43:39,552
right. That is so correct. The problem is, and I can't figure it out. Maybe the ATM is

555
00:43:39,552 --> 00:43:43,492
completely relevant. But what I understand from the market dynamics is if you're able

556
00:43:43,492 --> 00:43:48,312
to sell massive amounts of equity and then get the, at a certain price, and you know where

557
00:43:48,312 --> 00:43:54,132
you want to take the stock and get the offer to buy back your short liquidity, then you're

558
00:43:54,132 --> 00:43:59,872
essentially there's a gravitational pin. And I think what we've seen is that gravitational pin

559
00:43:59,872 --> 00:44:05,792
has been 6.5 MST or IBIT. And other shorts and other traders will come in and create that

560
00:44:05,792 --> 00:44:11,192
gravitational pin. So what we need to see is that pin be moved. It needs to be moved up. And I think

561
00:44:11,192 --> 00:44:16,352
the passive buying is going to do that. And so I think a little less marginal sell pressure could

562
00:44:16,352 --> 00:44:20,052
be the catalyst. Could I be totally wrong? Maybe they shut off the ATM. Maybe it's still pinned

563
00:44:20,052 --> 00:44:24,532
6.5 i that 100 that could be the case that's just where the market wants us that's the future

564
00:44:24,532 --> 00:44:31,172
expectation of bitcoin yield but i think it's well worth the time or experiment to see if we can move

565
00:44:31,172 --> 00:44:40,212
that pin up in the short term long term whatever that's true so i'm just going to add the the notion

566
00:44:40,772 --> 00:44:44,932
i think i used to strictly believe that that bitcoin yield is the only thing that justifies

567
00:44:44,932 --> 00:44:51,412
the multiple but i think josh mann changed changed my mind on that just from from the passive flows

568
00:44:51,412 --> 00:44:56,612
he's just said it will levitate up if you just leave it it will levitate that's what i've been

569
00:44:56,612 --> 00:45:02,292
saying the whole time yeah this is this is the architecture of the market right yeah i think

570
00:45:02,292 --> 00:45:05,012
you're really right here of the market this is what i've said since the very beginning is it's

571
00:45:05,012 --> 00:45:09,412
gonna be the largest company in the world it's a function of like what it takes to get there and

572
00:45:09,412 --> 00:45:14,772
you know how much how much capital is raised at different points in time depending on different

573
00:45:14,772 --> 00:45:19,652
catalysts in the market, right? You've got very specific times where a lot more energy comes into

574
00:45:19,652 --> 00:45:24,052
equities at different periods of time for whatever reason, right? We saw it in November,

575
00:45:24,532 --> 00:45:29,332
we saw it in March. You've got periods of time where that happens. We haven't seen that since

576
00:45:29,332 --> 00:45:34,232
November. I think that's typical with what we've seen in the past. We saw it actually, it was like

577
00:45:34,232 --> 00:45:41,932
last July or it was July, 2023, huge spike, March, 2024, huge spike, November, March,

578
00:45:41,932 --> 00:45:49,212
sure huge spike and we just we haven't seen one yet in 2025 and i think that's possibly on the

579
00:45:49,212 --> 00:45:54,812
horizon with the catalyst and personally when i'm thinking about this stock like i love that we're

580
00:45:54,812 --> 00:45:59,852
diving super nitty gritty into all these different components because it's it's useful to understand

581
00:45:59,852 --> 00:46:04,012
like all the different players in the market here and what's going on but personally when i'm

582
00:46:04,012 --> 00:46:08,172
thinking about this like from a long-term perspective opportunity cost of capital is huge

583
00:46:08,172 --> 00:46:10,892
Like what else would you rather be in?

584
00:46:10,892 --> 00:46:12,212
And we're going to sell this.

585
00:46:12,212 --> 00:46:14,252
If you're going to go buy Bitcoin, just go buy Bitcoin.

586
00:46:14,252 --> 00:46:17,132
If you just want Bitcoin exposure, what are you doing here?

587
00:46:17,132 --> 00:46:19,372
Just stop complaining.

588
00:46:19,372 --> 00:46:20,372
Just go buy Bitcoin.

589
00:46:22,332 --> 00:46:23,932
Well, yeah.

590
00:46:23,932 --> 00:46:26,692
So you think about opportunity, cost of capital and risk, right?

591
00:46:26,692 --> 00:46:28,252
What's the downside?

592
00:46:29,132 --> 00:46:31,732
What's the downside of all these instruments that you're holding?

593
00:46:31,732 --> 00:46:34,172
What's the downside in every scenario?

594
00:46:34,172 --> 00:46:36,172
What's the downside of other Bitcoin treasury companies?

595
00:46:36,172 --> 00:46:37,972
What's the downside of these preferred equity instruments?

596
00:46:37,972 --> 00:46:41,092
Like, where do you want to, like, it all comes, like, you've only got $1.

597
00:46:41,412 --> 00:46:42,312
Where do you spread that dollar?

598
00:46:43,572 --> 00:46:49,012
And if you're complaining about MSTR and you want to go invest in NVIDIA or Apple or Tesla,

599
00:46:49,152 --> 00:46:49,932
like, go do that.

600
00:46:50,712 --> 00:46:52,892
I don't know why people are just complaining so much.

601
00:46:53,672 --> 00:46:58,352
Because the long term here, you're thinking about what does this look like five years from now,

602
00:46:58,412 --> 00:47:00,672
10 years from now, based on the setup and everything you know.

603
00:47:01,452 --> 00:47:02,652
That's kind of how I'm viewing it.

604
00:47:02,732 --> 00:47:06,512
It's like, this is an investment-grade investment.

605
00:47:06,512 --> 00:47:13,532
yeah they created investment grade preferred equity instruments Bitcoin back credit that

606
00:47:13,532 --> 00:47:18,812
are revolutionary they're fundamentally going to change the world and people are complaining

607
00:47:18,812 --> 00:47:27,692
because it there's breaking correlation in the middle of the summer in 2025 when the Bitcoin is

608
00:47:27,692 --> 00:47:34,532
10 higher than it was you know a month ago so all the Bitcoin treasury companies are experiencing

609
00:47:34,532 --> 00:47:40,572
downward pressure right now. So are we saying that is it the ATM in all those cases of those

610
00:47:40,572 --> 00:47:46,612
companies as well? Or is it just the ATM in the case of micro strategy or strategy? All I just

611
00:47:46,612 --> 00:47:50,312
want to bring up and I just keep hammering this point until people perhaps consider it.

612
00:47:51,252 --> 00:47:54,612
Market sentiment is not a lever that can be pushed up and pushed down.

613
00:47:55,752 --> 00:48:00,252
The market is going to treat it as it sees fit. The multiple is the multiple.

614
00:48:00,972 --> 00:48:08,092
and i don't think that what sailor's doing and what strategy is doing is the deciding factor and

615
00:48:08,092 --> 00:48:15,372
what's pushing the multiple down that that's just more shares in the market i guess there's more

616
00:48:15,372 --> 00:48:18,652
shares in the market there's more shares in the market but the shares in the market is not going

617
00:48:18,652 --> 00:48:24,972
to determine the multiple the multiple is going to be a factor of market sentiment yeah and sentiment

618
00:48:24,972 --> 00:48:27,172
It's one input into demand.

619
00:48:27,172 --> 00:48:27,612
Yeah.

620
00:48:27,612 --> 00:48:42,898
Sentiment is one input into demand yes But the number of that multiple that the market going to put on it is a function of broader dynamics than simply supply and demand that all i saying yeah but okay so what one one other thing thinking about the catalyst here

621
00:48:42,898 --> 00:48:48,258
on the horizon potential s p 500 i've talked about this a lot but you look at some of the mag 7 right

622
00:48:48,258 --> 00:48:54,178
the s p 500 holds seven six to seven percent of any of the mag seven publicly traded equities

623
00:48:54,178 --> 00:49:14,118
This is huge. If we're talking about what event will happen that will significantly increase demand, it's the S&P 500. Is it already priced in? Do all of the publicly traded, do all the ETFs have S&P 500, all the shares necessary?

624
00:49:14,118 --> 00:49:23,258
I personally don't think so. Like, I think this is the last biggest demand factor that we can think about into the future.

625
00:49:23,438 --> 00:49:26,018
And I think you got to think about what Saylor knows, too, right?

626
00:49:26,738 --> 00:49:31,018
Like, what's he know? Like, he knows information that we don't know.

627
00:49:33,098 --> 00:49:36,738
Is it government information? Is it information about what's going on in Bitcoin?

628
00:49:36,738 --> 00:49:43,778
like there's there's some information asymmetry here um especially after being on the other side

629
00:49:43,778 --> 00:49:47,298
of the curtain at another company there's information asymmetry all over the place

630
00:49:48,018 --> 00:49:51,618
so um i guess just something to keep into consideration

631
00:49:54,418 --> 00:50:01,778
should we talk straps go ahead the thing that i thought about when um what what dan said about

632
00:50:01,778 --> 00:50:07,218
the the atm being public and and predictable um i think that kind of relates to to adrian's

633
00:50:07,218 --> 00:50:13,378
comment about market sentiment and and i'm not one of the people who thinks that the at the common atm

634
00:50:13,378 --> 00:50:18,738
has like a direct fact effect like it's pushing the price down literally but there could be some

635
00:50:18,738 --> 00:50:24,338
second order effects like um you know if anticipation of death is worth worse than

636
00:50:24,338 --> 00:50:30,018
death itself then maybe the anticipation of the m of the atm is worse than the atm

637
00:50:30,018 --> 00:50:35,638
them. Like if the, if the short sellers think they can get liquidity, then they're emboldened.

638
00:50:36,278 --> 00:50:40,998
And, you know, people who may or may not have bought at the top get a little bit of a

639
00:50:40,998 --> 00:50:45,838
demoralization effect. So I'm not sure if that, how much that factors into market sentiment

640
00:50:45,838 --> 00:50:48,918
or not, but it's just something that I was thinking about when you guys were talking about it.

641
00:50:52,998 --> 00:50:56,158
Makes sense. Makes sense. Should we jump into stretch?

642
00:50:57,478 --> 00:50:57,718
Yeah.

643
00:50:58,318 --> 00:50:58,718
Yeah.

644
00:51:00,018 --> 00:51:02,018
Let's talk about it.

645
00:51:02,018 --> 00:51:04,018
I'll write your notes.

646
00:51:04,018 --> 00:51:06,018
Let's jump in.

647
00:51:06,018 --> 00:51:10,018
Someone said in the chat, Mason's writing Dan's notes.

648
00:51:10,018 --> 00:51:13,018
Is he the big brain?

649
00:51:13,018 --> 00:51:14,018
No.

650
00:51:14,018 --> 00:51:17,018
Yeah, Mason's backing me over here.

651
00:51:17,018 --> 00:51:20,018
Did World War III start today?

652
00:51:20,018 --> 00:51:21,018
What is going on?

653
00:51:21,018 --> 00:51:25,018
We got some serious, a lot of haters in the chat, man.

654
00:51:25,018 --> 00:51:27,018
I mean, it makes sense.

655
00:51:27,018 --> 00:51:29,018
I mean, people are frustrated, right?

656
00:51:29,018 --> 00:51:33,578
the ATM is put more shares in the market. There has been pressure, but the stock is like we're

657
00:51:33,578 --> 00:51:43,018
in top 99 percentile of stock closes trading at 1.85 MNav. Historical vol is at all time lows.

658
00:51:43,018 --> 00:51:46,938
And let's just look at the vol real quick. Historical vol is at all time lows. But you

659
00:51:46,938 --> 00:51:52,458
look at history, right? Goes high, goes low, goes high, goes low, goes high, goes low. It's like a

660
00:51:52,458 --> 00:51:58,618
mean reverting statistic here. And we're at an all time low. What has historically come next when

661
00:51:58,618 --> 00:52:04,538
you're at historical ball at all-time lows like where we go from here it's kind of how i think

662
00:52:04,538 --> 00:52:09,738
about it but let's jump in who wants to who wants to take this dan you're mr preferred give us a

663
00:52:09,738 --> 00:52:17,098
give us a rundown all right uh i just know the little maybe jeff why don't you get an overview

664
00:52:17,098 --> 00:52:22,378
of what this is designed to be because i always just like rock right into the nitty-dirty stuff

665
00:52:22,378 --> 00:52:22,878
Yeah.

666
00:52:22,878 --> 00:52:24,378
I'll take over from there.

667
00:52:24,378 --> 00:52:26,378
Yeah. Okay. So let's jump into this.

668
00:52:26,378 --> 00:52:32,378
So this is now Strategies fourth perpetual preferred equity that they've issued to the market.

669
00:52:32,378 --> 00:52:35,178
This is called Stretch, STRC.

670
00:52:35,178 --> 00:52:40,378
So preferred equities, this is a function of collateralizing the capital stack

671
00:52:42,458 --> 00:52:50,378
such that you are now creating different risk tranches across the capital stack that have different risk return metrics.

672
00:52:50,378 --> 00:52:58,898
So in the event of a bankruptcy liquidation, the highest up on the capital stack is going to have first priority over capital coming in the door.

673
00:52:59,258 --> 00:53:05,238
Lowest on the capital stack has last priority on any money that's left over.

674
00:53:05,678 --> 00:53:15,258
So when you think about seniority here, seniority is incredibly important because that is a function of who gets money in the event of a liquidation, which we think is an incredibly low probabilistic scenario.

675
00:53:15,418 --> 00:53:15,918
What's up, Ben?

676
00:53:17,138 --> 00:53:19,618
We've got so most senior, you've got convertible debt.

677
00:53:19,618 --> 00:53:28,658
most senior, second most senior, STRF. Now you have STRC, stretch, then you have STRK and then

678
00:53:28,658 --> 00:53:34,098
STRD. So it is the second most senior, sits right below STRF. STRF is the investment grade

679
00:53:36,098 --> 00:53:40,098
product that they're looking to provide to the market and they have STRC, which is stretch.

680
00:53:40,098 --> 00:53:44,178
And from a duration perspective, this is effectively a zero duration instrument

681
00:53:44,178 --> 00:53:50,678
with a relatively high yield and the yield is meant to float such that the price of the equity

682
00:53:50,678 --> 00:53:56,538
itself is relatively stable. So I will pause there and I'll kick it over to you guys. I want to talk

683
00:53:56,538 --> 00:54:06,698
about this. Yeah, I mean, this is it. So a couple of the really interesting parts of the perspectives

684
00:54:06,698 --> 00:54:15,498
that from my understanding is they agreed to not issue strc at prices either via atm or via just

685
00:54:15,498 --> 00:54:22,458
secondary market offerings um outside of the range of 99 and 101 so if the price gets too high it goes

686
00:54:22,458 --> 00:54:27,338
to 102 they'll stabilize the price using a couple different methods one of which is they'll drop the

687
00:54:27,338 --> 00:54:34,378
yield which may lower the price or they'll issue they'll issue new strc at 99 right and they have

688
00:54:34,378 --> 00:54:37,818
have to issue in that range. So they have covenants in the prospectus that make it such that

689
00:54:37,818 --> 00:54:43,418
they have ways, specific, legitimate ways in which they'll stabilize the price. And another really,

690
00:54:43,498 --> 00:54:46,958
really interesting part of this prospectus you won't read in the pitch deck here is,

691
00:54:47,418 --> 00:54:51,098
there's this question. And a lot of people say this, and it's actually quite frustrating to me.

