Welcome back. Episode 58 of True North, the investment grade Bitcoin podcast. We are back.
We are on the road. It's myself, Ben Workman, Mike, grain of salt. And we are here to talk
about everything Bitcoin, talk about securitized finance and hit it again for another week. I think
it'll be a little bit of a short week. We've been burning the candle on both ends here,
trying to digital creditize the entire world.
And I think we're making some progress.
So, all right, we've got a fun little agenda for you guys today.
We are going to walk through the recent MSTR purchase,
the $1 billion purchase, dissect it a little bit.
How large can this ecosystem get?
Let's kind of brainstorm and think through it a little bit.
What would have to be true?
What is Big Capital thinking about?
how is this ecosystem changing and shifting?
How do we start to think about these instruments?
Who are these instruments good for?
Big question that a lot of people are thinking about right now.
Is this the bottom?
Have we seen the bottom?
Is the bottom behind us?
Starting to feel like it a little bit.
We'll talk about that.
And maybe we'll have some conversation on private credit
because it is one of the hottest topics
outside of the perpetual preferred equities at the moment.
And obviously, AI is continuing to one-shot companies left and right, but private credit
is a hot topic.
So let's just jump into it.
Maybe I'll pass it over to you guys.
Mike, Ben, how are you guys feeling?
Obviously, a lot of buzz on STRC.
We helped create some of the buzz on STRC.
Volumes are popping off.
I think this week, STRC has traded over a billion dollars of volume, 1.2 billion dollars
of volume through three days.
So massive, massive liquidity growing in this instrument.
Will be really fascinating to see how this trades over the next couple of days.
You've got the record date tomorrow, Thursday the 12th, and then coming up on the ex-dividend
date.
So we'll see how capital rotates.
If it does rotate, how does it shift?
How do ARB models work and interact with the product on Friday?
And then how quickly does it go back to par?
Does it even fall off of par?
And it'll be a great data point to see how that continues to operate.
Because as you've seen, the strategy is continuing to hit on this low volatility of this instrument,
pushing sharp ratios.
Sharp ratio hit three of STRC today, which outperforms pretty much everything in the
entire market.
When you're thinking about portfolio allocation, sharp ratios are important because assets
with different risk return metrics,
improves the return and reduce the risk
of your entire portfolio.
And when you see something with a sharp ratio of three,
you kind of have to squint your eyes
and look a little bit harder
and it probably gets passed off
as too good to be true right away.
So fun stuff, fun times.
Maybe I'll kick it over to you guys.
How are you feeling?
Feeling good.
I mean, same as you.
I'm tired now.
We've been crisscrossing here
We're trying to spread the good word around digital credit, which has actually been a ton of fun.
And it's been incredibly eye opening.
We say it all the time.
I'm sure it seems like it gets old, but you start to realize just how early we are on all of this stuff still.
Right.
The awareness is just not out there.
You're trying to go and target institutions that are incredibly resistant to change, that don't see the risk that they're taking on, which was kind of a fascinating concept that we saw today.
And Jeff, you know, you made several posts about what you saw with private credit in some of our conversations and, you know, how that was giving you that tingling sense that it seemed like they were hearing about in the big short.
And so it's just been fascinating to watch this unfold.
And at the same time, you're watching Stretch pick up all this strength.
You're seeing a relentless bid on there.
You know, today we were even joking because we pulled it up and it was at, you know, $100.16.
cents. And we're going, Sailor must be furious. The volatility is getting out of control on this
thing. It went from $100 to $100.16. He's got to get it back down. And so that was fascinating.
But then you could also start to watch how it trades in the aftermarket. And I think that's
also going to be very fascinating. We're never going to get a break when these things start
trading 24 hours a day because we're going to be watching this. And even with the purchase that we
made when we bought $50 million worth of stretch, it was kind of funny because you put the
trade on, you see the trade hit the tape. And then we're immediately wondering how long it's
going to take people to spot it. And it was seconds. I bet within 30 seconds, there were
posts out there on X about the buy. And obviously it shows up because it's a big volume spike event.
But it shows you how in tune people are with this. It's fascinating. It's captivating everyone's
imaginations. They're starting to see this relentless building bid that's coming underneath
Bitcoin now, you're starting to see the price hold up. It keeps bouncing above 70. It feels like it's
a matter of time before we finally get to move the other direction. But we've got so much macro
uncertainty out there that I think things are just still in a position where people aren't ready to
go full risk on again yet. There's still just too much uncertainty wavering around out there.
So but all in all, I mean, it's been we've had so much happen this week.
You just had MetaPlanet kind of announce a pivot in their business model, which is fascinating to see, you know, the space is evolving and how people are going to utilize these balance sheets is going to evolve.
And I'm pumped. I think we've got a really exciting year here ahead of us.
And if Bitcoin gives even a little help, I don't think there's going to be a bigger story or anything being talked about more in the financial markets than what's going on in the space right now.
Completely agree.
And real quick, while this information may be amazing, none of this is financial advice.
And this information is for entertainment purposes only.
And we're on different machines and everything today.
Otherwise, Tim would be up here passing it back to me.
And now it's over to you, Mike.
What's on your mind?
You've been ripping up the spaces recently.
How are you thinking about things?
Yeah, so I did a space last night for two hours, hosted it myself, ran it.
I've been on multiple spaces.
I was on Scott Melker's space the first thing this morning.
There was 3,000 people on that space.
And I keep on saying the same thing.
A bear market typically is when an index is down by 20% from its all-time high.
For Bitcoin, if you're down 50% from its all-time high, I think you're in a bear market.
If it's 60% or 70%, it's just a worse bear market.
So do I think that we're in a bear market right now?
Sure.
But the fact that strategy was able to raise $1.2 billion in a bear market last week, and
it was almost 18,000 Bitcoins, that answers that question to people.
Oh, what's going to happen with Saylor if we enter a bear market?
it's like really i think that he he just got stress tested that's the correct word he was
stress tested bitcoin is off 45 from its all-time high and he's able to raise 1.2 billion dollars
and the naysayers and then i say to them this i go this is counterintuitive in a bull market
with higher mnavs it's easier for any company that has a higher mnav to acquire more bitcoin
because you're arbing that difference.
If your MNAV is 1.5 and your stock is $1,
that extra 50% is immediately accretive
or if you sell it to MNAV.
So in a bull market,
it's easier to acquire capital than right now.
And I don't think people are understanding that.
And I've had to say this multiple times
and people are like, we still hear the same thing.
Is he going to get liquidated?
I'm like, I don't think so.
He's bought 18,000 Bitcoins in one.
And you know what's crazy?
They pulled up that tweet from two years ago where he said, imagine that there's a buyer,
Saylor said this, that has unlimited amounts of money that buys 450 Bitcoins a day.
Well, it turns out that it's him and he's buying 1,000 Bitcoins a day or 2,000, four
times that amount.
And it's two years later.
So, I mean, people are catching on.
I don't know how long it's going to take for people to understand this.
Yeah, that commentary or the, you know, what if the access to capital markets changes in a bear market?
It's completely blown that argument out of the water.
And we even got that question today.
What happens when the music stops?
That was the question.
What's the music?
Is the music fiat debasement?
I mean, since 1970, fiat, the U.S. monetary supply has increased 6.7 percent, compounded annually for 56 years in a row.
Right?
Yeah.
I want to talk about that.
Right, right, right.
And by the way, if our budget was truly budget neutral, just not balanced by Fed printing, we have a 1.7.
I know we've hounded on this.
I've hounded on this for a year.
Even if that got fixed magically overnight,
you still have a $39 trillion deficit that you still have to pay interest on.
So that doesn't magically go away.
So everybody's like, oh, we could just fix this.
No, that's not going away.
But, you know, I think, I don't know why, you know,
what happens if the, you know, the music stops?
You know, somebody said, somebody posted today,
well, strategy does not guarantee the payments.
I'm like, okay.
I didn't want to even engage with this person.
Could you tell me who guarantees any payments?
I'm not aware of any guarantees.
Right?
He needs a guarantee.
And by the way, the reason why FDIC insurance exists is because the banks have to hold zero.
That bill was changed.