692
00:54:51,258 --> 00:54:56,638
And it's kind of a valid concern with stride, but not really. It's that sailor will just stop

693
00:54:56,638 --> 00:55:00,398
paying the yield. Well, you read the prospectus, you figure out, no, that's actually not valid

694
00:55:00,398 --> 00:55:05,598
whatsoever. So you may say, well, what if stride just goes up and sailor wants to drop the yield

695
00:55:05,598 --> 00:55:10,418
to zero and not pay any yield and we're all left holding the bag? Okay. That's not going to happen.

696
00:55:10,418 --> 00:55:15,698
So in the, in the perspective of the covenant is such that they can't drop the yield on a month

697
00:55:15,698 --> 00:55:20,418
to month basis. Again, it's changed every month. So the new yield for the next month is announced

698
00:55:20,418 --> 00:55:26,378
in the last day of the prior month, and they can drop it by the change in the SOFR rate over the

699
00:55:26,378 --> 00:55:31,618
prior month. So the SOFA rate dropped by 10 basis points. That's the drop in SOFA rate over the

700
00:55:31,618 --> 00:55:36,978
prior 10 months plus 25 basis points. So that's the maximum drop. They can drop the yield over

701
00:55:36,978 --> 00:55:43,598
the next month, or they can only drop it to a floor of the SOFA rate. So you know the yield on

702
00:55:43,598 --> 00:55:48,618
stretch will never drop below the SOFA rate. This is extremely important. Liquidation preference is

703
00:55:48,618 --> 00:55:53,398
the same. Liquidation preference floor is 100. This doesn't really matter because they're not

704
00:55:53,398 --> 00:55:57,878
to let it rise other than that. But that's kind of the interesting protections you have.

705
00:55:57,878 --> 00:56:02,198
And then finally, the dividends are cumulative, which is hugely important, right? As long as the

706
00:56:02,198 --> 00:56:06,518
dividends are cumulative, you have protections against not having that dividend paid.

707
00:56:06,518 --> 00:56:10,758
And the cumulative dividend is a little bit different than STRF because the dividends

708
00:56:10,758 --> 00:56:15,798
compound into perpetuity. So if strategy misses a dividend payment on a month,

709
00:56:16,518 --> 00:56:20,678
that dividend payment then compounds against strategy at the dividend rate.

710
00:56:20,678 --> 00:56:26,898
So for example, let's say they miss a 0.75% monthly payment, which annualizes out to about

711
00:56:26,898 --> 00:56:32,918
the 9% that we're talking about annually. Let's say they miss it. The next month, they'll own

712
00:56:32,918 --> 00:56:43,378
0.75% dividend payment that they missed times 0.75. So it compounds at a rate of the compounding

713
00:56:43,378 --> 00:56:47,218
dividend into perpetuity. Point being, missed dividends compound against strategy into

714
00:56:47,218 --> 00:56:52,598
of perpetuity, it's highly protective strategies incentivized to pay them under all circumstances.

715
00:56:52,598 --> 00:56:57,618
So you have lots of protection, lots of stability, lots of mechanisms MSTR can use to stabilize

716
00:56:57,618 --> 00:56:58,618
the price.

717
00:56:58,618 --> 00:56:59,618
Boom.

718
00:56:59,618 --> 00:57:05,718
I hit the nail on the head.

719
00:57:05,718 --> 00:57:11,838
So right, you've got multiple different things that tools that you can use to pin the price

720
00:57:11,838 --> 00:57:12,838
in any one direction.

721
00:57:12,838 --> 00:57:15,078
But alternatively, you also can think here,

722
00:57:15,078 --> 00:57:18,418
if the price of STRC goes above 100,

723
00:57:19,318 --> 00:57:21,278
you're not buying it, right?

724
00:57:21,278 --> 00:57:23,078
There are other people, they're going to issue shares

725
00:57:23,078 --> 00:57:25,658
into the market such that the price does come down to 100.

726
00:57:25,658 --> 00:57:30,778
Alternatively, if the price is below 100, let's say 98, 99,

727
00:57:30,778 --> 00:57:34,838
there's an instant opportunity to go buy it at 98 or 99,

728
00:57:34,838 --> 00:57:37,138
knowing that they're going to get it back up to 100

729
00:57:37,138 --> 00:57:38,438
using these other instruments.

730
00:57:38,438 --> 00:57:40,898
This is like, Dan, to what we were talking about earlier,

731
00:57:40,898 --> 00:57:42,398
you've got this algorithm component

732
00:57:42,398 --> 00:57:44,738
that's gonna move back and forth all the time,

733
00:57:44,738 --> 00:57:46,278
understanding this ARB opportunity

734
00:57:46,278 --> 00:57:47,798
and this capital going to be coming in the door

735
00:57:47,798 --> 00:57:50,138
to pin it there at 100.

736
00:57:50,138 --> 00:57:54,178
And I mean, I'm sure traders are thinking about the field

737
00:57:54,178 --> 00:57:55,798
that they're gonna have with this instrument.

738
00:57:55,798 --> 00:57:58,558
I think it'll be a little bit volatile in the beginning.

739
00:57:59,598 --> 00:58:03,078
It might, the spread or the Delta between 100 might be,

740
00:58:03,078 --> 00:58:06,198
as it's outlined here, a dollar or so, or maybe two.

741
00:58:07,038 --> 00:58:09,198
But I think that will compress over time

742
00:58:09,198 --> 00:58:12,758
as the depth of this market gets significantly larger

743
00:58:12,758 --> 00:58:14,678
and the liquidity gets significantly larger.

744
00:58:14,678 --> 00:58:16,438
Like instead of being a dollar spread,

745
00:58:16,438 --> 00:58:19,678
it might be 10 cents next year.

746
00:58:19,678 --> 00:58:21,598
A year from now, the spread might be 10 cents.

747
00:58:21,598 --> 00:58:26,198
It moves up $1.10 and then down to $99.90.

748
00:58:26,198 --> 00:58:28,918
And then two years from now, it might be a penny.

749
00:58:28,918 --> 00:58:29,878
Every time it goes up a penny,

750
00:58:29,878 --> 00:58:33,318
somebody's arming that penny down in volume and size.

751
00:58:33,318 --> 00:58:38,198
So there's significant opportunity

752
00:58:38,198 --> 00:58:41,518
to get alpha in any one direction,

753
00:58:41,518 --> 00:58:45,118
knowing that there's an ARB basically.

754
00:58:46,798 --> 00:58:48,218
That's a really good point, Jeff.

755
00:58:48,218 --> 00:58:51,058
Yeah, that market, the more depth of liquidity,

756
00:58:51,058 --> 00:58:53,258
the more ARBing will happen

757
00:58:53,258 --> 00:58:55,778
and the more stable the actual equity is,

758
00:58:55,778 --> 00:58:57,518
even without strategy's input, right?

759
00:58:57,518 --> 00:59:01,038
The incentives are such that people will be likely

760
00:59:01,038 --> 00:59:04,158
to ARB it back to that kind of desired price range.

761
00:59:06,038 --> 00:59:06,798
Ben, what are your thoughts?

762
00:59:06,798 --> 00:59:07,758
You've been thinking about this a lot.

763
00:59:07,758 --> 00:59:13,598
talked about in a bit yeah i think it's a fascinating product to put out particularly

764
00:59:13,598 --> 00:59:19,198
while you were seeing some of the repricings happening for strike and strife over the last

765
00:59:19,198 --> 00:59:24,478
little period of time but i think it's more interesting the timing with which he's dropping

766
00:59:24,478 --> 00:59:29,758
this one into the market you know everyone's looking forward to a point where rates start

767
00:59:29,758 --> 00:59:35,598
coming down and they're starting to be a lot of pressure to start lowering rates and because of

768
00:59:35,598 --> 00:59:40,578
of that, they're going to be able to lower the rates on STRC likely right out of the gate. So if

769
00:59:40,578 --> 00:59:45,798
he can keep this stable at 100 and raise capital at 100, but he only has to pay out, you know, say

770
00:59:45,798 --> 00:59:52,318
it's $8.50 or 8.5% or 8.75%, it becomes pretty accretive to raise capital through this product.

771
00:59:52,318 --> 00:59:59,718
So what I'm going to be very interested in watching as this one moves forward is the size

772
00:59:59,718 --> 01:00:04,418
of the ATM they assign to it. You know, that's kind of how I'm viewing all of these products,

773
01:00:04,418 --> 01:00:08,018
because that's telling you where they want the markets to look.

774
01:00:08,198 --> 01:00:10,838
Where do they want them to participate in these products?

775
01:00:11,438 --> 01:00:13,758
And they've said that explicitly as well, right?

776
01:00:13,778 --> 01:00:14,838
They're limiting strife.

777
01:00:14,958 --> 01:00:17,278
That's kind of the crown jewel top of the capital stack.

778
01:00:17,518 --> 01:00:21,538
You know, that one, they're keeping a very low ATM relative to the others.

779
01:00:21,758 --> 01:00:26,018
Strike, obviously, one of the main ones that they're trying to issue out to the market.

780
01:00:26,298 --> 01:00:27,838
Massive ATM against that one.

781
01:00:28,158 --> 01:00:28,838
Stride, lower.

782
01:00:29,398 --> 01:00:33,058
This one, I'm pretty interested to see where it falls

783
01:00:33,058 --> 01:00:38,938
because the mechanics of having something so stable like this, you know, in this area where

784
01:00:38,938 --> 01:00:43,198
we all love volatility, it seems really boring, right? It's kind of like creating the equity

785
01:00:43,198 --> 01:00:48,398
version of a stable coin here. And so for us, you know, we look at those, well, if it's not going to

786
01:00:48,398 --> 01:00:54,018
move, there's nothing interesting there, but we're ignoring that the rest of the world is really

787
01:00:54,018 --> 01:01:00,338
looking for stability, right? Not everyone's been investing in, you know, options and all this other

788
01:01:00,338 --> 01:01:05,858
stuff that's super high octane a lot of people are looking for ways to generate really strong yields

789
01:01:05,858 --> 01:01:12,098
without capital risk and with this one being pegged at a dollar so they're essentially saying

790
01:01:12,738 --> 01:01:18,098
you know you can bet that we're going to actively manage this thing to a hundred dollars and we're

791
01:01:18,098 --> 01:01:22,658
going to keep it within a range there and we've got a lot of tools to make that happen that

792
01:01:22,658 --> 01:01:30,098
certainty at a dividend like stretches carrying is going to be very attractive in these markets.

793
01:01:30,098 --> 01:01:38,398
And not just for the pools of fixed income buyers, but for individuals as well. When you look at,

794
01:01:38,398 --> 01:01:44,058
if you can find the slide, Jeff, that shows the categories where they're sizing the market around

795
01:01:44,058 --> 01:01:49,258
this one. Yeah, that one right there. You can see the largest one they're highlighting there is US

796
01:01:49,258 --> 01:01:54,558
dollar bank accounts. So if rates start coming down and we end up back in an environment here

797
01:01:54,558 --> 01:02:02,178
where your high interest checking account is back to 1% or below, we all remember the days

798
01:02:02,178 --> 01:02:08,058
when you had 0.1% interest in a lot of your bank accounts. This is massively attractive,

799
01:02:08,598 --> 01:02:14,398
but it's going to depend on how much supply they put out there in the market, right? How much of

800
01:02:14,398 --> 01:02:18,638
this is actually going to be available? And I think the demand is going to be incredibly high

801
01:02:18,638 --> 01:02:25,198
just because of how universally applicable this product is when you're not looking at capital risk,

802
01:02:25,358 --> 01:02:28,938
right? It's not going to be tied to the movements of the common stock equity.

803
01:02:29,398 --> 01:02:36,238
And that is going to be very important. So this one, I just, this one fascinates me.

804
01:02:36,558 --> 01:02:41,738
And it fascinates me both because of its simplicity, right? How boring it sounds,

805
01:02:41,738 --> 01:02:47,678
but also just because this is one that they can market to an entirely different pool of capital

806
01:02:47,678 --> 01:02:49,618
than we've been looking at with all the other preferreds.

807
01:02:49,618 --> 01:02:52,438
This one's almost universally attractive

808
01:02:52,438 --> 01:02:54,618
if you've got cash sitting on the sidelines.

809
01:02:55,238 --> 01:02:59,738
So you could make the play just to capture what's in money market accounts

810
01:02:59,738 --> 01:03:02,278
or what's held in the cash accounts on brokerages.

811
01:03:03,018 --> 01:03:06,378
And if people are just settling into something that's stable like this,

812
01:03:06,378 --> 01:03:09,978
but high yield, and as long as you're settled out of a trade,

813
01:03:09,978 --> 01:03:12,778
but you want to sit in something that's going to yield you something meaningful,

814
01:03:13,418 --> 01:03:14,538
this is a great product.

815
01:03:14,538 --> 01:03:16,618
So, you know, in the early days, we all talked about it.

816
01:03:16,618 --> 01:03:20,698
I was trading and when I'd settle out of a trade, I would settle into strife and I would just sit in

817
01:03:20,698 --> 01:03:25,978
strife and wait for the next opportunity I was going to get into. And this is effectively probably

818
01:03:25,978 --> 01:03:31,258
even taking the place of that for temporary parking of capital monthly dividends. So you've

819
01:03:31,258 --> 01:03:37,178
got much more of an opportunity to hit that. And I think that for a lot of people, monthly is a huge

820
01:03:37,178 --> 01:03:42,138
deal. Waiting for a quarter feels like forever for those dividend checks. People are conditioned to

821
01:03:42,138 --> 01:03:49,258
get those quick you know they get them with all the etfs with msty and imst people love seeing

822
01:03:49,258 --> 01:03:53,898
activity you know if they did one of these with a weekly payout you know people would go crazy for

823
01:03:53,898 --> 01:03:59,898
it because there's just that dopamine hit of seeing money hit your account and so being able to get

824
01:03:59,898 --> 01:04:07,418
you know quick effectively interest payments on your cash and being able to just park it without

825
01:04:07,418 --> 01:04:15,018
worry about about capital risk is a huge huge deal so i do like this product a lot i wasn't expecting

826
01:04:15,018 --> 01:04:19,818
it at all that is not what i was expecting them to launch as the next product was something that's

827
01:04:19,818 --> 01:04:26,058
going to function as a stable coin but you know here it is and i think it's a pretty brilliant

828
01:04:26,058 --> 01:04:32,138
move the other thing that that is interesting and then i'll stop my rant here but is there's a

829
01:04:32,138 --> 01:04:36,778
a difference in the preferreds for qualified dividends.