I found the SEC notice of that.
I posted that.
And they said, oh, well, you know, the crypto guys need FDIC insurance.
No, they back it 100%, right?
We're talking about stable coins.
But with strategy, they have 10% leverage.
That means they're 90% backed.
And banks are the reverse.
They're somewhere below 10%.
Otherwise, 90% does not exist.
That's why FDIC insurance exists.
Yeah, this, I want to hit on this liquidity component here for a moment, too,
because this is what I've been thinking about quite a bit is a lot of this business model
is a function of the liquidity environment of Bitcoin and the securities that are created
around Bitcoin. So what has the creation of these securities done? It's created new expressions of
Bitcoin exposure. Just like standard oil, right? You took this raw crude commodity out of the
ground, you turn it into kerosene, you turn it into gasoline, you turn it into asphalt.
Those different expressions of that primary commodity are interesting to different people,
right? They're different industries, basically. And it's the same concept here, right? You're
taking this raw commodity out of the ground or like this raw commodity out of the protocol that's
getting mined by all of the electricity, all the miners that are mining all this Bitcoin,
and you're converting it into different expressions that are interesting. And they're interesting
for different reasons. And you think about, okay, well, how does anybody value the equity,
like the common stock equity? It is a function of the price of Bitcoin moving up or down, right?
It is a function of that.
What is the function?
I don't know.
There are thousands of computers that are calculating some sort of function, and they're using different hedging tools and mechanisms to go in both directions.
They want to short it.
They want to long it.
They get leverage.
It's a relatively pure expression of Bitcoin, and the underlying value will always be a function of this instrument.
Now, what do we know about Bitcoin?
It's moving every day.
You could sit and watch the chart every day.
It's moving.
So, strategies price is likely going to move as well if there's a tie, if there's some
relationship to this underlying product that's kind of always moving.
Now what makes that interesting about the credit instruments is the same thing, like
the liquidity profile and the fact that this thing is always moving.
You now have an understanding of like a risk profile of these instruments all the time.
I think that's fascinating.
And you can compare it to everything else in the market.
That's interesting.
And I think a lot of people don't quite recognize the fact, just like the subtle, it's not even subtle.
Bitcoin is super liquid.
It trades $40 to $60 billion a day.
Sometimes it trades $100 billion a day.
So you think about just strategies balancing, for example.
They have $50 billion of capital that's liquid to pay an $850 million annual interest obligation.
So what is that divided by 12?
$850 million, $70 million monthly obligation.
and they have $50 billion of liquid capital to pay that obligation?
$52, $54 billion of liquid capital to pay that obligation?
What other corporation on the planet has that much capital
to pay their monthly obligation into perpetuity at any point in time?
I think it's very, very small.
Infantastically small.
Yeah, I think of these models, you know, to the question we got that you were talking about when we were asked what happens when the music stops, I think there's a fundamental disconnect about what the products are that are being offered.
You know, when you start talking about Bitcoin right away, you can get a lot of people that just kind of glaze over and they tune out because they hear Bitcoin, they hear risky.
But if you look at the two products, they're very different and that serves you in different market conditions.
So, for instance, when you look at the common equities, you might say, well, what are you selling with the common equity?
What are people buying with the common equity?
Well, you're buying enhanced volatility is effectively the product that you're buying with the common equities.
They're structured in such a way that their volatility is going to be greater than what Bitcoin is going to provide.
Now, they're confusing instruments for a lot of people because they can both be looked at as a long-term investment vehicle for working to outperform Bitcoin.
But they're also highly liquid, high volatility instruments that enable trading activities.
And it's the same thing that we saw with why the convertible bonds were so popular, right?
Why there was so much demand for those products.
and it was because that underlying equity moved.
And so there was that gamma trading that you could do between, you know, the bond paper
and the equity.
Well, the same thing is happening with the common.
So people say, well, what happens if the price goes down and all the demand dries up for
the common?
You go, well, that's not how volatility's value works out there for a lot of these trading
firms, for these hedge funds, for these guys that are putting on these different trades
and they're looking for these different expressions of the trade that they want to put on.
And it's the reason why you see such high volatility, such high liquidity in these products.
If you look at MSTR, it's one of the most liquid stocks on the entire stock market.
They trade three to three and a half billion dollars a day of stock on there.
And even when you look at us, you know, at the size that we are and we'll trade, you
know, 30 to 50 million dollars in a day relative to our size is a huge amount.
Right. If you break it down on a volatility per Bitcoin basis, we're effectively at the
same level of strategy as far as size, which is fascinating to look at.
So that's one product, right?
You've got the high octane expression of volatility.
And to a lot of these traders, that's all they need to know.
They just need to know that this vehicle moves a lot, right?
They're not looking at the Bitcoin side of it.
They're looking at the fact that the equity moves.
And then you look at the other product, it's live.
And then you look at the other product, and the other product is cash flow.
It's high yield.
Now who wants high yield?
Who wants high cash flow?
Well, the short answer is everybody.
That's why when Saylor had that moment where he was at Strategy World and he goes, I ultimately
realized that for this phase, digital credit is Bitcoin for corporations.
Corporations aren't quite there yet on the risk profile of Bitcoin itself.
It's hard to stomach that volatility if you're managing a treasury.
You know, if that comes to a point where all of a sudden I've put a significant portion
of my treasury into Bitcoin and that volatility strikes during a time period where my corporation
needs liquidity, that's a risk, right?
And it's not one that a lot of corporations are willing to take yet.
I think over time they'll start wanting to have some allocations.
But what's very easy for them to do is plug in a low volatility, high yield instrument
as a part of their standard treasury management practices.
That's very non-threatening as a corporation
or as a corporate treasurer.
And because of that,
it brings on a different level of adoption.
And so you've got these two,
you could look at them as polar opposite products
that are being offered in the market now.
And that helps build resiliency
across the entire market cycle.
When things are ripping,
you've got this high demand for the high octane,
high volatility flavors of these assets. When things are kind of going sideways or even during
the bear markets, you've got more of a risk off type of an expression, but it's still linked to
Bitcoin, but you're going to that cash flow. So I think that there's actually a way to talk about
these products more where you don't have to lead with Bitcoin as the headline. Bitcoin is what
makes all this possible. But what they want is enhanced volatility and cash flow. And those are
the two products that are being offered now in the market and they're incredibly powerful
products when you start to realize how this capital moves and what their incentive structure
is for how they're going to create their own returns.
Totally. Corporations have they view capital. I think this is something that a lot of people
that haven't worked in finance, maybe not recognized is like corporations when they are
managing capital, they're managing a liability profile, right? If you have an operating business,
you have an understanding of at what point in time you're going to have expenses come up.
If you're an insurance company, you have an actuarial understanding of at what point in time
our liability is going to come up. And so then what you do is you manage your assets relative to
those liabilities that you have in the future. So if you want to manage to 24 months of 18 or 24
months of liquidity, you may make different decisions for different tranches of that exposure
that you have over time.
So maybe the first six months is in something like literally just cash.
It's like in a money market savings account.
You might have six months in T which is very short duration very liquid basically connected to the Federal Reserve You can get that money no matter what And then for some of that moderate duration you might hold it in a little bit of a higher yielding instrument which is how how we view STRC on our balance sheet right
We view this as kind of a moderate term instrument with the ability to increase the
return relative to the other assets that we would hold for a moderate duration instrument.
Like if you were to hold T-bills paying 3.4% or 3.1%, whatever the rate is, there's a significant
delta in those two instruments for the relative risk profile.
And there's significant alpha for that duration of that capital being used for that point in time.
So, you know, we see this as a credit enhancing decision-making process for duration capital
on our balance sheet.
And it's fascinating.
We think this is a great use case for other corporations, right? And not just publicly
traded companies, small, medium enterprises. I heard an anecdote chatting with a friend a little
bit earlier today. And he was saying that basically he orange-pilled them on stretch.
And they said, all of our money right now is in money market funds. If we move it over to stretch,
we can make payroll. All of our concerns about our operating business are gone, literally
gone. And he hung up the phone, it's like, okay, I got to go. I got to go talk to my
board. And I think those conversations need to happen. And I think they're interesting
conversations around risk profile of these instruments and how to think about how it
can help enhance your business operating into the future.