830
01:04:36,818 --> 01:04:40,378
And I don't think a lot of people know it in the timing that you have to hold it

831
01:04:40,378 --> 01:04:44,618
to qualify for them. So on something that's cumulative,

832
01:04:44,664 --> 01:04:49,964
I believe it's 60 days out of 121 day period you have to be holding it to get the qualified dividends.

833
01:04:50,244 --> 01:04:54,364
But on non-cumulative products, it's 90 out of 181 days.

834
01:04:54,624 --> 01:04:57,944
So you have to hold the other products longer to get the qualified dividends.

835
01:04:58,264 --> 01:05:03,804
So just something I learned along the way that I'm guessing a lot of other people didn't know as well,

836
01:05:03,864 --> 01:05:08,204
that there is a difference between the preferred products, whether they're cumulative or non-cumulative,

837
01:05:08,364 --> 01:05:10,764
and what it takes to qualify for the qualified dividends.

838
01:05:10,764 --> 01:05:18,244
yeah the boring part is a feature not a bug because i texted my mother today if

839
01:05:18,244 --> 01:05:25,564
about stretch specifically because if her account went up 50 yeah she'd be euphoric

840
01:05:25,564 --> 01:05:32,564
but then if it went down 10 she'd be on the ledge it doesn't matter that she's still up 30 or 40

841
01:05:32,564 --> 01:05:39,504
if it goes down she's freaking out and i'm like this would be perfect for her she can just

842
01:05:39,504 --> 01:05:46,024
see the cash that would just be in her bank account and getting, you know, insane dividend

843
01:05:46,024 --> 01:05:52,324
payments off of it. So I was psyched about it. You know, obviously I'm a vault junkie and,

844
01:05:52,324 --> 01:06:01,424
and she's not, so this would be perfect for her. I think you explained 75% of X.

845
01:06:02,404 --> 01:06:07,964
Yeah. Started about 50% gain and then 10% down. I think that's a lot of what's the,

846
01:06:07,964 --> 01:06:12,984
a lot of what's going on in the chatter in the community at the moment yeah my mother's definitely

847
01:06:12,984 --> 01:06:19,944
inside that big green dot right there usd bank accounts usd bank accounts you know what i was

848
01:06:19,944 --> 01:06:25,324
thinking is like i think there's going to be a race right here to uh offer a credit card with

849
01:06:25,324 --> 01:06:33,284
cash back and stretch or cash back like think about like acorns or any of these like uh man

850
01:06:33,284 --> 01:06:41,824
And if I can convert my airline miles to stretch, I would do it in a heartbeat or any of these one, any of these preferred equity instruments, I would do it in a heartbeat.

851
01:06:42,964 --> 01:06:46,024
And yeah, I got to figure out a way to do that.

852
01:06:48,644 --> 01:06:52,084
I think that would be an interesting, somebody could do that, maybe Fold.

853
01:06:52,224 --> 01:06:57,784
Maybe Fold offers a card where you get cash back and it goes into one of these instead of sats or something like that.

854
01:06:57,784 --> 01:07:03,064
you get an option you go into sats or you go into stretch or any of these other preferred equity

855
01:07:03,064 --> 01:07:10,744
instruments but yeah ben i mean you highlighted a couple of huge things here the the the capital

856
01:07:10,744 --> 01:07:19,224
pools are absolutely enormous that can that should be interested in this type of product and

857
01:07:19,864 --> 01:07:23,064
i was explaining this earlier on the space with ryan and matt it's like these are

858
01:07:23,064 --> 01:07:32,664
are these are products that the entire world needs nobody can stop and very few people understand

859
01:07:33,784 --> 01:07:37,064
and it's it's like i feel like i'm banging my head against the wall most of the time trying

860
01:07:37,064 --> 01:07:44,104
to explain these to people but like these are these are going to be so pervasive in all of society

861
01:07:44,104 --> 01:07:48,744
over the next decade these are going to be absolutely enormous products because they're

862
01:07:48,744 --> 01:07:57,064
backed by bitcoin right the the bitcoin network continuing to grow is what's going to facilitate

863
01:07:57,064 --> 01:08:03,464
the growth of these instruments and the pro the a bit as the as these products

864
01:08:04,824 --> 01:08:10,984
get more attention and have more success over time because the information is symmetry as they have

865
01:08:10,984 --> 01:08:15,704
more success over time that is going to draw more capital into these instruments the yields are going

866
01:08:15,704 --> 01:08:21,864
of fall, which is going to lower strategy's cost of capital and their ability to raise capital

867
01:08:22,424 --> 01:08:31,784
goes higher. And the duration and the yield that they have to pay over time falls, which is more

868
01:08:31,784 --> 01:08:38,984
accretive to strategy's balance sheet into the future. And that just, these are levering,

869
01:08:39,704 --> 01:08:44,904
the coil for Bitcoin to go tighter and tighter, to go more vertical because they've got more capital

870
01:08:44,904 --> 01:08:48,904
that's able to come in the door via these instruments and drive Bitcoin higher because

871
01:08:48,904 --> 01:08:52,184
they're using Bitcoin as their permanent form of capital to back these products.

872
01:08:55,224 --> 01:08:59,944
I don't think people quite get that yet. And that's why we spend so much time on them,

873
01:08:59,944 --> 01:09:01,864
because they're huge. This is going to change the world.

874
01:09:01,864 --> 01:09:06,824
I think people miss a big thing with these. They see these preferreds that are coming out

875
01:09:06,824 --> 01:09:10,744
and they're constantly comparing them to MSTR.

876
01:09:11,804 --> 01:09:14,844
And these are not MSTR, right?

877
01:09:14,884 --> 01:09:16,824
These are entirely different products

878
01:09:16,824 --> 01:09:18,484
and they're not even meant for the same reason.

879
01:09:18,684 --> 01:09:21,124
So, you know, I know that there's a lot of comments

880
01:09:21,124 --> 01:09:22,284
that come out saying, you know,

881
01:09:22,284 --> 01:09:23,704
why do you even talk about the preferred

882
01:09:23,704 --> 01:09:24,864
you should be talking about MSTR?

883
01:09:25,184 --> 01:09:27,124
This is, what you have to realize

884
01:09:27,124 --> 01:09:28,664
and appreciate about these products

885
01:09:28,664 --> 01:09:31,064
is if you look at just this chart right here,

886
01:09:31,644 --> 01:09:35,684
this is capital being onboarded to Bitcoin, right?

887
01:09:35,684 --> 01:09:42,364
this is the loading dock for capital coming into Bitcoin. If you are a Bitcoin maxi and you want to

888
01:09:42,364 --> 01:09:47,604
drain capital out of the traditional system, this is the ramp. This is how that happens.

889
01:09:48,084 --> 01:09:52,844
So I'm not even necessarily looking at these all the time for, well, what's the impact going to be

890
01:09:52,844 --> 01:09:57,204
on MSTR? I mean, yes, obviously they're raising capital, they're buying Bitcoin, it accretes

891
01:09:57,204 --> 01:10:01,944
Bitcoin per share. I know you guys had a debate before I jumped on about volatility and all that,

892
01:10:01,944 --> 01:10:05,304
But, you know, this I look at it from a bigger picture.

893
01:10:05,304 --> 01:10:07,704
I mean, this is so.

894
01:10:08,344 --> 01:10:14,104
Such a massive movement for them to prove out these products and be able to go and say,

895
01:10:14,104 --> 01:10:16,464
listen, this is universally applicable.

896
01:10:16,504 --> 01:10:20,544
If you're holding cash, this product applies to you.

897
01:10:21,264 --> 01:10:27,544
Right. You've got whether you've got ten thousand dollars or you've got a hundred million dollars,

898
01:10:28,104 --> 01:10:31,864
this product is applicable for you, because if that money is sitting in a bank

899
01:10:31,864 --> 01:10:39,484
account, this highlights that you are now losing, right? You can effectively get S&P 500 returns

900
01:10:39,484 --> 01:10:45,844
with no capital risk. I mean, just think about that, right? That's why these products are so

901
01:10:45,844 --> 01:10:50,984
fun to cover. And it's why I'm going to continue talking about these products because this is such

902
01:10:50,984 --> 01:10:55,724
a big deal. You know, we quickly moved past what was happening with strategy because now they've

903
01:10:55,724 --> 01:10:59,904
scaled up and their liquidity is so deep and people are focusing on the options and all this stuff.

904
01:10:59,904 --> 01:11:06,084
I'm still looking at the fact that they are draining massive, massive amounts of fiat capital

905
01:11:06,084 --> 01:11:11,004
and bringing it into the Bitcoin network and into the Bitcoin system. And that's going to continue

906
01:11:11,004 --> 01:11:16,944
to drive that demand for Bitcoin up. Bitcoin's got the finite supply. And when you've got a finite

907
01:11:16,944 --> 01:11:21,284
supply and there's no amount of demand that's going to change that, the only thing that can

908
01:11:21,284 --> 01:11:26,824
give is the price. So I think these products deserve a lot more appreciation than they're

909
01:11:26,824 --> 01:11:32,404
getting. And this is just opening the door for these. You know, more companies are going to come

910
01:11:32,404 --> 01:11:36,984
in and get creative in this way and find products that tailor to different people. But it's this

911
01:11:36,984 --> 01:11:41,804
type of universally applicable product. This would have sounded like a dream a while ago.

912
01:11:42,604 --> 01:11:46,864
No capital volatility, right? Your capital is going to remain begged. You got a 9% dividend

913
01:11:46,864 --> 01:11:52,784
that's paid every month. Like you got an emergency fund, right? Sign me up. It's way better than

914
01:11:52,784 --> 01:11:58,184
parking it in a bank account. There's a lot of cash in bank accounts. So, you know, these are a

915
01:11:58,184 --> 01:12:01,964
big deal, regardless of whether you're looking at them and you're just tying them to the performance

916
01:12:01,964 --> 01:12:07,584
of MSTR, the volatility or whatever it is. If you just zoom out from that, you know, there's some

917
01:12:07,584 --> 01:12:13,584
appreciation that I think needs to be out there for just how big of an idea these products were

918
01:12:13,584 --> 01:12:20,604
and seeing them scale out and build out this yield curve is incredibly impressive. I mean,

919
01:12:20,604 --> 01:12:27,084
this is going to make a huge, huge impact in the price of Bitcoin long term. So I love these

920
01:12:27,084 --> 01:12:31,064
products and I'm going to continue to follow these because I think it's just an amazing

921
01:12:31,064 --> 01:12:38,624
shift in the market and the ability to attract that capital so seamlessly into Bitcoin is just huge.

922
01:12:39,104 --> 01:12:45,264
This is going to solve the retirement crisis in America. I think I personally think this will

923
01:12:45,264 --> 01:12:49,364
solve the retirement crisis in America. You've got Bitcoin backed securities. When you look at

924
01:12:49,364 --> 01:12:53,684
the alternatives out there, there's so much physical risk in the world. Mortgage backed

925
01:12:53,684 --> 01:12:59,524
securities, you're looking at, you know, all these other fixed income products from all these other

926
01:12:59,524 --> 01:13:05,364
corporations that just are piled with physical risk, they're probably mispriced. And this is

927
01:13:05,364 --> 01:13:09,764
the ability to onboard the rest of the world into Bitcoin backed credit, which could solve some of

928
01:13:09,764 --> 01:13:13,444
the retirement crisis. You think about somebody that holds 10 Bitcoin, let's just say Bitcoin goes

929
01:13:13,444 --> 01:13:22,084
to $2 million. You now hold $20 million. So you take half of that at a future point in time,

930
01:13:22,084 --> 01:13:25,364
and they're still offering strategy, still offering these products. Now you've got $10 million.

931
01:13:26,244 --> 01:13:32,484
Let's say you've got something that's giving you 8% interest in fiat. That's $800,000 a year,

932
01:13:32,484 --> 01:13:38,164
and you still have half your Bitcoin. This world is going to look way different when the price of

933
01:13:38,164 --> 01:13:43,764
bitcoin rises and these products become more popular it's going to take time it's not going

934
01:13:43,764 --> 01:13:48,564
to happen tomorrow right there's not going to be a huge rush of capital in the door into these

935
01:13:48,564 --> 01:13:53,844
preferred products tomorrow no it's going to take time to mature just like any new product coming

936
01:13:53,844 --> 01:14:00,324
to the market like when the iphone came out it took time started with a very basic product and

937
01:14:00,324 --> 01:14:05,604
then it evolved over time and it got better and better and better and more people bought it and

938
01:14:05,604 --> 01:14:10,604
And as these products made their way into the world,

939
01:14:10,724 --> 01:14:12,304
everybody started talking about them.

940
01:14:12,304 --> 01:14:14,104
Hey, I got this iPhone, let you check it out.

941
01:14:14,104 --> 01:14:15,864
And you're like, wow, that's super cool.

942
01:14:15,864 --> 01:14:18,744
Now, instead of a $1,000 iPhone,

943
01:14:18,744 --> 01:14:19,604
you're talking about something

944
01:14:19,604 --> 01:14:21,544
that you could store your economic energy in

945
01:14:21,544 --> 01:14:24,824
and get paid capital with Bitcoin backed safety.

946
01:14:24,824 --> 01:14:28,164
Like that's a really interesting value proposition.

947
01:14:28,164 --> 01:14:32,024
And that takes time to penetrate the market.

948
01:14:32,024 --> 01:14:33,844
That's why we're talking about it.

949
01:14:33,844 --> 01:14:35,604
This is the biggest story.

950
01:14:35,604 --> 01:14:39,964
This is the biggest story in all of finance right now.

951
01:14:39,964 --> 01:14:40,944
We need to talk about it.

952
01:14:40,944 --> 01:14:42,824
People need to talk about it.

953
01:14:42,824 --> 01:14:44,364
It's different.

954
01:14:44,364 --> 01:14:45,544
I kind of want to,

955
01:14:45,544 --> 01:14:48,084
I just want to double tap what Ben said.

956
01:14:48,084 --> 01:14:52,904
Just the fact that now, if you are holding cash,

957
01:14:52,904 --> 01:14:56,064
the, in my opinion, the best thing that you could do

958
01:14:56,064 --> 01:15:00,304
with no capital risk, no volatility, 9% return,

959
01:15:00,304 --> 01:15:04,284
as Ben said, almost beating the S&P 500,

960
01:15:04,284 --> 01:15:12,164
put it into stretch, right? And then that leads to buy pressure on Bitcoin. Beyond strategy,

961
01:15:12,264 --> 01:15:18,784
that just made me so incredibly bullish for Bitcoin. 100%. When you think about,

962
01:15:19,184 --> 01:15:22,444
and I tweeted this, when you think about all the people selling the top,

963
01:15:22,964 --> 01:15:25,764
and then they have all this cash, it's like, what are you going to do with that cash?