Just as you would manage your cash flow for your life, I think of my family as a business,
my wife, my dogs, and everything.
I manage our capital as a business.
And you can take that same framework and manage that for an actual real business that is managing
different scales of different capital.
And that will evolve.
That will change.
as these things start to build a track record,
as people start to wrap their heads around them,
as the dividends continue to get paid
over and over and over and over again,
and the volume continues to be higher and higher
and the liquidity builds in these things.
This is the biggest story in all finance, right here.
Exactly what's happening in digital credit.
It is.
And I actually think that it's going to get built up
at more of a grassroots level.
You know, obviously we're, you know,
going around and swinging big
and trying to start to nudge.
If you're trying to turn a freighter out there,
we're trying to nudge it and get it to change course a little bit
with all of these large traditional finance institutions.
But this is incredibly applicable for small and medium-sized businesses.
One of the things that fascinated me while we were at Strategy World
was the number of small business owners that came up to me.
And it's people that are running medical practices
and then all these other small businesses
where they were very quick adopters of this as a treasury instrument for those businesses.
And I even look at other industries that people don't tend to think about a lot, but you've
got something like the trucking industry, where there's a significant amount of self-insurance
that has to happen, which means you have to hold a significant amount of capital back
so that you're covered for any claims that may come up.
And being able to deploy that into a higher yield instrument is massively favorable to
that industry.
And so I think that this probably actually starts more in like the private business sector.
I would guess that you actually get quite a bit of uptake.
It's just not going to be the flashy uptake, you know, that we're used to seeing on the
internet when, you know, some big corporation gets involved or some big institution starts
getting involved.
But the conversation around digital credit has really changed a lot and very quickly.
I mean, it's only been just over a year, but you look at strategy world and you look at
the names of the institutions that are now lending their reputation to the space.
I thought that was as eye-opening for me as anything else that's ever been done.
Who's going up on that stage?
Who's willing to walk out there with strategy and start talking about digital credit and
how it's going to get pushed out there in the market and how it's going to evolve and
how the new products are going to get placed?
And you start hearing from firms like Morgan Stanley.
You start hearing from the TD Ameritrade.
You start hearing from all of these highly recognizable, highly respected financial institutions that are telling you these are the products that are going to be able to get this uptake.
You can build industries around these products.
And that sends a significant message out to the rest of the world.
You know, for a company like Morgan Stanley to be pursuing a Bitcoin ETF.
You know, yeah, you can say, well, they're late to the game.
You know, BlackRock was out there first, and yes, they were, but Morgan Stanley has a very large private wealth management practice.
And which product do you think they want to sell?
Do they want to sell BlackRock's product, or do they want to use their sales funnel to go and sell Morgan Stanley's ETF?
And so these are all massive developments, but all these developments take time to develop.
And, you know, there's a patience factor here and a persistence factor here where you just have to constantly keep pushing the messaging out wide that there's a better solution than you're used to.
Right. You've got new options for how to do this. You've got a better option for how to manage your treasury.
You can increase your cash flow.
If you're a retiree, you can average up the returns you're getting out of the fixed income
portion of your portfolio, which could make a very meaningful impact to the quality of
your retirement.
These are all things that are impacting people's real lives.
And as soon as you can start getting that message out that you have an option now that
can really improve the quality of everything you're doing, it's a matter of time before
the update comes.
And for everyone wondering, you know, all the all the scrambling we're having today, you know, there's some this one's effectively a YouTube special because X is having some issues.
The team was trying to troubleshoot that. It's why we didn't have music coming on.
We thought Jeff was going to sing, but, you know, he.
Yeah, a lot of scrambling here. Episode 58. We're rolling with the punches.
just that's just the way we're going to do it. Another fascinating thing that happened in this
last week, and I'm sure we'll see it here this next week as well. So 377-ish million raised on
STRC last week. Okay. Week prior to the record date, which was new, novel. I think they raised
every single day last week. Impressive. But the total capital raise is 1.2 billion. So they raised
on MSTR as well. I think it was two to one, two and a half to one. So effectively, after the end
of the week, they raised $377 million on STRC and $1.2 billion in total, so whatever that delta is.
And they kept the credit quality the same. So at the end of the week, it was actually pretty much
like nothing had changed because the amplification stayed flat. I guess the cash coverage probably
dwindled slightly, but the relative risk profile of the instrument remained unchanged, which is
incredible. This company raised $377 million of a fixed income credit instrument,
and the credit remained unchanged in a week.
They did that in a week.
We'll see what this week is,
but I would assume it's probably larger.
That's incredible.
That is totally incredible.
Again, access to capital markets, liquidity,
the entire corporate structure.
And it can scale.
That's the other crazy part.
We were trying to conceptualize this a little bit earlier
in some of our conversations.
This is pretty much infinitely scalable.
And I think somebody asked me today as a response to one of my tweets, like, what happens if Berkshire Cathaway came with their cash?
Like, could strategy support $373 billion of cash dumped into STRC at 11.5%?
And I'm bummed I'm not on my computer because I have the math right here.
So maybe I'll share it afterwards.
But I ran into, I did an as if on if they put $373 billion worth of demand into STRC,
and they raised MSTR at a one-to-one multiplier. So raised $373 billion with MSTR at the same time.
Assumed an average price of accumulation of $750,000 for the price of Bitcoin,
and that pushes the price of Bitcoin to a million. So these are pretty conservative assumptions.
In that scenario, the amplification today is 33%. The amplification afterwards would be 23%.
And that's if they raised one-to-one MSTR to the one-to-one STRC coming in the door.
The years of Bitcoin coverage before goes from 27 to years of Bitcoin coverage afterwards goes to 37.
I'm assuming all of the debt is equitized.
So those numbers are a little different than what's on Strategies' website.
But the math is incredible.
And you start to think about scale.
I started trying to wrap my head around this.
I'm like, does this even make sense?
What is the relativity here?
Because we're starting to talk very large capital numbers.
How much capital can you move into this?
What would the dividend obligation be?
in this circumstance, the dividend and the annual dividend obligation would be $44 billion a year,
which again, we're talking about bewilderment, right? Like we just wait until this thing 10Xs,
the bewilderment in the market is going to be insane when the even lower IQ people start to
enter the space. So Jeff, go back for one second. What did you say? So assuming the price of Bitcoin
right now is 70 000 and 340 billion dollars comes into it as a market buy what did you model the
price of bitcoin jumping to i assumed 746 billion coming in the door so so one to one 373 billion
coming in from berkshire and 373 billion coming in from msdr raising in the common at the same time
oh okay 746 in total and what did that do to the price of bitcoin i just took a conservative
assumption assuming that the average price of bitcoin purchased was 750 000 750 000
750 000 yeah i get it and and and that moved the price to a million
okay so i assumed average price is 750 000 and that moved to the price to a million
and uh the amount of bitcoin purchased would be one point or the amount of bitcoin held at
the end would be 1.73 million and the amplification before would be 33 the amplification afterwards
would be 23 and they would have material you know 30 30 plus years of dividend coverage with the
capital held on their balance sheet which okay so i gotta i guess go ahead go i i gotta i gotta
of would you rather okay so um would would you rather so um so the historical and the historical
bitcoin quarter over quarter growth for for strategy is 16 and is 15.98 percent it's 16
and it ranges anywhere from less than one percent all the way to a high of 77 in the fourth quarter
of 2024.
This is just Bitcoin growth.
Just Bitcoin growth.
But if you add up everything
starting from Q3 2020 to now,
the average is 15.98%.
Just assume it's 16%.
If you continue,
so if you say,
you know what,
it's at that percentage.
I did an analysis saying,
What happens if it just grows at 11% a year?
Sorry, 11% quarter over quarter growth.
16% is historical.
Assume it drops down.
At 11%, and I got to that number because we hit 1 million Bitcoins in Q4 of 2026.
That's how I figured.
I just kept on typing in numbers until I hit a million.
And it was reducing it.
So the historical is 16%, 11%, quarter over quarter growth gets us to 1 million Bitcoins
in Q4 of 2026.