964
01:15:25,924 --> 01:15:30,404
Where does it go? You're selling for dollars. You don't want dollars, you're a Bitcoiner.

965
01:15:30,404 --> 01:15:36,044
What do you want? So, okay, well, I could actually, if I think it's, everything's looking super toppy

966
01:15:36,044 --> 01:15:41,304
here, I could sell and you can move into these other instruments. And you're like, great, this

967
01:15:41,304 --> 01:15:44,924
is over collateralized. It's senior in the capital stack. I think the probability of this going to

968
01:15:44,924 --> 01:15:49,404
zero is incredibly low. It's over collateralized and still Bitcoin backed exposure. I just want to

969
01:15:49,404 --> 01:15:57,864
push the clutch in. You can now push the clutch in and still be Bitcoin related in a Bitcoin

970
01:15:57,864 --> 01:16:05,604
related security. That's never existed before. It's just ironic. If you're selling Bitcoin to

971
01:16:05,604 --> 01:16:10,884
try to profit and then go into this and strategy is just going to ATM and then buy the Bitcoin that

972
01:16:10,884 --> 01:16:18,704
you just sold. It's like, what are you really doing? It's the same thing as the ETF, right?

973
01:16:18,724 --> 01:16:24,124
It's the kick yourself in the deck trade, right? This happened in February of 24 when everybody's

974
01:16:24,124 --> 01:16:25,784
saying, oh, MSTR is dead.

975
01:16:25,844 --> 01:16:28,284
I'm going to sell MSTR and I'm going to buy the Bitcoin ETF.

976
01:16:28,404 --> 01:16:30,864
And it's like, well, do you realize what you're doing?

977
01:16:31,584 --> 01:16:37,764
Like you're selling the thing to buy the thing that makes the thing that you just sold more

978
01:16:37,764 --> 01:16:38,204
valuable.

979
01:16:39,464 --> 01:16:41,584
And it's the same concept, right?

980
01:16:41,584 --> 01:16:46,544
And like we're going to see this, this, right?

981
01:16:47,324 --> 01:16:50,924
People are going to be moving to all of these different instruments at different times in

982
01:16:50,924 --> 01:16:53,384
the cycle, just depending on what they think is going on.

983
01:16:53,384 --> 01:17:00,484
right? People are going to be in MSTR and they're like, okay, I think I'm going to peel off a little

984
01:17:00,484 --> 01:17:07,244
bit on MSTR and maybe I go to some strike and strife because I want some more safety, but maybe

985
01:17:07,244 --> 01:17:12,364
I do that with 10% and if it goes higher, maybe I, maybe change that from 10% to 20% and you're

986
01:17:12,364 --> 01:17:17,024
just kind of like constantly moving between these pieces and maybe I'm peeling off some into Bitcoin

987
01:17:17,024 --> 01:17:23,364
all the time. And there's just so many different permutations and combinations

988
01:17:23,364 --> 01:17:28,344
of these different instruments that you can hold at any one given time based on what you think

989
01:17:28,344 --> 01:17:37,984
market expectations are for the future. And all of it flows into Bitcoin, right? It is the defense

990
01:17:37,984 --> 01:17:42,624
strategy, the Pentagon, it's the Bitcoin defense strategies, all these different ATMs. So it's

991
01:17:42,624 --> 01:17:49,984
it's interesting to think about you know what sailor said winter's not coming back

992
01:17:50,784 --> 01:17:57,184
does that mean there's not going to be bear market drawdowns no are there going to be extended

993
01:17:57,184 --> 01:18:03,024
periods of time where things are as bad as they were maybe in 22 with ftx clubs may be different

994
01:18:03,024 --> 01:18:07,984
right it may look completely different and the plumbing has changed right this infrastructure

995
01:18:07,984 --> 01:18:13,104
didn't exist previously. If you look back in history in 2017, if you wanted to buy Bitcoin,

996
01:18:13,104 --> 01:18:16,064
if you wanted a Bitcoin exposure, you had to take your money from a bank account,

997
01:18:16,064 --> 01:18:19,664
move it over to some sketchy exchange that you didn't know how it worked and then figure out

998
01:18:19,664 --> 01:18:25,744
how to do it. And then buy some thing on the internet that is just untested and move it over

999
01:18:25,744 --> 01:18:34,704
to a flash drive. It was a tough sell, really tough sell. Now, 2020, you have MSTR buys Bitcoin

1000
01:18:34,704 --> 01:18:41,024
and you're like, okay, now I could get correlated exposure in an equity. 24 comes and now I can buy

1001
01:18:41,024 --> 01:18:47,884
a Bitcoin ETF from all of these different institutions. And now 25 comes and you've

1002
01:18:47,884 --> 01:18:51,684
got Bitcoin backed credit fixed income instruments that are still tied and correlated to Bitcoin.

1003
01:18:52,424 --> 01:18:56,684
That is a fundamental change in the architecture and the plumbing of the market that didn't exist

1004
01:18:56,684 --> 01:19:05,344
previously. Fundamental. And that's exciting. So do I think we're going to get an 85% drawdown?

1005
01:19:05,564 --> 01:19:10,364
I don't think so. Like, I don't think it's going to happen because there's these different

1006
01:19:10,364 --> 01:19:15,544
instruments, like the architecture has changed. And now there's opportunity to stay within Bitcoin,

1007
01:19:15,544 --> 01:19:20,924
as opposed to moving to altcoins or dollars or, you know, pushing the clutch in, you have

1008
01:19:20,924 --> 01:19:28,204
alternatives that you can go into. And that's what I'm excited about. Well, I'm getting accused of

1009
01:19:28,204 --> 01:19:32,524
being a permable, which is fine because I am incredibly bullish on all of these different

1010
01:19:32,524 --> 01:19:38,044
instruments. I'm incredibly bullish on all the new capital coming the door. And this is the biggest

1011
01:19:38,044 --> 01:19:43,964
story in all of finance. And I'm going to hang my hat on that. Well, I'm always going to be bullish

1012
01:19:43,964 --> 01:19:49,644
all of these because I'm so bearish. Our politicians and the fiat monetary system,

1013
01:19:49,644 --> 01:19:55,564
right? Like that's the only thing I need to continue to be bullish on products coming out

1014
01:19:55,564 --> 01:20:02,064
in the Bitcoin space, right? This is the other side of the trade of fiat currencies. You know,

1015
01:20:02,084 --> 01:20:06,604
if they're out there with their unlimited supplies, you know, able to manipulate it to try to create

1016
01:20:06,604 --> 01:20:11,304
the economy and stimulate growth and keep everything rolling, keeping people spending as consumers,

1017
01:20:12,344 --> 01:20:16,464
you know, I want to opt out of that. And I want something that's got a completely fixed supply

1018
01:20:16,464 --> 01:20:20,164
where no matter the demand, the only thing that's going to be able to give us the price.

1019
01:20:20,804 --> 01:20:23,404
And it depends on what you're going to view as risk, right?

1020
01:20:23,404 --> 01:20:36,176
People look at bear markets and shakeups in the markets and they say well you know there going to be a flight to safety Well what do you think safety is going to be in 10 years Like I don know if people are looking at all these spending bills that are coming

1021
01:20:36,616 --> 01:20:39,576
and everything that's happening out there, but I'm not thinking

1022
01:20:39,976 --> 01:20:41,616
that parking back in U.S.

1023
01:20:41,616 --> 01:20:44,576
dollars is going to be safe at some point.

1024
01:20:45,176 --> 01:20:48,216
I think you're going to want to opt out of that, whatever the country is.

1025
01:20:48,216 --> 01:20:50,176
U.S. to I don't care what country you're in, right?

1026
01:20:50,176 --> 01:20:56,996
whatever you currently is. I think that the world is evolving to a point where people are going to

1027
01:20:56,996 --> 01:21:04,536
really start valuing true decentralization. And that, I think, is still massively underpriced in

1028
01:21:04,536 --> 01:21:10,976
Bitcoin. So, you know, I don't even look at these to tell people to buy them, right? I don't think

1029
01:21:10,976 --> 01:21:15,196
these belong in everyone's portfolios. A lot of people still have really long timeframes and

1030
01:21:15,196 --> 01:21:20,016
Bitcoin's probably the better bet because if you've got a long time horizon, you're accumulating

1031
01:21:20,016 --> 01:21:26,096
wealth, like the money printing is not stopping. So you might want to get in Bitcoin instead and

1032
01:21:26,096 --> 01:21:31,896
ride that for the long haul. But I also try to put myself in other people's positions.

1033
01:21:32,416 --> 01:21:36,636
And what we have right now is a massive amount of people exiting the workforce.

1034
01:21:37,956 --> 01:21:44,056
And that is huge. You know, my financial advisors, you know, I hear all the time about the aging of

1035
01:21:44,056 --> 01:21:48,436
his clientele, right? And it's not getting replaced. The next generations don't have nearly

1036
01:21:48,436 --> 01:21:52,936
the capital available. It hasn't changed hands. It hasn't changed generations. So you've got this

1037
01:21:52,936 --> 01:22:00,476
huge cohort of people that are hitting retirement. And we all live in this space where we're constantly

1038
01:22:00,476 --> 01:22:05,076
seeing people make huge wealth on all these trades. And we've all been finding Bitcoin early

1039
01:22:05,076 --> 01:22:10,876
and doing well. We live in a very unique bubble of affluence, but not everyone's in that bubble.

1040
01:22:11,716 --> 01:22:16,176
And you got to realize that not everyone is out here able to be speculators. Not everyone out

1041
01:22:16,176 --> 01:22:19,836
here is going to try to YOLO into Mason's 1080s at the end of July.

1042
01:22:20,436 --> 01:22:22,316
You know, not everyone's going to be doing all these things.

1043
01:22:22,436 --> 01:22:28,356
Some people, what they need is stability and something they can depend on because they

1044
01:22:28,356 --> 01:22:31,916
have bills and they have finite resources with which they can fund them.

1045
01:22:31,976 --> 01:22:35,376
They cannot take the same risks that the younger generation can.

1046
01:22:36,156 --> 01:22:43,196
And it's because of that cohort that I look at these products and go, this is a huge win

1047
01:22:43,196 --> 01:22:45,496
for people that are in that spot, right?

1048
01:22:45,496 --> 01:22:51,336
If you can get that capital stability and a 9% interest rate, that's life-changing for a lot of people.

1049
01:22:51,876 --> 01:22:58,536
You know, if you're living on Social Security and you've got a small asset pool, but you can augment it if you've got 9% coming in on it, right?

1050
01:22:58,556 --> 01:23:03,676
Maybe you've saved $200,000 and that $18,000 a year makes a huge difference in paying your bills.

1051
01:23:03,756 --> 01:23:04,376
That's massive.

1052
01:23:05,196 --> 01:23:10,036
So, you know, not everything is about trades and 10,000% returns, right?

1053
01:23:10,036 --> 01:23:15,256
Some people still have lives they have to live in these products, if they find them,

1054
01:23:15,256 --> 01:23:16,756
right, which is the other thing.

1055
01:23:16,756 --> 01:23:19,396
We also live in a small world where we know these exist.

1056
01:23:19,396 --> 01:23:23,656
There's a lot of people that don't, but if they find them, these could be very impactful

1057
01:23:23,656 --> 01:23:28,796
in creating a product like stretch is one of the ones that I think would be that first

1058
01:23:28,796 --> 01:23:29,796
stopping point.

1059
01:23:29,796 --> 01:23:34,036
I used to always think it was strife, but now you're seeing the value of that move around.

1060
01:23:34,036 --> 01:23:37,116
I think that does make people nervous, even though it went up right now, they're going

1061
01:23:37,116 --> 01:23:39,116
to be nervous that it comes down.

1062
01:23:39,116 --> 01:23:43,296
something like stretch where they're saying explicitly, we're trying to hold it at a hundred

1063
01:23:43,296 --> 01:23:48,596
dollars. That's more dependable for people to dip their toe in. And it might lead them to the point

1064
01:23:48,596 --> 01:23:52,896
where they say, well, I want some directional long exposure. So maybe I'm moving into some of it into

1065
01:23:52,896 --> 01:23:57,716
strike now. And they start moving out that risk curve if they're comfortable with it. But, you

1066
01:23:57,716 --> 01:24:01,996
know, that's, that's what I really appreciate about these is these are, these are products that you can

1067
01:24:01,996 --> 01:24:07,196
weave into your everyday life. If you need to, it's not for everybody, right? It very much depends

1068
01:24:07,196 --> 01:24:10,796
on where you're at in your life, what you've managed to accumulate through your career,

1069
01:24:11,436 --> 01:24:15,356
what you've got available to you to support yourself in retirement, and how much risk

1070
01:24:15,356 --> 01:24:17,196
you can take with that nest egg that you built.

1071
01:24:17,676 --> 01:24:23,156
But there's a massive cohort of people that are not in the position to take big swings.

1072
01:24:23,156 --> 01:24:29,376
And because of that, something that's stable, pays out monthly, and is giving you effectively

1073
01:24:29,376 --> 01:24:32,416
the return of the S&P 500, that's powerful.

1074
01:24:32,636 --> 01:24:34,116
And that's important to a lot of people.

1075
01:24:37,196 --> 01:24:46,696
a lot of people and institutions. Yeah. And institutions is what I'm excited for.

1076
01:24:47,776 --> 01:24:56,336
That's where my background is identifying term liabilities with different durations and

1077
01:24:56,336 --> 01:25:00,296
identifying how to get there. So I talked about this on the last couple of podcasts I've been on

1078
01:25:00,296 --> 01:25:04,856
where I think stretch is really interesting is this is an alternative to a US treasury.

1079
01:25:04,856 --> 01:25:10,436
And so my background was working in collateralized finance. So in collateralized finance, you got to

1080
01:25:10,436 --> 01:25:17,176
take assets and pledge them as collateral for a future point in time. So let's just say a duration

1081
01:25:17,176 --> 01:25:22,756
of two or three years for a reinsurance contract. Let's say you post $100 million of US treasury

1082
01:25:22,756 --> 01:25:29,956
bills and those treasury bills sit there for two years or three years. And the entity that is taking

1083
01:25:29,956 --> 01:25:37,796
on that capacity in case of a loss for risk, they want stability that that $100 million is going to

1084
01:25:37,796 --> 01:25:45,556
be there at a future point in time. So now here's a new product that strategy has created, a Bitcoin

1085
01:25:45,556 --> 01:25:52,016
backed credit instrument that can be stable and will effectively be stable at a future point in

1086
01:25:52,016 --> 01:25:57,976
time, assuming the market agrees. And that can now be used as collateral in those types of

1087
01:25:57,976 --> 01:26:05,696
instruments. And that's a big function of the insurance and reinsurance market is this

1088
01:26:05,696 --> 01:26:09,916
collateralized world that's evolving and changing pretty rapidly and growing very quickly.