If you keep that same rate in Q427, you have one and a half million Bitcoins, which is kind of odd that, you know, it just continues growing at that rate.
So what you were saying for your numbers is that's assuming the price jumps up.
You know, if Bitcoin stays kind of low right now, what I don't think the market is pricing in is everybody talks about the S curve.
So if it stays relatively flat and then we get an inflection point, then MSTR, MNAV explodes higher because they acquired so much more Bitcoin.
So what you're saying is I think what you're saying is completely plausible as an outside case.
For me, you know, that that gets us to, you know, a million by the end of this year.
If you go at 16%, you would get to 2 million Bitcoins for strategy by the end of Q4 of 2027.
If it would just match the historical.
16% per quarter?
Quarter over quarter.
Right.
And that's the historical.
And so you would get that now.
But it assumes no other company is coming in to issue any credit products.
Put a little pressure on.
Yeah, that assumes no other company.
Now, at the same time, you've got Ibit trying to get also to a million Bitcoins.
And if they were growing at the same rate, then you'd have two Bit-
This is not the Hunt Brothers.
Somebody said to me, this is like the Hunt Brothers of 1979 covering the silver market.
No.
What is that?
What are we in?
2022 fund?
Come on.
Right.
Come on.
The Hunt Brothers?
I said that doesn't make any sense at all.
One's a publicly traded company with a Bitcoin treasury.
The other one is IBIT, which is a collection of investors that's in a fund.
And the Hunt brothers were a bunch of investors doing it on comic.
They didn't have multiple exchanges.
This trades 24 by 7.
Obviously, we know that the dollar, we know the physical supply out there.
So with that said, my models, I don't think in retrospect, looking at what they've been able to do for strategy, I don't think my models are that aggressive.
and and then and then the hard part that i had to figure out was and this is the part i want to
talk to you guys about is that the the share growth in in my model the historical share growth
quarter over quarter it's about anywhere from you know year over year it was about 30 percent and
then it runs it kind of varies from quarter to quarter but anywhere from two to eight percent
And you have to have lower share growth given the Bitcoin to keep it accretive.
The Bitcoin's growing at a higher percentage than the shares.
So basically the model works out.
You kind of make the share growth half of that.
But what that doesn't take into account is stretch.
Yeah, the press.
It doesn't take into account.
So then I just modeled it and said, what happens if you cut it in half again?
And that's where I came up with my model in order to figure out the stock price and so forth.
So that's not taking into account MNAP.
That's just saying is if we continue at the historical level, 16% quarter over quarter,
and then if you looked at 5%, which is about the average for the share growth, but with
the prefs, it's probably half of that.
And that's where you start getting some really weird numbers.
I kind of don't want to publish it because there's not enough data points right now on
stretch or on the preps to have it hold up to screw it i want to wait until tuesday once once
we see how much if strategy look last last week they buy they bought almost 18 000 bitcoins
this week i think the weird part is do they buy 30 000 40 000 and i want to see that number two
weeks in a row before i publish this because i don't really have a good number for that i mean
you guys have any ideas of what you think they're going to buy
I don't have any ideas specifically. I mean, Stretches traded 1.2 billion of volume.
If they took half of that, which maybe they did, they're now trading in extended hours,
making an ATM in extended hours. We've seen pretty high elevated volume in extended hours,
maybe anywhere upwards of $600 billion of volume on STRC alone. So if they're going one to one,
that'd be 1.2 billion. If they're going two to one, that'd be 1.8 billion. So yeah, the scale
scale, 30, 40% larger than this last week, and the price is relatively the same. So I
wouldn't be surprised if it's another large double digit figure, even upwards of 20,000
plus. Again, thinking of scale, I've been doing a lot of analysis thinking about the
marketplace in general as a whole, right? Thinking about just this Berkshire example
made me consider like is this realistic like is this crazy what's the scale this is something ben
and i have been talking about quite a bit as well like just thinking about the cracks in the private
credit market i mean we just saw what is this um morgan stanley has put the gate up on private
credit uh aries put the gate up on private credit several fun blackrock now has put the gate up on
private credit a lot of people are going to the exits to try to get their capital out and these
companies that are facilitating these private credit vehicles are saying, whoa, whoa, whoa,
you have covenants, you can't pull out more than 5%, 10%, 20%, whatever the number is per quarter,
or whatever the covenant is in the private credit instrument. And so there's almost like this pseudo
private credit bank run happening right now. And it'll be fascinating to see how this just
continues to play out. But it seems like there are some cracks that are showing up and eroding there.
I think there's roughly $3 trillion of private credit out in the market at the moment.
You think about insurance companies' balance sheets, they have roughly $250 billion to $500
billion of this private credit stuff on their balance sheets. That's interesting.
So again, that's two things, right? You've got, Berkshire's got $373 billion in cash.
insurance companies have $250 billion in private credit. Okay, that's just two pools of large-scale
capital where something is cracked or something's changing. You've got a change in trust environment
or you've got a change in the risk environment. And I think with what we're seeing, this is what
I've been pounding the table on, is the risk environment for private credit with the advancement
of AI and the advancement of just the world right now. I think that risk profile of those things,
the uncertainty probabilities in the tail are starting to get much larger.
So thinking about how that capital moves, this is excluding sovereign wealth funds,
pension funds, different nations reallocating capital, investment managers, or any of the other
200, 300 trillion dollars of capital that's tied up in fixed income instruments. I can come over
to this. So I think we've got a long way to go. I think Stretch has nearly $4 billion of
notional outstanding, it's trading $500 million a day. I think it could get significantly larger
than this. I think Saylor's right when he says, I can do a billion dollars in a day. I think he's
going to have a billion dollar day in the near future where they pulling in a billion dollars on Stretch maybe a billion dollars on both Stretch and MSTR and smash buying Bitcoin I think we almost at this tipping point where the demand is elevating the interest
is elevating, the question marks on how to value the equity is elevating, the volumes
are elevating all these things.
And it's a very interesting time.
Seems like we're kind of playing whack-a-mole with where the weaknesses are out there broadly
the economy financial system right i mean with bitcoin it started around monetary debasement
right that was kind of the foundation of everything it was the reckless money printing you needed
something that was decentralized with you know no central issuer around it and then as we keep going
you know we keep finding different places where bitcoin can offer a solution and now it's coming
through the structured finance vehicles but you know what you started to see was well people were
saying if your money's getting debased your banks aren't paying you anything you know you should be
saving in bitcoin okay that was one evolution of this but you've got the volatility issue out there
and i think a lot of people find out that they're not ready for the volatility right you've seen a
lot of that during a bear market so then you said well here's a credit product and as from an
individual level this is a better way for you to save capital and get a higher return on the capital
that you're parking if you've got you know midterm capital call it you know four months or greater i
I think is kind of what Saylor says that these are great products for you to park capital in.
But now we're seeing a different thing showing up, which is illiquidity.
And that's being shown in the private credit market. But the private credit market is so
structural to these financial institutions that it's probably a much bigger deal than what people
would ever give it credit for. You're just starting to see those headlines out there where
that weakness is coming in, it's starting to get highlighted that, hey, all of this paper that
you're holding behind the scenes that's backing all of these policies and everything else
is incredibly illiquid. And oh, the value is somewhere between 100 cents on the dollar and
zero. But you're not going to know which until we tell you. That's what you had with BlackRock
recently when they came out and they marked it down from 100 cents on the dollar to zero.
like that's a really tricky place to be in if you're one of these traditional financial
institutions because on the one side this is kind of a foundational component to your entire business
but to the point of what your post said jeff not only are they holding all of this opaque illiquid
paper they're levered to it and that's an entirely different problem they're levered long to this
opaque illiquid paper that's valued somewhere between 100 cents on the dollar and zero.