1089
01:26:10,736 --> 01:26:15,456
So that's exciting. And it's going to take a while for these things to get in there,

1090
01:26:15,556 --> 01:26:20,096
but that's the future of these things. These have use cases that people aren't aware of yet,

1091
01:26:20,176 --> 01:26:23,836
and that's going to evolve. And that's where there's a lot of opportunity in the space for

1092
01:26:23,836 --> 01:26:27,476
people to think about how to use these in different ways and go talk in those different

1093
01:26:27,476 --> 01:26:34,376
marketplaces, like go contaminate all of your other financial realms with these products

1094
01:26:34,376 --> 01:26:35,056
in different ways.

1095
01:26:36,156 --> 01:26:38,076
You know, Dan's got a lot of models there in the background.

1096
01:26:38,236 --> 01:26:41,436
Imagine Dan has to reset all of his risk-free rates to 9%.

1097
01:26:41,976 --> 01:26:46,796
What do you think that does to the returns for a lot of things you're evaluating?

1098
01:26:47,516 --> 01:26:47,676
Right.

1099
01:26:47,956 --> 01:26:52,496
If your risk-free rate's 9% and you're, I don't know, say you're eight times over collateralized

1100
01:26:52,496 --> 01:26:57,496
on that position, you know, that changes the formulas in a pretty big way.

1101
01:26:58,196 --> 01:27:02,636
So it's a powerful, powerful product that they're putting out there in the market.

1102
01:27:03,136 --> 01:27:06,096
And I think it's going to do quite well.

1103
01:27:06,836 --> 01:27:10,696
And I think that you're going to see this one probably, maybe it's going to be second

1104
01:27:10,696 --> 01:27:14,316
to strike in terms of how much of it they're trying to raise.

1105
01:27:14,316 --> 01:27:19,016
I don't think they're probably going to put out a $21 billion ATM on it, but I can see

1106
01:27:19,016 --> 01:27:24,536
it being a 10 to $12 billion ATM and having this be the second largest that they're trying to raise

1107
01:27:24,536 --> 01:27:31,996
through because that carry cost can go down. If you're betting on rates going down, you know,

1108
01:27:31,996 --> 01:27:36,636
it's going to adjust down with SOFR, you know, so the carry on these can be lower than it can be on

1109
01:27:36,636 --> 01:27:40,676
a lot of the other ones that are purely fixed. So I think it's going to be one they're going to lean

1110
01:27:40,676 --> 01:27:47,176
on pretty heavily. Yeah. How is it not a direct swap for U S treasuries in every case where you

1111
01:27:47,176 --> 01:27:54,776
have the ability to do that it's just well it's market acceptability of the strength of the

1112
01:27:54,776 --> 01:28:01,256
collateral or the the the collateralization level and the security right like the

1113
01:28:02,136 --> 01:28:08,936
u.s treasury is backed by the u.s government this the strength of the u.s government so is

1114
01:28:08,936 --> 01:28:16,456
strategy stronger than the u.s government in bitcoin terms yes but in other terms no leverage

1115
01:28:17,176 --> 01:28:20,416
Yeah. Yeah. Just think of leverage and Bitcoin terms. Yes.

1116
01:28:21,616 --> 01:28:23,216
And leverage terms. Absolutely.

1117
01:28:23,556 --> 01:28:27,996
So it definitely changes your, your cost of capital mechanics.

1118
01:28:27,996 --> 01:28:31,356
Like all of your weighted average cost of capital requires the risk-free rate.

1119
01:28:31,416 --> 01:28:33,216
So if you start plugging in the risk-free rate at nine,

1120
01:28:33,296 --> 01:28:35,956
using those instruments, like your models are upside down.

1121
01:28:36,176 --> 01:28:39,456
This is rewriting finance and with different instruments and different

1122
01:28:39,456 --> 01:28:42,256
perspectives. One thing that will be really interesting,

1123
01:28:42,256 --> 01:28:43,216
and maybe Dan,

1124
01:28:43,296 --> 01:28:45,256
you might want to follow this or somebody else in the community,

1125
01:28:45,256 --> 01:28:51,196
like just can build this is tracking the volume of these instruments over time because that might

1126
01:28:51,196 --> 01:28:58,816
indicate uh where things are moving um and like um i guess the relative volume of all these

1127
01:28:58,816 --> 01:29:05,836
instruments next to each other so then you might be able to see where energy is flowing into is it

1128
01:29:05,836 --> 01:29:10,516
is it moving into strc like is that is that a bearish indicator is it moving into sdrk is that

1129
01:29:10,516 --> 01:29:17,356
a bullish indicator? Is it like, what is the relativity of all of these volumes together over

1130
01:29:17,356 --> 01:29:23,456
time and how does that change? And that might be an indicator of sentiment or market movement.

1131
01:29:24,016 --> 01:29:30,436
That could be interesting to follow. Yeah, it makes me a little bit sick to my stomach that

1132
01:29:30,436 --> 01:29:37,156
the ETFs can't hold something like this. They have to hold the treasuries. There's like $400

1133
01:29:37,156 --> 01:29:45,436
billion dollars of treasuries held by ETFs. And, you know, like if Misty could hold STRC instead of

1134
01:29:45,436 --> 01:29:52,596
US treasuries, they, you know, they might not have nav erosion. Yeah, there's, there's a lot,

1135
01:29:52,676 --> 01:29:57,036
a lot of things that can be used for here. Yeah, go ahead, Ben. I was just going to say it does

1136
01:29:57,036 --> 01:30:01,076
change. You know, we always talk about Bitcoin being the hurdle, right? Right. And it should be.

1137
01:30:01,656 --> 01:30:05,636
But for a lot of people, if you just look at your traditional investment portfolio now,

1138
01:30:05,636 --> 01:30:08,796
Now you look at these products and you know this is the hurdle rate.

1139
01:30:09,176 --> 01:30:13,556
If you can effectively sit risk-free, and risk is always in quotes, right?

1140
01:30:13,596 --> 01:30:14,776
Because there's always risk to everything.

1141
01:30:14,956 --> 01:30:20,456
But if you can sit risk-free at 9%, you got to evaluate everything else you're holding, right?

1142
01:30:20,496 --> 01:30:24,076
How much risk are you taking on to outperform that 9%?

1143
01:30:24,476 --> 01:30:30,396
And you got to look at the tax treatment of it and figure out what that net performance is.

1144
01:30:30,396 --> 01:30:33,616
So it does change your mindset when you look at it.

1145
01:30:33,616 --> 01:30:38,576
you've got something that's built to be stable you can monitor that collateral position in real time

1146
01:30:38,576 --> 01:30:43,456
so you know if you're starting to lose credit quality on the on the instruments you're holding

1147
01:30:43,456 --> 01:30:47,856
and you can make adjustments through the liquid market right trade them like equities in and out

1148
01:30:47,856 --> 01:30:52,976
very easy you know it's they're good products and i think that when people discover them there's

1149
01:30:52,976 --> 01:30:57,696
going to be a lot of people that you know might kind of reset their portfolio and go if this is

1150
01:30:57,696 --> 01:31:01,696
where i'm gonna settle and park in the base and then i'll move in and out of this but every time

1151
01:31:01,696 --> 01:31:05,376
i settle back out i'm not settling into a money market fund anymore i'm just going to settle into

1152
01:31:05,376 --> 01:31:12,416
these so you know everything's got risk clearly right i mean there's you've got risk with any

1153
01:31:12,416 --> 01:31:18,096
corporation that's issuing any securities wow that's a new the darkest dark yeah darkest ride

1154
01:31:18,096 --> 01:31:26,016
with this for a while timer lights but uh but they're pretty powerful because they already have

1155
01:31:26,016 --> 01:31:32,096
the assets that are backing them so i did hear on on one of the spaces i think it was when you were

1156
01:31:32,096 --> 01:31:36,176
on jeff and i think it was karan that was talking about it about the potential in the future where

1157
01:31:36,176 --> 01:31:43,616
they might have to actually carve bitcoin out collateral ease yeah to collateralize the

1158
01:31:43,616 --> 01:31:48,896
preferred products in order to try to get ratings which would be pretty interesting because now you

1159
01:31:48,896 --> 01:31:53,056
would have direct collateral tied behind these instead of just you know the entire pool that

1160
01:31:53,056 --> 01:31:58,816
would be segmented out by product so i thought that was an interesting conversation yeah it's

1161
01:31:58,816 --> 01:32:03,696
it's possible uh the rating agencies are interesting and that's that's something that we talked about a

1162
01:32:03,696 --> 01:32:09,536
little bit earlier but i think it's helpful to hit on again these rating agencies are for profit

1163
01:32:09,536 --> 01:32:15,776
entities and the people that work at these rating agencies are not like these aren't the smartest

1164
01:32:15,776 --> 01:32:20,176
people of the bunch right like if you're if you're really brilliant in finance you work for a company

1165
01:32:20,176 --> 01:32:25,396
to go make a lot of money. You don't go work for a rating agency. So the fact that they haven't

1166
01:32:25,396 --> 01:32:30,616
rated these into these products yet is not a surprise. They probably are having a hard time

1167
01:32:30,616 --> 01:32:34,776
wrapping their head around it. They also have a target on their back after the financial crisis

1168
01:32:34,776 --> 01:32:40,156
when all these products that were AAA rated collapsed. And they're probably a little bit

1169
01:32:40,156 --> 01:32:44,516
skittish about issuing a credit rating on something that doesn't have a ton of history,

1170
01:32:45,056 --> 01:32:50,036
despite it being significantly over collateralized. So there's work to be done there in order to get

1171
01:32:50,036 --> 01:32:51,616
of credit rating agencies around.

1172
01:32:51,916 --> 01:32:53,776
And maybe it's something like that, Ben,

1173
01:32:53,796 --> 01:32:55,196
where you've got a special purpose vehicle

1174
01:32:55,196 --> 01:32:56,196
that's got different collateral

1175
01:32:56,196 --> 01:32:57,416
in each one of these different buckets.

1176
01:32:57,916 --> 01:32:59,816
And that's how you go get the ratings in the door.

1177
01:33:00,076 --> 01:33:00,956
That's possible.

1178
01:33:02,696 --> 01:33:04,336
But ultimately, it's going to take time

1179
01:33:04,336 --> 01:33:05,556
and other people in the market

1180
01:33:05,556 --> 01:33:07,036
just continuing to pound the table.

1181
01:33:07,036 --> 01:33:09,656
And when the products themselves

1182
01:33:09,656 --> 01:33:11,436
reprice to different levels,

1183
01:33:11,676 --> 01:33:14,616
that's when the rating agencies

1184
01:33:14,616 --> 01:33:17,956
will also have an easier time to rate these products.

1185
01:33:17,956 --> 01:33:46,156
So right now, if, you know, strategy wants STR to be rated investment grade, well, it's got an 8% yield right now. That's not an investment grade yield. Now, if it reprices to 160 or 180 and it drops to five, maybe that's an easier message to go into the rating agencies and have that conversation. Or if there's, you know, a dozen other of these companies and you have some relativity, that's the other thing that the market is missing right now is a relativity, right?

1186
01:33:46,156 --> 01:33:55,036
Like you can compare this to like other preferred equities, but they're not the same because it's not some expectation of future cash flow.

1187
01:33:55,216 --> 01:33:58,436
It's a function of balance sheet strength and their ability to raise capital.

1188
01:33:58,556 --> 01:34:01,016
It's a different beast and a different animal.

1189
01:34:01,636 --> 01:34:08,156
So, yeah, that future is going to take some work.

1190
01:34:08,156 --> 01:34:14,696
work. And the weird dynamic here is that these rating agencies are for-profit entities, and you

1191
01:34:14,696 --> 01:34:19,676
have to pay to go get those products rated every year. You're paying to get those products rated

1192
01:34:19,676 --> 01:34:27,096
every year. It's just an interesting element of how these things work. So they could probably get

1193
01:34:27,096 --> 01:34:32,556
those products rated, B plus rated or something right now, but they don't agree with that rating.

1194
01:34:32,736 --> 01:34:37,696
So they don't want to go out and go get a B plus rating and then be benchmarked against all the

1195
01:34:37,696 --> 01:34:42,556
other B plus product products out there and have this kind of peg on what the yield should be if

1196
01:34:42,556 --> 01:34:46,276
they think the yield should go significantly lower, which would lower their cost of capital.

1197
01:34:46,396 --> 01:34:50,416
So there's this like chicken and egg component with those rating agencies as well.

1198
01:34:52,476 --> 01:34:57,396
It's unique. One thing that's also interesting to think about the future here is like the

1199
01:34:57,396 --> 01:35:03,136
tokenization of all of these assets or equities in general and your ability to use them as currency.

1200
01:35:03,136 --> 01:35:12,716
And if that's the case, you now have a direct competitor for some of these stable coins that is paying a yield where these other stable coins don't pay, don't currently pay yield.

1201
01:35:12,716 --> 01:35:24,736
Right. If STRS, STRC is a tokenized product that is transactable peer to peer, that changes how society can work.

1202
01:35:25,896 --> 01:35:32,316
I don't think it's going to happen tomorrow. I don't think it's going to happen next year, but it's a unique concept to think about.

1203
01:35:33,136 --> 01:35:36,416
these these instruments as currency as well

1204
01:35:36,416 --> 01:35:39,676
something less volatile

1205
01:35:39,676 --> 01:35:47,456
i don't know all right guys i gotta drop all right adrian see adrian stuff

1206
01:35:47,456 --> 01:35:54,136
later should we talk about that should we talk about the retirement of the converts

1207
01:35:54,136 --> 01:36:00,656
i think that's that's valuable yeah this this was really the first time where they i mean they

1208
01:36:00,656 --> 01:36:08,656
He'd mentioned it a few times already on podcasts that they were moving away from the convert market and he wasn't even suggesting new entrants come into the convert market.