Right. That is a structural issue that's out there. And so whether they want to,
right, whether this is a willingness debate or whether they're going to have to,
I think that looking at these instruments and realizing, one, how well backed it is by an asset,
right these balance sheets are incredibly robust these balance sheets are being managed at an
institutional level to make sure that you know the risk frameworks are really tightly managed
and controlled and they're incredibly liquid which i think is becoming one of the primary
focus areas for a lot of these institutions they need liquidity in these products if the private
credit market if you do get one of these bank runs and everyone's trying to get out and everyone's
trying to redeem, you know, their 5% a quarter, whatever it is, you have a significant problem
on your hands. And so I think it's a matter of time before you start to be, these institutions
start to be willing to explore the risk profile of these products. Because I think when they do,
and a lot of the conversations that we had this week lead me to believe this,
there were a lot of aha moments that were happening around those rooms.
They haven't even been looking into them at all.
The vast majority haven't even heard they exist.
But they're looking for ways that they can plug these types of products into their business.
And it's going to take time.
You know, ratings are a big problem.
You know, if these were able to be instruments that were rated, these would be home run instruments.
They'd be everywhere.
Right.
The demand for these would explode overnight if one of these rating agencies came out and
was willing to give them a rating.
but as we've learned you know they also have a lot of unrated instruments it's just a different
approach to how they're going to utilize those so it doesn't mean that the answer is no the answer
is we have to explore this and get our heads around what this means because it sounds intriguing
they understand balance sheet companies in a way almost nobody else does crazy part that we also
here today. If you wrapped up the digital credit instruments into a debt structure
and put a term on it, you could probably get it rated.
Yeah, but it's fine.
You're like, whoa, okay, hold on. So if I go the opposite direction, if I make this thing
more illiquid and take the attributes that make it amazing, if I take those out of it,
I can probably get it rated. Wow, that's interesting. And it just kind of shows a little bit how
backwards some of the rating agency and the rating framework is. Just to give some perspective,
believe it or not, I worked in reinsurance. Thanks, Ben. And the rating agencies are fascinating,
right? There's a couple of rating agencies out in the insurance market. One of them is called
AMBEST. AMBEST is fascinating. The company itself, the only reason AMBEST exists is because when
insurance companies started, you know, percolating in the early 1900s, they started, they said,
you know, somebody needs to put a rating framework around this. AMBEST, the company is like over a
hundred years old. They've been doing this forever. There's something like 16,000 insurance
companies in the insurance market and they rate almost every single one of them.
So they provide capital framework for every single one of them.
And every single one of those insurance companies pays AMBEST money every single year to give
them a rating.
Talk about skewed incentives, right?
Like totally skewed incentives.
And the rating agency isn't regulated.
So like there's rating agencies and there's regulators, they're different.
And so if you want access to like large pools of capital in the reinsurance market, you
need to get rated.
So it's kind of this incestuous little model.
So that's kind of strange.
And then thinking about the rating agencies, each individual state has different risk RBC
constraints, so risk based capital constraints in the insurance market.
So that means depending on your portfolio of liabilities, there's different risk weightings
that you can have for different asset classes.
I just published this on my X account.
And what was fascinating, I was doing some research from the regulatory lens.
If you held non-investment grade private credit on an insurance company balance sheet, you
You can, you have to have between 7% and 20% capital coverage for that asset on your balance
sheet.
Mike, you're going to love this.
So if you have $100 of sub investment grade private credit on your balance sheet, you
have to hold seven to $20 worth of capital backing it.
Okay.
That means you could be anywhere between 5X levered long to 14X levered long sub-investment grade illiquid private credit.
So, Jeff, yeah.
Let me tell you what I think is going on.
This is what I think is going on.
I go, I don't think people just understand the math.
I'm trying to be really, really nice about this.
I understand what you just said.
7 to 14x lever, right?
Because we can all do this in our head.
7 times 14 is 98, right?
And I get people who are like, what?
I'm like, come on, dude.
This isn't that hard.
And so when you think about that, I don't think people understand the math.
It's like, let me get a calculator.
Can we go any freaking slower?
And I just don't think they get it.
I think what we're seeing is people look at numbers on a paper.
and they just don't get it.
No matter how many times you explain it,
until they internalize it,
until it marinades into their brain,
that's if they care.
I got a question for you two guys.
What's the over-under?
What's the dollar amount on stretch
when it gets rated?
10 billion, 20 billion, 30 billion dollars?
What dollar amount?
I think it's larger, way larger, way higher, like way, way, way, way higher.
I mean, grain, the people that work at these companies, the rating, it's like the big short.
You know, you walked in and the lady's got the glasses on.
I've seen the movie 20 times.
You know, it's that.
It's anybody who's not worth their salt that, like in finance, works at the rating agencies.
I get it.
What I'm trying to tell you is if Stretch gets to $50 billion, right, and they're not rated at that point, and Bitcoin is at $300,000, do we care?
I mean, it'll be nice to have it.
But I mean, at that point, let's assume two years from now, Bitcoin's at $250,000, and Stretch, easy number, is at $30 billion.
Do I care?
My answer to that is I probably don't.
I just want to be clear with you guys.
I love being on these spaces and doing this.
But two years from now, if Bitcoin's at two hours.
This August will mark my, sorry, this May will mark my ninth year basically living on a Bitcoin standard.
Mostly through derivatives, right?
Through Grayscale Bitcoin Trust and through MSTR and options and so forth.
but two years from now, I will be basically my 11th year. I kind of won't care anymore. I just
want to be, I'll be like, oh, you finally raided it? Yeah. Welcome to the party. I mean.
So hold on. Let's think about this, right? 3 billion stretch outstanding right now. If it 10x's,
it goes to 30 billion. If it 100x's, it goes to 300 billion. If it 1,000x's, it goes to 3 trillion.
If it 1,000 Xs and the monetary supply doesn't move, it would be 1% of the fixed income market.
Yeah.
And by the way, the private credit market came in at $1.7 trillion.
So 1% is $17 billion.
So why do I think, look, I talked to Saylor multiple times in public settings in Las Vegas.
And there was other people there.
Rohan was there.
Adrian was there.
I talked to a couple in the hallway.
So these were not private conversations, a bunch of other people around.
I thought one thing when I was talking to him live.
Now, two weeks later, seeing what STRC has done, my view is, look, I always think he
knows way more than we know because he's obviously on the inside.
It's his company, of course.
And there's nothing nefarious about this.
I think that his confidence level was so high while we were there was because I think that
He knew that there were cracks in the private credit market like we knew.
And for some reason, if 1% of the $1.7 trillion, which is $17 billion, just make it even one-tenth of that, it's still $1.7 billion that would bleed into STRC, which is almost half its value.
I'm trying to make these numbers really, really.
So I think that he knew this and he was just very confident.
And now we're waking up, you know, and they talked, you guys were there.
They talked about STRC nonstop.
That was the number one.
It was STRC world.
It was.
So now when you think about what he said to us and two weeks later, are you guys more bullish?
A lot more bullish?
I mean, I'm 2x more bullish after the conversations that I saw what he said publicly there and what I said, you know, talked to him.
And he said to me, and I told this on other space, I was there with Rohan, who did BitcoinQuant.co, and Adrian.
And he looks at the guys, and he goes, I am not selling STRC below $100.
Not even one penny, 99.9.
And I'm standing next to him, and he goes like this.
And he's like, green.
He goes, you think I should sell it under $100?
I'm like, no, I don't think you should sell it under $100.
I'm not going to.
Why sell it at a discount if you don't have to?
I didn't say that.
He just pokes me.
He goes, I'm not selling it.
I'm like, okay, dude, you're fine with me.
Right?
I mean, that was the interaction.
But now when I look back on this, I'm like, oh, he probably has-
It's super important.
The not selling under 100 is so incredibly important.
And I think that it's expectations, right?
Like you think about trust, you think about trust and credit quality.
So he talks about this with MSTR a lot as well.
He's like, if people want to short my stock, great.
If people want to long my stock, great.
Like I'm transparent in what I'm doing and I'm telling you.
So it's funny that he's like, I'm not selling STRC below 100.
For one penny.
He was very clear.
He goes, I will not sell STRC at $99.99.
He goes, not one penny.
And he's like, green, you agree with me?
Boom.
And he hit, I'm like, dude, we're good.
Yeah.
No, don't sell at a discount.
He doesn't need my approval.
But I was like, go ahead.
There's another point with that as well.
It's back to what he's talked about, like not taking the opportunity away from somebody else, right?
I mean, if the price drops down below to $99.99, there's incentive for somebody to buy it there.
And so you think about like ARBs, right?
Like how does an ARB work if they see a mispricing or something like that?
they jump in and they eat it up. So if it goes from $99.99 up to $100. And so then you think
about the incentive of the ARB, right? Like if you buy it at $99.99 and it keeps falling,
what's the downside risk? The downside risk is you're holding an instrument that pays you 11.5%
annualized paid monthly. Oh darn. So it's like the perfect incentive structure. And that's why
we have updated our guidance to be aligned with that we are not selling
sata below a hundred dollars and zero cents
look i i fully support i support i'm gonna tell you guys do not sell things at a discount if you
don't have to if people are like look i i've got a buddy right and he wants to buy a porsche 911
but the dealership, there's no discounts on them. If you want an electric Porsche,
plenty of discounts, right? They depreciate horribly. Unfortunately, they are terrible.
You want a new 911, there's the sticker price and you got to pay over. And everybody, well,
that's not fair. No, because there's a limited supply and there's a higher demand for it.
And that's a very desirable car. So you got to pay above sticker. There is no discount,
but on the ones that aren't in demand, there's a discount.
So if you have something that you don't have to give a discount on,
why would you do it? You wouldn't do it.
If you own the dealership, you would be the same way.
And I think that that's what's going on. And, and again,
now that I think about what Saylor said, I'm like, Oh,
I think this is going to go on longer than people think.
And that, that tweet or the post from two years ago,
I really think that this is going to go on. I think the bottom is in,
Look, you guys can quote me.
I think the bottom is in.
I think we're in crypto winter.
I think we maybe trade sideways.
You may get a little selling around the beginning of April for people that have to pay taxes, be short-lived, right?
Because you have to sell, wait, T plus one, move your money to your account, then send it in to pay taxes due April 15th in America.
Even if you ask for an extension, you still have to pay your taxes.
So maybe you get a little dip around that.
But you got Kevin Warsh, right?
They're going to start the confirmation hearings.
I don't know the date on that.
We're in a war with Iran.
I would have expected Bitcoin to be at 40,000 by now, but that didn't happen.
So, you know, in light of the bad news, I think Bitcoin's holding up really well.
And Strategy buys 18,000 Bitcoins last week.
This week, I'm going to throw it out there.
I think they buy 30,000, 50% more.
It was a shade under 18,000.
I'll say right around 30,000 Bitcoins.
That's my projection for Monday.
Yeah, I'm thinking 25.
So we'll see where we land.
We're thinking 25?
Jeff, what do you do?
Come on.
Throw out another thing.
29,000.
All right.
Well, what's been interesting is every once in a while,
it's fun to put these, you know, just test bids out there to see what happens.
So I've had a bid out on stretch at $99.99 for five days.
Hasn't gotten filled.
So you go back, you look at the chart here over the last while.
Today, the low of the day was $100 and a penny.
The day before, it was $100 flat.
Day before, $100 flat.
But Friday is actually the test day here, right?
You kind of expect, you don't expect the scale of the demand that they saw this week.
This has been incredibly impressive running up into it.
But you've got to buy the stock tomorrow to get the dividend, right?
Because the next day it'll be Friday because you've got a T plus one settlement.
So you've got to buy it one day before that.
So tomorrow's the last day for people to buy stretch to get the dividend.
And so seeing how stretch reacts on Friday is going to be really interesting to watch.
Right.
The first day where it's trading, where now you've got to wait a month to get to the next record date.
And so if that demand sustains, if it stays pegged to 100 or even if it just dips slightly,
like every time they've had one of these, the dip has become shallower and shallower.
But that's going to tell you how much new organic demand is coming into this.
And I think it's pretty significant.
And people are willing to wait a month, right?
It's a different thing mentally if you're buying and you've got to wait for a quarter
to get a dividend, right?
That feels differently.
But people are willing to park capital if they know that they've got to wait 30 days.
You know, that's fine with them.
You see, I think this is why, I don't think it's, I agree with everything you just said,
but I think that retail is 1% to 5% of this.
And that's being generous.
Totally.
I mean, totally, totally generous with that.
I think that if you're like, if you're in private credit and you're like, you have redemption
periods and there are lockup periods. And typically you go into private, any private placement is
typically going to be, in my experience, it's always been a five-year term. I guess it could
be shorter, three-year. Some have, where you have redemption periods, like there's no redemptions
in the first year. And then after that, it could be like 10 or 25%, you know, per year done quarterly.
So, I mean, you've also been in the private placement market and private. I don't, I mean,
I don't know if I call it private credit, just private placements.
But for this, I think people look at it like,
well, there's there is no redemption.
You just sit by and sell whenever you want.
And I think that that's what's getting people really interested
in this because it pays monthly.
It blows their minds.
I mean Jeff and I were at the Money Show Conference in Vegas which you guys may have talked about this on here already But you know that conference is like a very old school fixed income age in the rooms
you know, 50 to 90, right?
It's one of these very traditional style conferences.
And so Jeff and I went in there to talk about digital credit.
Wait a second.
You just said 50 to 90.
Okay.
So I'm like...
Rolled up in wheelchairs, Graeme.
Thank you.
People are kings.
It's crazy.
I think your adrenaline chasing keeps you really young, Green.
You're constantly out there testing your limits all the time.
I see you always doing something wild.
Go ahead.
But what was fascinating was what they've been conditioned to accept from the products that they hold.
So there's an assumption anytime you talk to them about one of these products that there must be a front-loaded fee on it.
or there must be some type of a lockup period on it.
You know, how much can I redeem in a quarter?
Like these are things they've been conditioned
to just be okay with in their portfolios,
which is robbing them of total returns over time.
And so having them come up to us afterwards,
and it was almost like a, I don't believe you,
but it wasn't about any of the good point stuff.
It wasn't about the balance sheets.
It wasn't about any of that.
It was about the structure of the products.
They're going, so I can just call my guy and buy it like a normal stock.
They're like, yeah.
And they're like, and there's no fee.
Like, there's no fee.
Like, and I can sell it whenever I want to, any day you want to.
And it was, it was mind blowing to them, particularly because of the yields, right?
These are people that are really excited to get something that's got a 6% yield on it,
right?
That's great.
And then they've got the fee that they got to pay.
There's all this stuff.
And so, you know, we live in a very small echo chamber, right?
Like incredibly small echo chamber.
You go wander around and just start talking to anyone else who's not, you know, in the Bitcoin ecosystem.
And they are completely unaware that these products even exist, which is part of, you know, the job that Jeff and I have and what you've been doing, Grain.
I mean, you've been on a tear going out there talking to everybody about about this space.
I mean, you've been as active as anyone I've seen in a long time.
And so there's an education component to that.
And scale actually helps with education.
Right.
When you can go and talk about the fact that, you know, there's billions and billions of dollars of these products out there in the market, and they've now been around for a year, the dividends continue to get paid.
You've now got to see it in a stress test situation where Bitcoin didn't perform and the value of the assets drew down.
The dividends continue to get paid.
Right. You're starting to build that story that makes it more comfortable to people.
It doesn't feel like a fringe risk asset that they're buying.
it feels like a fixed income product that's being managed like a fixed income product with
responsible risk frameworks around how you manage the balance sheet. And that's different than what
they used to hear around anything in the digital asset space. It was always just the Wild West. It
was being run by cowboys. And that's not happening anymore. Now you've got people that are coming
from all these traditional finance institutions that are getting involved in the space that are
taking the rigor and the discipline of how they manage portfolios, how they manage products,
that's coming into the Bitcoin space, which is what is going to make Bitcoin the premier
institutional asset in the space. Not another one is going to come even close.
Wait. Yeah. I had too many windows open. You know, what I wanted to say is,
you know, one of the things that fundamentally changed was putting, having the dashboards on,
on strategies page. And I was just looking up as you were talking to get the exact date for that.
And, and that date was, give me one second and I'll tell you, cause it's a lot, it's a lot
sooner than, okay. So the new strategy website went live in Q4 2024. Think about that. So it went
live in Q4 of 2024. And so basically you have all 2025. So it's been out there for one and a half
years at the most, but instead of somebody, if you, what's the rate that it currently gets paid?