1209
01:36:08,656 --> 01:36:24,308
But this was the first time that they really outlined that concretely as the plan effectively just saying we going to completely clean the capital structure and it going to be built around preferreds and commons And that the way that we going to structure this out So I thought it was very

1210
01:36:24,308 --> 01:36:30,248
interesting for them to call this out directly and show, you know, yeah, when you equitize these

1211
01:36:30,248 --> 01:36:36,148
convertible bonds, you know, that's going to boost the credit quality in all of these preferred

1212
01:36:36,148 --> 01:36:39,348
products. And if they're not going to replace them, what's going to be interesting is that's

1213
01:36:39,348 --> 01:36:43,948
going to leave a vacuum in the convertible bond market. You know, I got to imagine that these

1214
01:36:43,948 --> 01:36:48,608
convertible bond buyers have gotten used to, you know, the volatility of these, you know, even if

1215
01:36:48,608 --> 01:36:56,048
the volatility is dampened recently, you know, these have been massive return accelerators for

1216
01:36:56,048 --> 01:37:00,468
the guys trading convertible bonds. I mean, if you're out traditionally going and trading

1217
01:37:00,468 --> 01:37:05,968
convertible bonds on equities that have, you know, 20 to 30 vol, you know, even getting a convertible

1218
01:37:05,968 --> 01:37:10,148
bond on something with a 60 is going to greatly accelerate your ability to generate your returns

1219
01:37:10,148 --> 01:37:17,748
through your Delta hedging trades. So I do think that it's actually going to open up a market for

1220
01:37:17,748 --> 01:37:22,248
a lot of these other treasury companies where I think they will fill the demand in the convertible

1221
01:37:22,248 --> 01:37:28,768
bond market. But, you know, I mean, taking what do they have out there? Eight point. I can't remember

1222
01:37:28,768 --> 01:37:34,208
how much it was in convertible bonds, but a little over eight billion, 8.4 billion. Oh yeah. 8 billion,

1223
01:37:34,208 --> 01:37:39,288
8.2 billion. 8.2 billion. Yep. I mean, that's a lot. That's a lot of demand to replace,

1224
01:37:39,408 --> 01:37:42,788
particularly because you don't have any other real players at major scale. I mean, you saw

1225
01:37:42,788 --> 01:37:48,968
Marathon issue one, but there's going to be a void there. And I think that that demand,

1226
01:37:49,348 --> 01:37:53,308
perhaps it drives some better terms. Maybe there's some better premiums to be had out there

1227
01:37:53,308 --> 01:37:59,548
for some of these smaller issuers that are going to offer them, but it's clear strategy is shifting

1228
01:37:59,548 --> 01:38:07,388
off of that i could still see a world where if they weren't able to drive liquidity into these

1229
01:38:07,388 --> 01:38:12,908
preferreds fast enough and they got really under levered that you could see them go pull on this

1230
01:38:12,908 --> 01:38:18,108
lever again to get an injection but they're pretty clear at the moment that that's not the primary

1231
01:38:18,108 --> 01:38:26,028
path they're going to be taking right they they put this was the first time they did this as well

1232
01:38:26,028 --> 01:38:29,288
well, they put a pro forma BTC credit rating in here

1233
01:38:29,288 --> 01:38:32,848
without the converts as if they did roll them off,

1234
01:38:32,848 --> 01:38:35,588
which would show the credit quality of the instruments,

1235
01:38:35,588 --> 01:38:37,348
assuming the conversion of all the

1236
01:38:37,348 --> 01:38:38,928
in the money convertible notes.

1237
01:38:38,928 --> 01:38:40,888
And you see that that improves drastically.

1238
01:38:40,888 --> 01:38:42,648
Like STRF goes from, I don't know,

1239
01:38:42,648 --> 01:38:45,728
what is it like a six or seven X,

1240
01:38:46,568 --> 01:38:51,088
7.7 X BTC rating to a 11.8 X BTC rating.

1241
01:38:51,088 --> 01:38:52,428
And all of these other instruments

1242
01:38:52,428 --> 01:38:54,048
increase drastically too.

1243
01:38:54,048 --> 01:38:56,008
So significantly over collateralized,

1244
01:38:56,008 --> 01:38:57,728
and the importance there is

1245
01:38:58,868 --> 01:39:01,128
they can withstand a significant drawdown

1246
01:39:01,128 --> 01:39:05,888
and still have capital left to pay off the obligation.

1247
01:39:05,888 --> 01:39:09,388
There's just so much money on the balance sheet

1248
01:39:09,388 --> 01:39:11,188
that this isn't that big of a deal.

1249
01:39:12,988 --> 01:39:14,328
And yeah, do you mind if I hop in

1250
01:39:14,328 --> 01:39:17,528
and just talk about the definition of cum notional value

1251
01:39:17,528 --> 01:39:19,268
or cumulative notional value?

1252
01:39:19,268 --> 01:39:21,248
Yeah, I did a little post on this,

1253
01:39:21,248 --> 01:39:23,228
and because I didn't know what it was.

1254
01:39:23,228 --> 01:39:29,888
And it's just the amount of senior capital above that instrument, including that instrument.

1255
01:39:30,568 --> 01:39:36,008
So for like, for Strife, for example, you can see the outstanding liabilities.

1256
01:39:36,008 --> 01:39:38,288
This is obviously pro forma, so it's different.

1257
01:39:38,508 --> 01:39:43,208
But the cumulative notional value is, the cumulative notional is just all the converts

1258
01:39:43,208 --> 01:39:48,908
plus the outstanding Strife liquidation preference, a total of Strife outstanding.

1259
01:39:48,908 --> 01:39:55,948
And that's essentially what is prioritized in the case of liquidation, including that liability.

1260
01:39:55,948 --> 01:39:59,948
So it's just a cool way to look at it. And then you can use the drawdown scenarios to kind of

1261
01:39:59,948 --> 01:40:03,948
put your own Bitcoin rating assumption. It's all kind of saying the same thing with different

1262
01:40:03,948 --> 01:40:08,988
different words, Bitcoin rating, you know, Bitcoin backed collateral, all of that. It's all very

1263
01:40:08,988 --> 01:40:18,828
similar. Yeah, it's to provide perspective on the asset relative to the liability. That's what

1264
01:40:18,828 --> 01:40:23,828
That's how you get to the BTC rating is by summing the cumulative.

1265
01:40:26,668 --> 01:40:28,828
Yeah. Bingo. Okay.

1266
01:40:28,828 --> 01:40:30,828
Sorry guys, it's getting late over here.

1267
01:40:30,828 --> 01:40:32,828
It's getting late. Grow up chat.

1268
01:40:32,828 --> 01:40:33,828
Grow up.

1269
01:40:33,828 --> 01:40:37,828
Oh man. Okay.

1270
01:40:37,828 --> 01:40:43,828
STRC is low volatility, short duration. Okay. So before we end, where's the next one?

1271
01:40:43,828 --> 01:40:50,448
Mason's got some thoughts on where the next one fits in this bucket here.

1272
01:40:50,448 --> 01:40:52,868
Where are we going to put Stratus, guys?

1273
01:40:53,568 --> 01:40:54,648
Stratus is next.

1274
01:40:56,008 --> 01:40:58,588
Stratusphere, that's the high leverage.

1275
01:40:59,008 --> 01:41:00,668
STRU, Stratus.

1276
01:41:01,548 --> 01:41:03,268
But it's going to be the lowest.

1277
01:41:06,548 --> 01:41:11,268
Someone when they announced STRC was like,

1278
01:41:11,268 --> 01:41:18,668
no way. 9% monthly dividend. This is a mistake. I was like, what? It's funny.

1279
01:41:19,948 --> 01:41:22,468
9% monthly dividend might've been a little concerning.

1280
01:41:22,948 --> 01:41:28,388
Yeah. I would be bearish on that. Yeah. I would be bearish on that product.

1281
01:41:28,628 --> 01:41:33,488
That would raise some questions. That would flip me to the other side for sure.

1282
01:41:34,148 --> 01:41:36,188
I mean, Josh and I would have a field day.

1283
01:41:36,188 --> 01:41:39,308
Yeah, I would join forces.

1284
01:41:39,828 --> 01:41:41,568
I would be concerned at that point.

1285
01:41:42,028 --> 01:41:43,528
Go to slide 19.

1286
01:41:43,688 --> 01:41:45,788
I think that's the one that Jesse shared.

1287
01:41:46,508 --> 01:41:50,108
And there's a bunch of room in between STRC and STRD.

1288
01:41:50,828 --> 01:41:52,128
So I don't know.

1289
01:41:52,168 --> 01:41:55,648
It's got to be some kind of effective duration between two and eight years.

1290
01:41:55,888 --> 01:41:57,168
You can stick two more in there.

1291
01:41:59,148 --> 01:42:00,168
Yeah, you can stick.

1292
01:42:00,388 --> 01:42:01,428
You can stick quite a few.

1293
01:42:01,528 --> 01:42:02,608
Yeah, quite a few in here.

1294
01:42:03,028 --> 01:42:05,088
Building out this whole duration curve.

1295
01:42:05,088 --> 01:42:10,708
which again my background thinking about insurance right average duration on a like a

1296
01:42:10,708 --> 01:42:19,508
workers comp claim might be a decade like six to six to eight years and that means you want you

1297
01:42:19,508 --> 01:42:23,628
want products that have a duration of six to eight years and you're going to get paid out over time

1298
01:42:23,628 --> 01:42:30,368
for a six to eight year liability and that's like how i see the world is this like this duration curve

1299
01:42:30,368 --> 01:42:35,748
where you need to have assets that match to that specific duration.

1300
01:42:36,208 --> 01:42:38,628
This is big.

1301
01:42:38,848 --> 01:42:43,268
This is really important to wrap your head around this duration component.

1302
01:42:43,408 --> 01:42:44,528
I'm still learning it.

1303
01:42:44,548 --> 01:42:45,328
I'm still figuring it out.

1304
01:42:45,688 --> 01:42:48,748
When we were talking about what the potentials were for the next ones,

1305
01:42:49,008 --> 01:42:53,008
I think we mentioned something about a variable rate one,

1306
01:42:53,388 --> 01:42:58,008
but the fixed price was shocking to me.

1307
01:42:58,288 --> 01:43:00,288
That wasn't on my radar at all.

1308
01:43:00,368 --> 01:43:02,788
but so could there be another one that's variable,

1309
01:43:02,788 --> 01:43:04,768
but not pegged to a hundred or does that,

1310
01:43:04,768 --> 01:43:07,808
does it need to be pegged to something for this to make sense?

1311
01:43:08,028 --> 01:43:08,568
To be variable.

1312
01:43:10,548 --> 01:43:11,488
That's interesting.

1313
01:43:12,868 --> 01:43:13,788
I'm not sure.

1314
01:43:14,388 --> 01:43:15,228
Not really.

1315
01:43:15,668 --> 01:43:16,608
It could be variable.

1316
01:43:16,768 --> 01:43:17,628
You just remove the,

1317
01:43:19,208 --> 01:43:20,408
maybe it's a,

1318
01:43:20,548 --> 01:43:23,928
maybe it's so for plus something and it's just always,

1319
01:43:24,128 --> 01:43:25,268
always floating.

1320
01:43:25,268 --> 01:43:36,188
do we need to have predictions on how many more preferreds oh man no it's gonna be it's gonna be

1321
01:43:36,188 --> 01:43:41,868
a lot i think i think there's gonna be a whole catalog it's gonna be like uh you know getting

1322
01:43:41,868 --> 01:43:45,468
the east bay catalog to get cleats back in the day you're just gonna like look through all of

1323
01:43:45,468 --> 01:43:52,368
them you're like a different color different color nike adidas you know uh that's kind of

1324
01:43:52,368 --> 01:44:00,428
how I'm thinking about it. And man, I mean, when there are, I mean, Semler is already in their

1325
01:44:00,428 --> 01:44:05,568
filing. They've already looked, I think in the shareholder vote, they're going to

1326
01:44:05,568 --> 01:44:10,988
look to approve an increase in preferred equity shares. So they're signaling that they're going

1327
01:44:10,988 --> 01:44:15,868
to offer perpetual preferred equities. There are going to be dozens of these companies that are

1328
01:44:15,868 --> 01:44:19,688
going to do this. These Bitcoin treasury companies are going to do this. And we're going to have this

1329
01:44:19,688 --> 01:44:25,368
like yield curve that strategy is creating here and i hope everybody's prepared to talk about

1330
01:44:25,368 --> 01:44:30,488
these products forever because there's going to be a hundred of them there's going to be 200 of them

1331
01:44:30,488 --> 01:44:34,168
and they're all going to be competing for the same space and uh

1332
01:44:36,728 --> 01:44:41,528
i do like where it's pushing us you know as an industry though right i mean it's showing a lot

1333
01:44:41,528 --> 01:44:47,528
of maturing in this industry when you know this is moving people away from saying we're going to

1334
01:44:47,528 --> 01:44:52,568
compete and doesn't mean someone's still not going to go try to compete on this but we're not

1335
01:44:52,568 --> 01:44:58,728
necessarily competing for how much leverage we can apply what we're starting to focus on competing

1336
01:44:58,728 --> 01:45:05,288
on is credit quality products we can offer into the market and you know that's a much more

1337
01:45:05,288 --> 01:45:11,368
responsible way to scale and i think that that's a pretty good message to put out there now you're

1338
01:45:11,368 --> 01:45:15,688
still definitely going to have the other side of this there's still certainly going to be companies

1339
01:45:15,688 --> 01:45:17,548
that come out and try to really lever up.

1340
01:45:17,788 --> 01:45:19,668
And if Bitcoin's moving sideways,

1341
01:45:19,848 --> 01:45:20,848
they're going to try to find a way

1342
01:45:20,848 --> 01:45:22,188
to get their equity moving

1343
01:45:22,188 --> 01:45:23,608
and kind of be the vol play.

1344
01:45:24,028 --> 01:45:25,568
But largely for the players

1345
01:45:25,568 --> 01:45:26,828
that are achieving scale,

1346
01:45:27,288 --> 01:45:28,948
they're showing that,

1347
01:45:29,008 --> 01:45:30,928
do this unencumbered, right?

1348
01:45:30,948 --> 01:45:33,308
Don't stack on a lot of debt

1349
01:45:33,308 --> 01:45:35,988
and then focus on the credit quality

1350
01:45:35,988 --> 01:45:37,908
of the securities you can issue out into the market.

1351
01:45:38,588 --> 01:45:40,028
And if you want to go compete

1352
01:45:40,028 --> 01:45:42,788
with the products that strategy is putting out,

1353
01:45:42,868 --> 01:45:43,828
well, one way to do that

1354
01:45:43,828 --> 01:45:45,348
is to have better credit quality on them

1355
01:45:45,348 --> 01:45:49,428
than they do right have them be more over collateralized than the product that strategy

1356
01:45:49,428 --> 01:45:54,228
has out in market and maybe some companies will only focus on one or maybe two products

1357
01:45:55,268 --> 01:45:59,028
and you know that's really where they'll try to dominate by keeping them with a very high

1358
01:45:59,028 --> 01:46:04,868
credit quality i mean we'll see how this evolves but i do like that that's becoming the focus

1359
01:46:04,868 --> 01:46:10,388
right it's on quality now it's not necessarily on that all the credit quality ability if you want

1360
01:46:10,388 --> 01:46:14,548
that you're gonna have to go you know further out on the risk curve and you're gonna have to go

1361
01:46:14,548 --> 01:46:19,108
chase the emerging companies you know there's still a lot of a lot of plays out there where

1362
01:46:19,108 --> 01:46:23,188
there's a lot of volatility i think people are feeling that right now you know which is uh

1363
01:46:23,908 --> 01:46:28,548
which is always interesting there's been a lot in in a lot of these smaller cap plays where you had

1364
01:46:28,548 --> 01:46:33,988
some serious volatility happening in the last couple of weeks but uh you know it's it's still

1365
01:46:33,988 --> 01:46:39,428
out there but strategy is reaching such a scale where you know clearly with this depth of liquidity

1366
01:46:39,428 --> 01:46:44,388
it's not going to be nearly as volatile as some of those small plays are going to be so people are

1367
01:46:44,388 --> 01:46:49,188
chasing the super high volatility. I think a lot of people are going to be rotating capital into

1368
01:46:49,188 --> 01:46:54,988
smaller plays to chase that. I think you're right. And I think it's so important. And it was something

1369
01:46:54,988 --> 01:46:59,188
I was listening to Saylor talk about on a recent interview is why are there volatility sellers?

1370
01:46:59,188 --> 01:47:03,108
And what do options participants want on an equity? And I know a lot of these other smaller

1371
01:47:03,108 --> 01:47:06,468
companies don't have options markets, but it's something I've been reflecting on a lot too. It's

1372
01:47:06,468 --> 01:47:11,908
like, why is the volatility of MSTR more valuable than maybe the volatility of NVIDIA or some other

1373
01:47:11,908 --> 01:47:18,408
equity in the market. He says you want liquidity, obviously MSR has that, volatility, obviously has

1374
01:47:18,408 --> 01:47:23,248
been dying a little bit, and you want durability. And I think durability is the key here, right?

1375
01:47:23,248 --> 01:47:27,168
You have an equity backed by the hardest asset known to man that has an upward trajectory of 30

1376
01:47:27,168 --> 01:47:33,948
Kager plus. So I think those things combined make an incredibly attractive equity and pool

1377
01:47:33,948 --> 01:47:40,308
for option selling and that sort of those dynamics. So I just think it's really important

1378
01:47:40,308 --> 01:47:44,788
we don't forget those things and that's why mstr is valuable in the first place like all of that is

1379
01:47:44,788 --> 01:47:50,308
huge and a lot of these smaller bitcoin treasuries don't have that necessarily right and that's you

1380
01:47:50,308 --> 01:47:54,708
know it's kind of funny because this goes both ways right a lot of times the people that are

1381
01:47:54,708 --> 01:47:59,748
also trading around strategy are also selling options on strategy and they're going well where's

1382
01:47:59,748 --> 01:48:05,988
the volatility right well you're selling the volatility right so now imagine dollars in

1383
01:48:05,988 --> 01:48:10,628
misty thousands of other people are also selling the volatility now add on the etfs that are

1384
01:48:10,628 --> 01:48:14,948
selling the volatility right you're going to get these periods in time where things go sideways

1385
01:48:14,948 --> 01:48:18,628
right i mean you're going to get these gamma pins that are out there and it's going to stall things

1386
01:48:18,628 --> 01:48:24,708
out and you know everyone that's selling volatility contributes to that but it's a feature and i think

1387
01:48:24,708 --> 01:48:29,348
you said something earlier dan when i was just listening to it where you said at some point

1388
01:48:29,348 --> 01:48:32,388
there's going to have to be a moment where all these vol sellers get blown out

1389
01:48:32,388 --> 01:48:35,948
and I do think that will happen.

1390
01:48:36,908 --> 01:48:39,608
These are the types of plays where you get lulled to sleep

1391
01:48:39,608 --> 01:48:42,688
and you think it's over and then overnight,

1392
01:48:43,128 --> 01:48:45,788
all of a sudden you wake up and you've got a lot less shares

1393
01:48:45,788 --> 01:48:46,748
than you had the day before.

1394
01:48:47,208 --> 01:48:49,088
So I think that day is still coming.

1395
01:48:49,928 --> 01:48:51,348
Okay, now I feel personally attacked.

1396
01:48:52,888 --> 01:48:55,528
Well, it was kind of direct that had you, wasn't it?

1397
01:48:56,048 --> 01:48:57,008
Yeah, I think so.

1398
01:48:57,008 --> 01:49:02,348
I keep crossing my fingers hoping

1399
01:49:02,348 --> 01:49:04,528
the shorts will get blown out because I'm still

1400
01:49:04,528 --> 01:49:06,168
so freaking irresponsibly long

1401
01:49:06,168 --> 01:49:08,628
that I need an excuse to take

1402
01:49:08,628 --> 01:49:10,508
off the freaking leverage. Those are always

1403
01:49:10,508 --> 01:49:12,548
my favorite days to go watch your show, Solay.

1404
01:49:12,648 --> 01:49:14,228
I knew you had to scramble

1405
01:49:14,228 --> 01:49:16,448
because you were getting blown out of the water because things

1406
01:49:16,448 --> 01:49:18,688
move so quick. Those are my favorite days to watch.

1407
01:49:19,688 --> 01:49:20,628
It's always fun to

1408
01:49:20,628 --> 01:49:21,468
watch panic moves.

1409
01:49:22,228 --> 01:49:23,288
Love your back.

1410
01:49:25,468 --> 01:49:25,908
The

1411
01:49:25,908 --> 01:49:32,168
The move here on the price from, what was it, like $380 to $430?

1412
01:49:32,448 --> 01:49:36,748
When it moved just in the last two weeks, the vol didn't move at all.

1413
01:49:37,248 --> 01:49:38,608
Implied vol didn't move at all.

1414
01:49:39,248 --> 01:49:40,048
I noticed.

1415
01:49:42,708 --> 01:49:43,788
Which is interesting.

1416
01:49:44,788 --> 01:49:45,688
It's quiet.

1417
01:49:48,228 --> 01:49:51,228
It also feels like Bitcoin is kind of loading up, right?

1418
01:49:51,228 --> 01:49:57,188
I've never been more bored at 120,000 or whatever we're at right now, 119,000.

1419
01:49:58,468 --> 01:50:03,188
Even though just go back a couple of months and we would have been super excited on that move.

1420
01:50:03,268 --> 01:50:07,488
Now it got here and it's just kind of to that point where you just expected it to happen.

1421
01:50:07,808 --> 01:50:09,528
It should have been here a long time ago.

1422
01:50:09,628 --> 01:50:10,948
We were more surprised it wasn't.

1423
01:50:11,028 --> 01:50:13,528
So now it's here and you're going, all right, well, where's 150?

1424
01:50:14,308 --> 01:50:15,108
Yeah, where's the rest of it?

1425
01:50:17,108 --> 01:50:18,588
People are calling for double top.

1426
01:50:18,588 --> 01:50:19,848
It's like, here we are, double top.

1427
01:50:21,228 --> 01:50:24,348
It's like there's so much more money on the horizon.

1428
01:50:24,548 --> 01:50:25,628
It is a different market.

1429
01:50:25,828 --> 01:50:28,388
I mean, people do need to look back at the prior cycles.

1430
01:50:28,928 --> 01:50:32,908
And I'm not going to say there will never be a bear market again,

1431
01:50:33,168 --> 01:50:36,308
but the probabilities seem to be going down

1432
01:50:36,308 --> 01:50:40,388
because you got to look at the types of buyers that we have now.

1433
01:50:40,588 --> 01:50:45,748
In the past cycles, you had massive leverage trading in Bitcoin,

1434
01:50:46,028 --> 01:50:48,428
primarily from all these offshore exchanges.

1435
01:50:48,428 --> 01:50:56,288
You had all the collateral getting passed around behind the scenes for all these bad actor firms that were out there.

1436
01:50:56,848 --> 01:51:00,788
You had VCs that were really some of the ones that were trading out here.

1437
01:51:00,848 --> 01:51:04,968
So it was very driven by retail VC activity.

1438
01:51:05,408 --> 01:51:13,228
But now you've got these directionally long accumulators, not traders, that are just putting buy pressure into the market.

1439
01:51:13,228 --> 01:51:19,688
you've got the people holding it in their brokerage through etfs like ibit and they've been

1440
01:51:19,688 --> 01:51:26,348
holding pretty strong and accumulating consistently you know so while there's of course there's going

1441
01:51:26,348 --> 01:51:31,348
to be bear markets at some point i just think the severity of them is what's probably going to

1442
01:51:31,348 --> 01:51:36,368
change here agree you know it's not to say that we don't get a 30 or 40 drawdown we might

1443
01:51:36,368 --> 01:52:09,320
But I think that you have so many people lined up to buy these days and you seeing more and more of that buy pressure building up and you seeing more and more weakness out there surrounding the US dollar and the narrative there that I think it drawing more attention as the asset class grows So you know yeah we might get a hit 200 come down to 150 you know that kind of stuff that can certainly still happen you can still have these blow off tops but it just seems

1444
01:52:09,320 --> 01:52:15,080
like the structural bit is building over time and i'm not necessarily seeing where that slows down

1445
01:52:15,080 --> 01:52:21,480
yet this is still such a small small piece of the markets out there relative to where all the other

1446
01:52:21,480 --> 01:52:25,780
capital is that I think that this space is going to continue to build.

1447
01:52:27,100 --> 01:52:28,320
I agree with that, Ben.

1448
01:52:28,380 --> 01:52:33,140
And I think a lot of people who are calling for double tops have crypto PTSD.

1449
01:52:33,820 --> 01:52:38,700
And I think what they're not realizing is exactly what you're saying about the structural

1450
01:52:38,700 --> 01:52:48,200
change here, which is Saylor and the other Bitcoin treasury companies globally are tapping

1451
01:52:48,200 --> 01:52:56,680
into a 300 trillion dollar capital pool that has has yet to be touched by bitcoin and they are

1452
01:52:56,680 --> 01:53:05,160
personally our sailors personally and these other companies are personally opening up the floodgates

1453
01:53:05,160 --> 01:53:12,120
to to allow that capital to come in and uh bitcoin's only two trillion dollars right

1454
01:53:12,120 --> 01:53:21,240
I keep on looking at Nvidia. Bitcoin's not even as big as the largest equities in the US, right?

1455
01:53:22,860 --> 01:53:30,920
We're at a unique moment here. Yeah, we really are. And when you look at this,

1456
01:53:31,220 --> 01:53:36,540
I do think that there's still a potential for some weakness. The Bitcoin treasury companies

1457
01:53:36,540 --> 01:53:41,260
have not reached escape velocity. You've really got one primary player of scale, right? That's

1458
01:53:41,260 --> 01:53:47,040
strategy. You've got others coming to the market, but a lot of the capital raising is dependent on

1459
01:53:47,040 --> 01:53:53,340
the availability of capital from these institutional investors. And so it can slow down significantly,

1460
01:53:53,340 --> 01:53:58,080
right? You can get a period where there's just not capital readily available for these companies

1461
01:53:58,080 --> 01:54:03,040
to raise to go buy Bitcoin with. So right now, I think you're kind of in a race for scale.

1462
01:54:03,500 --> 01:54:07,400
I think you're seeing a lot of these treasury companies that are trying to accumulate quickly,

1463
01:54:07,400 --> 01:54:21,900
Try to get to that billion dollar mark where you can get these products out into the market where you've got control over how you're raising capital versus being out there and being held to the terms that comes with a lot of these institutional capital raises.

1464
01:54:22,520 --> 01:54:29,120
And in that market, you're largely dependent on how the prior raises for them went.

1465
01:54:29,120 --> 01:54:35,880
right so if you get a pipe transaction that really doesn't perform those investors become

1466
01:54:35,880 --> 01:54:41,060
skittish about reloading for another one so that can dry up capital for a while until excitement

1467
01:54:41,060 --> 01:54:46,020
comes back into the space the other thing you get is because you have so many of these companies

1468
01:54:46,020 --> 01:54:50,900
going through these you know with things like mergers and spacks and all this is you've got a

1469
01:54:50,900 --> 01:54:55,340
lot of these institutions that are already allocated in this space and that capital hasn't

1470
01:54:55,340 --> 01:55:01,320
freed back up to rotate into other deals. So it's not like every institution on earth is out here

1471
01:55:01,320 --> 01:55:06,940
trying to invest money in these Bitcoin treasury company deals, but the ones that are, you know,

1472
01:55:06,960 --> 01:55:11,180
are trying to get out of positions that they're already in and then they can reload if that

1473
01:55:11,180 --> 01:55:17,220
position performed. So, you know, there's still certainly, we're not really even fully out of

1474
01:55:17,220 --> 01:55:22,000
the gates here until my opinion, we have several companies that have, you know, billion dollar

1475
01:55:22,000 --> 01:55:27,940
treasuries out there and more products where they're able to raise directly versus going through

1476
01:55:27,940 --> 01:55:31,700
and raising, you know, doing the sales rounds and raising money from these institutions.

1477
01:55:32,060 --> 01:55:39,600
So I think that's going to be very important to this really taking off. But the other area that

1478
01:55:39,600 --> 01:55:46,240
I'm still very bullish on is not even these active accumulators, right? To me, it's the fact that we

1479
01:55:46,240 --> 01:55:53,260
haven't even started on the companies just moving treasury assets into Bitcoin as a hedge. We kind

1480
01:55:53,260 --> 01:55:59,560
of skipped past that, right? I always assumed that was coming first, that companies would kind of dip

1481
01:55:59,560 --> 01:56:03,860
their toe in the water. They'd start converting some of the cash or some of the U.S. treasuries

1482
01:56:03,860 --> 01:56:08,400
they were holding into Bitcoin even as a hedge. And then eventually you might get more people that

1483
01:56:08,400 --> 01:56:15,420
follow the micro strategy model. But we kind of bypassed that and everyone jumped straight to,

1484
01:56:15,420 --> 01:56:22,160
you know, trying to reinvent themselves and trying to do the leverage play. And they're,

1485
01:56:22,160 --> 01:56:26,780
you know, creating companies out of nothing and raising capital and getting off the ground with

1486
01:56:26,780 --> 01:56:34,080
treasury operations. But I still think the big wave is when corporations start viewing weakness

1487
01:56:34,080 --> 01:56:38,780
in the U.S. dollar and in the U.S. economy, and they decide to start rotating into truly

1488
01:56:38,780 --> 01:56:44,660
sovereign assets. And there's a massive amount of capital sitting on balance sheets that hasn't

1489
01:56:44,660 --> 01:56:49,580
even begun to migrate. So that's actually the wave I look at and say there's still a lot of demand

1490
01:56:49,580 --> 01:56:53,360
coming. Right now, it's a lot of excitement for all the capital raising and the leverage being

1491
01:56:53,360 --> 01:56:57,740
applied to go out and buy and acquire Bitcoin. And people are excited about Bitcoin yield and

1492
01:56:57,740 --> 01:57:03,400
all the new market or all the new metrics. But it's really going to be when it becomes mainstream,

1493
01:57:03,400 --> 01:57:09,080
when these companies just start doing it purely as a hedge. And I've said for a very long time,

1494
01:57:09,080 --> 01:57:14,920
that's something I would applaud very loudly because just that alone is an incredibly,

1495
01:57:14,920 --> 01:57:21,880
my opinion, responsible move for a corporation to take. And I think it's becoming fairly obvious

1496
01:57:21,880 --> 01:57:28,880
that that should be the next step for a lot of corporations, even if it's 5%, right? Get off zero,

1497
01:57:29,740 --> 01:57:34,660
you know, see the impact of an asset that has a truly fixed supply on your balance sheet.