11 and a half percent. And strive has the same thing or Nakamoto has their page, all these other
pages that exist. You go to that page. You don't even need to look at a statement. Like if your
friend's like, oh, would you buy? Oh, I bought this. Okay. Well, show me your statement. No,
I don't want to show it to you. Okay. Go to this website. And on there, it says it gets paid 11
and a half percent. This is the ex-dividend date. You got to buy it for that. And it pays it
monthly. It's simple. It's not like you're reading a whole prospectus. You don't have to go read a
PDF. You just go to the website and you look at it. And the average investor maybe then asks some
questions, or if you want to read the prospectus, you do that. But they have made this so simplistic.
And you think, and this is not being critical of strategy at all. It's like, why did they have
that website in 2023 or 2022? And so when you think about how fast the market has moved, because
Q4 2024 people like oh that's been there for years not really and so you get we kind of get used to
this because we've been talking about we're on episode what 56 58 sorry so with that we get used
to this but other people are like just go to the website there it is and you can see that you can
see you can see this happen and I think that's that's part about this and people like oh I'm just
gonna get paid every month well great and I think that all the stuff has come together
If you're worried about it, over the weekend, Bitcoin drops 20%. You can go to the website,
you can look at the website, and you can go see how much Bitcoin coverage that they have,
how much USD cash they have, and go see how long is this thing going to get paid out,
even if they had to sell Bitcoin to pay this instrument.
and that's fascinating like you you can't do that like if um i don't know that like uh let's
think about this for the earthquake that happened in japan okay and there was a tsunami and it wiped
out toyota dealerships like what you would have no idea how to calculate the risk profile of the
debt that you held, like the paper that you held for Toyota. Like that's, you know, physical world,
digital world. Digital world, like you can calculate that risk at any point in time and
you can have an understanding of what that is. You wake up on Sunday morning, four o'clock in
the morning, you're like, oh my God, Bitcoin's down 20% and you can go look at the website and
be like, oh, you know, I've still got 25 years of coverage. Like why am I sweating? Or whatever
that is and that that's that's just a different mindset too for for people that are or corporations
right if uh if you if you were if you're a corporation and you put this instrument on
your balance sheet and a board member calls you on sunday morning you know you're drinking your
coffee and he says hey bitcoin's down 20 what about that instrument that we put on our balance
sheet like is that okay you can say go look at the website and look at it yeah and i think that
people just, they look at these numbers and they just don't get it. And, and, and I just want to
cover a couple of FUD things that came up on all the, the, the, the, um, calls that I've been on
strategy has 10% or 11% debt. Right. And that's their leverage amount that they say. That means
that 90% they have is not debt. And so that that's a huge number. Um, and people confuse this all the
time. Oh, they're leveraged. I go, the number is so reversed that people don't get. Then they say,
is it guaranteed i'm like you know what pretty much nothing is guaranteed by the way fdic insurance
only covers you up to 250 000 so what happens after that good luck so so another funny thing
about the conversation we're like what happens when the music stops and it's like okay
what's the point of holding any of these instruments right like if you're holding a
a fixed income instrument, what's the point of holding it? Historically, if you wanted to go buy
a piece of debt, they're so illiquid. I think we've talked about it the last couple of weeks.
JP Morgan, if you wanted to go buy the JP Morgan preferred instrument and you go buy $100 million
of it in the IPO, it pays you 6.5%. In order for you to get your money back out of that instrument,
you have to hold the instrument through the macaulay duration of the instrument
right that's just the math right like you're going to get paid that fact let's just say six
percent it's uh effectively a hundred divided by six is the math like that's the duration of the
instrument so you'd have to hold it for that number of years in order to get your money back
out that you originally put in now if you want to get your principal back out that's even a
a more difficult story because most of these are perpetual.
They're non-callable and you have to effectively be selling little chunks of
that over time because they're just so incredibly illiquid.
And I got a better way to look at this.
You know, there's a company, Adobe,
and Adobe is used for a lot of things.
Obviously they're the professional grade for digital graphics, right?
So you have that whole suite and then you have Adobe.
and then you digitally sign PDFs.
This has been around for, whatever, 30 years.
That company is basically now trading at its,
it basically hit its 2020 COVID low.
And people would be like,
oh, well, this is just another downturn like COVID.
No, the narrative, whether it's true or not,
is that AI is affecting Adobe.
Now, whether or not that's fair or not,
that's where the stock has gone down.
So it's traded down to the COVID low.
And being in a software as a service company right now,
there's two ways to look at it.
Either AI is going to make you much more profitable
and therefore your stock price should reflect that
or it's going to be a massive headwind.
So these software companies are saying,
oh, we're now an AI company.
If your stock doesn't rocket higher because of that,
that's a great narrative, but it doesn't match the idea.
And I think what we're seeing with strategy is if you believe in Bitcoin, like if you believe in AI, if you believe in Bitcoin, the company that holds a large amount of it, they're going to do well and have a clean balance sheet.
You know, what am I going to say about Stripe?
I don't work at Stripe.
I could say what I want about Stripe.
You know, Stripe has a pref out and Metaplan is trying to get theirs out.
And what I'm saying is there's not a lot of other companies that have done.
It's a very short list.
I just said the list. And so from that perspective, the bar to get that, you know, you talk about it is, do you have the, what's that called, the momentum?
Do you have a critical mass? The critical mass to get it done is very hard to do that.
And from that perspective, once you have that, then things get a little bit easier because you hit that critical mass and now it's going well.
The other Bitcoin treasury companies will have some trouble with that. That's an understatement.
But what I'm seeing here is that for strategy is that they just have a huge, you know, this huge amount of Bitcoin, if you believe it.
So when somebody says to you, what happens if Bitcoin fails?
It's like, well, what happens if Florida just drops into the ocean?
What happens if California has a massive earthquake?
Or what happens if there's a war in the middle?
What happens?
Oh, you remember the old days, guys?
what happens if a cargo ship gets caught sideways in the suez canal because like that doesn't ever
happen what happens then if two weeks later a ship hits the the bridge in baltimore and takes
that out well that doesn't happen either you know what happens if there's a worldwide pandemic
oh there was one of those also it's like you know yeah you gotta you gotta be long ammo right ben
and I were talking about this earlier, like, you know, like global EMP or whatever, you're like,
okay, I'm long ammo and whiskey and cigarettes, right? Like, that's my currency. And AM radios,
maybe I've got a couple crank AM radios. Yeah, it's the ordering of probabilities that I think
like that inherent natural ordering of probabilities that most people miss, and they just miscalculate
And they misorder the probabilistic outcomes because there's just a fear element of volatility, I think, naturally.
So, yeah, the other thing that people say is, you know, and I've been hearing this just by Bitcoin.
You know, Bitcoin is one to one Bitcoin.
One Bitcoin equals one Bitcoin.
OK.
And there's nothing wrong with that.
And you're going to go buy Bitcoin, put a cold storage.
Go do that.
I think that's fabulous.
Go right on.
I think that's awesome.
You want to be nonce?
We're big advocates of that, by the way.
I think that's totally great.
But then people are like, well, I don't want to pay taxes,
so I guess I better move to Dubai or Puerto Rico.
And I'm like, okay, I don't have any, well, maybe I'll go hang out with British HODL.
I've never met him in person.
But to get out of taxes, I'm not going to go move to Dubai.
Maybe I should buy something in an IRA account,
and then I could defer those taxes, or if it's a Roth IRA, I don't have to pay any taxes.
So I wish the instrument was available in the stock market.
and therefore I don't have to move to Puerto Rico or Florida to get out state income taxes.
I could just buy this and I have that benefit.
And people are like, no, you should move to Dubai.
I'm like, I'm not moving to Dubai.
Not that there's anything wrong with Dubai.
Or Puerto Rico or whatever.
It's a low tax state.
So I'm like, there's reasons why you buy these derivatives.
And I'm aware that you could buy Bitcoin in an IRA.