1498
01:57:34,840 --> 01:57:38,660
You're doing your shareholders a favor and you're protecting the value you've created through your

1499
01:57:38,660 --> 01:57:45,060
operations. And I think that's where the next really big wave of capital comes from. Treasury

1500
01:57:45,060 --> 01:57:51,840
companies are going to continue to scale. Very bullish on that space, obviously. But I'm not sure

1501
01:57:51,840 --> 01:57:57,220
that that's necessarily long-term, the major rush capital coming in. I still think it's going to

1502
01:57:57,220 --> 01:58:01,620
come from companies that are just holding cash on their balance sheet that are about to have a very

1503
01:58:01,620 --> 01:58:08,960
unignorable problem. Hey, Ben. Ben, quick question for you. I just saw this. I can't

1504
01:58:08,960 --> 01:58:14,760
believe it happened seven hours ago, and I'm just seeing it. Fidelity filed to amend its spot

1505
01:58:14,760 --> 01:58:20,560
Bitcoin ETF to allow in-kind redemptions and creations. What does that mean? Does it even

1506
01:58:20,560 --> 01:58:27,220
matter anymore? Are we past that? What are the implications there? I would have to look at that.

1507
01:58:27,340 --> 01:58:31,180
I haven't read through that yet to see what it was. I mean, I saw some of those before where it

1508
01:58:31,180 --> 01:58:35,220
only applied to the APs, but Jeff, I don't know if you've looked at that one or not yet to see

1509
01:58:35,220 --> 01:58:43,400
what they actually put in there. You're on mute, Jeff. Oh, shoot. No, I have not looked into it.

1510
01:58:43,440 --> 01:58:53,320
I was just looking at it up here. Fidelity in kind ETFs. Yeah, no, I haven't seen this yet.

1511
01:58:53,920 --> 01:58:58,760
I'd take a peek. I mean, that would be, that'd be pretty big, right? Cause I know a lot of people

1512
01:58:58,760 --> 01:59:02,680
are concerned that'd be pretty big because i know a lot of people are concerned about you know these

1513
01:59:03,560 --> 01:59:09,960
uh institutions actually holding this capital and you have the ability to roll uh

1514
01:59:11,320 --> 01:59:17,240
i know josh would love this he's been talking about this a lot basically if you've got options

1515
01:59:18,360 --> 01:59:24,440
that are that you exercise you're exercising options and getting the bitcoin in kind

1516
01:59:24,440 --> 01:59:31,640
which would put a lot of pressure on the remaining supply, especially if there's no

1517
01:59:31,640 --> 01:59:36,780
ability to go get that Bitcoin. Because we're already hearing rumblings of OTC desks are having

1518
01:59:36,780 --> 01:59:42,760
trouble filling big orders. And if they're having trouble filling big orders and you've got a big

1519
01:59:42,760 --> 01:59:50,900
movement in Bitcoin and all of these call buyers are exercising their IBIT calls or their Fidelity

1520
01:59:50,900 --> 02:00:00,840
the Bitcoin calls and then demanding it be returned in kind, that changes the landscape.

1521
02:00:00,840 --> 02:00:08,940
There's no temporary moment in time or like buffer period where they can go find the Bitcoin

1522
02:00:08,940 --> 02:00:13,400
that they don't necessarily have or borrow it on the balance sheet or whatever that may

1523
02:00:13,400 --> 02:00:13,720
be.

1524
02:00:14,020 --> 02:00:16,620
I think that makes things a bit more complicated.

1525
02:00:16,620 --> 02:00:22,320
so yeah that's interesting interesting tim thanks for sharing

1526
02:00:22,320 --> 02:00:31,920
okay we've got uh just four of us there we go dan mason popped off appreciate it we're at two

1527
02:00:31,920 --> 02:00:36,100
hours so let's run around final thoughts we'll pass it to soleil we'll start with you and pass

1528
02:00:36,100 --> 02:00:42,420
around yeah i'll keep it short and sweet if um fiat is a melting ice cube then uh strategy and

1529
02:00:42,420 --> 02:00:48,980
preferred converting fiat to bitcoin is the uh is like glacier formation boom

1530
02:00:50,900 --> 02:00:57,300
deep ben go for it i'm good man i think i've ranted enough for you we've cruised we've got

1531
02:00:57,300 --> 02:01:04,820
10 000 always bullish on the space i love it there's no better place to be tim i mean

1532
02:01:05,860 --> 02:01:11,460
when you zoom out and you realize that the stock market hit an all-time high today like

1533
02:01:12,420 --> 02:01:14,380
Everybody listening right now, raise your hand.

1534
02:01:14,580 --> 02:01:16,120
We can see all 10,000 of you.

1535
02:01:16,300 --> 02:01:21,260
Raise your hand if you had anyone in your life run around like a crazy person and say,

1536
02:01:22,200 --> 02:01:25,320
woo, my stock portfolio is at an all-time high.

1537
02:01:25,680 --> 02:01:27,480
Like no one's paying attention.

1538
02:01:27,980 --> 02:01:32,820
And then think about like one out of 100 of those people that aren't paying attention to the stock market

1539
02:01:32,820 --> 02:01:35,260
are paying attention to Bitcoin.

1540
02:01:35,260 --> 02:01:40,120
And then one out of 100 of those one people that actually know about Bitcoin

1541
02:01:40,120 --> 02:01:42,040
are paying attention to what we're talking about.

1542
02:01:42,420 --> 02:01:43,860
Like that's how early we are.

1543
02:01:43,860 --> 02:01:46,580
It's just unbelievable when you really zoom out.

1544
02:01:47,660 --> 02:01:50,620
To 100% to that point, we need an update of the image, right?

1545
02:01:50,960 --> 02:01:53,320
The number of people that understand Bitcoin, one out of 100.

1546
02:01:53,620 --> 02:01:55,760
The number of people that understand MSTR, one out of 100.

1547
02:01:55,980 --> 02:01:59,620
The number of people that understand STRK, one out of 100.

1548
02:01:59,920 --> 02:02:03,220
The number of people that understand STR, you could just do it all the way down the road, right?

1549
02:02:03,420 --> 02:02:06,220
In order to understand these products, you got to understand all of them.

1550
02:02:08,660 --> 02:02:10,320
Yeah, I think it's just it's really early.

1551
02:02:10,320 --> 02:02:11,460
Completely agree, Tim.

1552
02:02:11,460 --> 02:02:13,120
Nobody knows what's going on here.

1553
02:02:13,320 --> 02:02:14,140
Go talk to anybody.

1554
02:02:15,100 --> 02:02:16,840
Yeah, I mean, they're buying XRP.

1555
02:02:17,000 --> 02:02:19,860
They think XRP is going to be the financial rails of America.

1556
02:02:20,020 --> 02:02:24,580
They don't realize the cognitive dissonance there is just insane.

1557
02:02:24,880 --> 02:02:27,600
We've got an XRP treasury company now, right?

1558
02:02:27,680 --> 02:02:29,840
We've got a Dogecoin treasury company.

1559
02:02:30,160 --> 02:02:32,280
I mean, it's crazy.

1560
02:02:32,280 --> 02:02:36,500
Yeah, I mean, it's been a really super interesting day.

1561
02:02:36,620 --> 02:02:38,220
First, you have the hurdle rate come out.

1562
02:02:38,420 --> 02:02:40,720
Then you have a Josh Mann RaiQuant space.

1563
02:02:40,720 --> 02:02:46,000
then you have a strive space then you have a grain of salt space then you have true north i

1564
02:02:46,000 --> 02:02:54,480
probably missed a few things and like it's after midnight on the east coast but the thing is there's

1565
02:02:54,480 --> 02:03:01,200
only five ten a hundred thousand people listening to these things right you think about pomps event

1566
02:03:01,200 --> 02:03:07,920
you think about orlando i mean you're talking about like 500 people in a room that's where we

1567
02:03:07,920 --> 02:03:12,720
are right now it's like super interesting when you just zoom out and think about that

1568
02:03:13,600 --> 02:03:19,280
pretty wild i kept hearing so many people asking if the space was saturated already

1569
02:03:20,160 --> 02:03:26,080
right and you know that tells me what a very small bubble we live in because the minute you

1570
02:03:26,080 --> 02:03:32,320
step outside of the communities we've got on x or you know a lot of us working in bitcoin jobs and

1571
02:03:32,320 --> 02:03:36,960
you start talking to just normal people out there that aren't fully orange billed already

1572
02:03:38,160 --> 02:03:43,520
no idea any of this exists like there is a massive addressable market out there still

1573
02:03:44,080 --> 02:03:48,880
for all of this stuff and there's a lot of education to do right because getting people

1574
02:03:48,880 --> 02:03:56,080
you know i'll just say onboarding them to bitcoin is could be one of those defining decisions that

1575
02:03:56,080 --> 02:04:02,080
they make in their life so it's always going to be a worthy cause we happen to have the luxury

1576
02:04:02,320 --> 02:04:08,880
know as a group to be able to sit down and think about these things and look at the macro environment

1577
02:04:08,880 --> 02:04:13,360
and study the dollar and the way that they manage the monetary systems to see the problems

1578
02:04:14,320 --> 02:04:19,120
not everyone has that luxury right some people are white knuckling it paycheck to paycheck they're

1579
02:04:19,120 --> 02:04:26,080
a little busy to go out and try to figure out you know what what it what bitcoin is addressing in

1580
02:04:26,080 --> 02:04:32,340
in their personal lives. So yeah, keep talking to people, keep pushing the message out there.

1581
02:04:32,340 --> 02:04:35,140
It's important. You know, that's, it's going to help a lot of people.

1582
02:04:35,560 --> 02:04:42,160
That's my takeaway too. I've been working in this space now for seven months now, officially for

1583
02:04:42,160 --> 02:04:47,820
three weeks. And I've been talking to people about Bitcoin institutionally for years.

1584
02:04:48,540 --> 02:04:54,000
And I can confirm even behind the curtain over here, people that have issued thousands of

1585
02:04:54,000 --> 02:05:00,380
preferred equities in their lives have still, I had to explain the strategy products day one for

1586
02:05:00,380 --> 02:05:08,980
somebody that has issued thousands of preferred equities before. Like that, oh my God, how do you

1587
02:05:08,980 --> 02:05:14,180
not understand what's going on here? It's just crazy. So yeah, I would emphasize that it's just

1588
02:05:14,180 --> 02:05:21,840
still incredibly early. And like, that's why I continue to be permable. I'm here for the long

1589
02:05:21,840 --> 02:05:27,120
run right i'm not going to evaporate off the planet like i'm here to work in the space this

1590
02:05:27,120 --> 02:05:31,760
is going to be a ton of fun the next decade is going to be is the gold rush we are in the digital

1591
02:05:31,760 --> 02:05:38,480
gold rush and i'm going to be working here for a decade because it's the best place to be it is the

1592
02:05:38,480 --> 02:05:44,480
most exciting place to be and that's why i'm permable and yes and i've got a conversation

1593
02:05:44,480 --> 02:05:51,680
with ahmet tomorrow that'll be cool so super quick jeff yeah the news came out i want to say today

1594
02:05:51,680 --> 02:05:57,620
unless I just missed it, maybe it was a few days ago, that PNC Bank is something, something,

1595
02:05:57,760 --> 02:06:04,120
something, working with Coinbase to let their customers buy crypto. I mean, that was a headline

1596
02:06:04,120 --> 02:06:09,320
several years ago. And I would go into PNC branches and they're like, oh no, it's not happening. It's

1597
02:06:09,320 --> 02:06:14,440
not happening. And obviously we know now why, many reasons why it wasn't happening. But I think

1598
02:06:14,440 --> 02:06:20,020
that's one of the things I'm most bullish on is as soon as banks offer it, whether it's through

1599
02:06:20,020 --> 02:06:26,200
Coinbase, some other partnership, some other exchange or natively, and you can buy Bitcoin,

1600
02:06:26,400 --> 02:06:31,400
you can borrow against your Bitcoin at your local branch, I think it's going to change the game.

1601
02:06:31,400 --> 02:06:36,280
I mean, right, you're not going to have to have half a million dollars or a million dollars to

1602
02:06:36,280 --> 02:06:39,640
get into the finance department at one of these big exchanges. You're not going to have to pay

1603
02:06:39,640 --> 02:06:46,880
14% interest. I think it's really going to be a huge catalyst. It's one of those things that

1604
02:06:46,880 --> 02:06:51,720
people need, right? They don't understand necessarily that Bitcoin having the utility

1605
02:06:51,720 --> 02:06:57,600
of outpacing monetary debasements, a pretty powerful utility in and of itself. But the ability

1606
02:06:57,600 --> 02:07:04,000
to go borrow against that asset is what's really going to drive it home for individuals and

1607
02:07:04,000 --> 02:07:10,420
corporations. I think that that is one of those catalysts that drives the next wave. So, and it's

1608
02:07:10,420 --> 02:07:16,840
closer than we think. And it's high, high quality collateral. I can tell you that I've chased a lot

1609
02:07:16,840 --> 02:07:18,840
of collateral around in my life.

1610
02:07:18,840 --> 02:07:21,480
I would have loved to have Bitcoin as collateral.

1611
02:07:21,480 --> 02:07:23,740
So that'll drive the rates down.

1612
02:07:23,740 --> 02:07:25,840
It'll make it very cheap to borrow against.

1613
02:07:25,840 --> 02:07:29,080
And that's going to make it worthwhile for a lot of companies to hold

1614
02:07:29,080 --> 02:07:31,380
just for that reason alone.

1615
02:07:31,380 --> 02:07:33,680
Quick access to capital.

1616
02:07:33,680 --> 02:07:34,500
Bingo. All right.

1617
02:07:34,500 --> 02:07:35,240
We got it in the stream.

1618
02:07:35,240 --> 02:07:36,000
I got to take my dog out.

1619
02:07:36,000 --> 02:07:38,300
Bobo says hi.

1620
02:07:38,300 --> 02:07:40,000
We love puppies.

1621
02:07:40,000 --> 02:07:41,000
Good night, everybody.

1622
02:07:41,000 --> 02:07:42,000
All right.

1623
02:07:42,000 --> 02:07:43,240
I'm working.

1624
02:07:43,240 --> 02:07:44,260
Yeah.