But for some of these other assets, I think that that's the place,
you know you know to look at and on these spaces i mean what do you think you know when we're on
these spaces i mean do you guys listen to a lot of them or you just hear rumblings back and forth
no i've jumped into quite a few of them while you were on there oh okay
just to listen oh it's fun to hear what the conversation yeah yeah it's fun to hear what
the conversations are out there all right the bitcoin ecosystem for so for a long time has been
very tribal right and i think we had to be in the early days right there was this fight for the
survival which as it was going to get out there you had to you know really educate around the
thesis that was out there but as it starts to grow and gain exposure i think that there's a
realization that comes with the fact that you have to understand that you don't get to control
the desires other people have the tolerances other people have and the qualities other people need
And so what we're trying to do is take the asset. Everybody agrees in this space that it's the best asset.
Like this is going to be the most desirable asset on earth. The problem that you have when you're tribal about that asset is you can say, well, it's the best asset on earth, but only individuals should ever own it.
Well, if it's the most desirable asset on earth, that ain't going to be the outcome.
right? It's not because everyone's going to want it. Corporations are going to want it.
Countries are going to want it. Individuals are going to want it. Everybody's going to want it.
And what we're trying to do is create the different flavors of that asset that meet people where
they're at on their journey. You know, we're creating all these different on ramps that I
actually believe ultimately does bring people to Bitcoin. You know, when you start to see these
credit products, you know, and you've got this cash flow product that's providing you with these
great yields that's better than anything else. You know, a couple of months after getting that,
you start to ask yourself, well, what is it that's making this possible? Right. And that's a question
a lot of people ask all the time. And it ultimately leads to Bitcoin. And originally, we thought that
it was probably just the standard common equities that might be the on ramp to Bitcoin. But that
turned out to very much not be true, right? Because if people can't handle the volatility
of Bitcoin itself, you certainly can't handle the volatility that comes with an amplified version
of that volatility, right? That is a real stress test for your tolerances. You learn a lot when
you take that right. It's like I keep saying, right? The only thing that had a full cycle,
what, oh, we're getting closer now, so maybe Bitcoin's getting its cycle, but,
you know, the only thing that had a full cycle was the treasury space, you know, last year.
And so, Pete, you learn a lot around there and you learn a lot about what tolerances you actually have. And what you realize is even a lot of people that were really deep in the space that seemed like they were real believers in this and they understood that this is long term and you have to take, you know, a decade long outlook on these types of products.
you found that when the volatility really showed up, they weren't ready for it.
And so that just means that's not a bad thing. What it means is that's probably not the flavor
of the asset that you need. But now you've got different versions of it, right? So now you've
got something like Stretch that they're pinning at par and you're getting a high yield on it.
And that's a very comfortable product for people to sit on. Some people I've heard really enjoy
holding those products because then they take those dividends and that's the money they keep
buying Bitcoin with on the other side of that, right? So they're building their personal holdings
there. You know, it's a realization that the world doesn't move to where we want it to go,
right? You have to create the ramps for that to happen. And if all we did is go back and never
look at the structure that's out there in the financial markets and go, look, these financial
markets are broken. We're seeing that all over the place now, and it's becoming incredibly apparent.
there isn't an off-ramp that just immediately goes from the current structure that's in place
right now straight to Bitcoin. And I don't think the world would be ready if that did happen.
This is so ingrained in how our lives operate and function that for anything to transition to
a Bitcoin standard here, say we look out 50 years and Bitcoin does reach medium of exchange,
and unit of account and all these, you need an off ramp there. Nobody wants the unplugged version
of this. I promise you, it's not going to look good. It's going to be brutal if that were to
happen. If all the currencies were collapsing around the world and the world goes into chaos,
that is not a good outcome. But with these types of products, you can start offloading
those markets. And so like right now, we're focused on the credit markets, obviously,
but you look at the credit markets and you go, we've got an off ramp for that capital
where now it's actually backed by a balance sheet filled with a hard asset and a surplus of it
relative to the obligation, right? You're creating an off-ramp that's comfortable and smoother.
And in return, you're giving them a better product than what they have. You're giving them
a better yield profile. You're giving them a better risk profile. You're giving them a better
liquidity profile, right? So they're winning. But there's a realization that comes with the fact
that these industries have worked one way for so long when it comes to things like the rating
agencies. People have outsourced their trust in products. That's what rating agencies are.
It's a way for these institutions to not have to go do any diligence on their own.
They outsource that to the rating agencies and they go, well, the rating agencies must have looked
really deep at these and determined that these are investment grade vehicles and so we're
going to buy those.
That's what's happening.
But it's a push.
We're going to need a push.
And I think that's the reason why we're out having all these conversations is because
if we can create awareness around these products, if the people, Jeff was talking about how
the AMBEST model works, if the people that are writing those checks into AMBEST start
getting interested in these products and they start pushing it towards them.
saying we want a rating on these, we want to integrate these. That is more influential
than the issuers of digital credit products going to that rating agency and trying to say,
we'd like you to rate this. And they're just going to say no. But if their main customers that are
paying them millions of dollars a year come in and say, we're interested in these products,
but we need them to have a rating, we want you to look at these. That's when it starts to change.
And as soon as that happens, whether it's in three years or five years or 10 years, you know, it's probably going to actually align quite well with the track record that you need to have here.
Right. So Matt talks a lot about how you've got kind of a three year track record and then you get the hockey stick growth.
Right. Where you get three years of linear and it can be a steep linear.
And I think that's what we're going to see here.
But if that times out where you've built a track record, you've seen how these products and how these issuers operate in a bear market, and now all of a sudden they've been in the market long enough where you've seen a history of the dividends being met, balance sheets being managed effectively, and all of a sudden they've got scale and you get a rating agency to come out and say, we're willing to give this a rating.
Even if it's not a great rating, a rating, all of a sudden you see that high-stick curve growth.
right so you got to play the long game every conversation you know that jeff and matt and i
have around this is always looking out 10 years right it's not everything isn't going to happen
in one week or one month there's a foundation building under this and we have to do that with
our business strategy had the benefit of being able to scale at the same time they were evolving their
model right so that foundation was under them as soon as they launched these credit products and to
what you were saying earlier, Mike, about how many of these digital credit issuers are there
going to be in the near term. I think you're right. I think it's a very small list because I don't
think people have a full appreciation of what it means to create a good credit. There's a foundation.
There's a level of stability that you have to have underpinning that credit you're issuing out into
the market. And you don't build that by snapping your fingers, building these reserves and things
that are backing that credit product, you know, that takes a lot of time to get that
into place. But when it does, it's ultimately also what makes the equity so valuable, right?
You have to focus on maintaining good credit quality for your company so that the credit
products are very valued out there in the market, because the demand that comes into
the credit products is going to greatly enhance the value over the long term of that common
equity, right? There's a link between these two products, particularly in this model.
and it's a really important one to get right.
And so you have to take your time,
you have to do it the right way
and you can't try to rush things.
Yeah, so Ben, what you're saying is,
you know, we're all really good with spreadsheets.
For us, it's trivial for us to do it.
The catch is that modeling out
more than three or four years,
the projections just become really weird,
specifically with the prefs because of the amplification.
You're not increasing the shares.
The prefs are issued in shares, but because they're debt,
even though they're digital credit, they're debt,
it doesn't affect the share count for the common stock.
So how do you model that becomes a little bit weird.
And so the modeling that I did,
I had done a previous article going out 10 years on strategy.
And now that I look back on it, I did this back in January.
And now seeing what Stretch has been able to do by acquiring Bitcoins at this rate and how that affects the amplification of MSTR, I don't have a better way to model it.
You know, I feel uncomfortable doing a model more than two years because 10 years out, the numbers are really because.
And by the way, somebody had posted this.
So there's 1 million Bitcoins left to be mined over the next, whatever, 100 years.
Then somebody said, yeah, but in the next 10 years, 90% of those Bitcoins will be mined because it gets halved each cycle.
And I was like, oh, God, you know, what does that do to the price of this?
And, right?
Is that math right?
I mean, I saw that.
But, yeah.
So let me give another example.
in history, right? Tesla comes out with the Roadster, the first Tesla car. And you see
the thing do zero to 60 in like two and a half seconds. And you're like, holy shit, this
is faster than everything else I've ever seen. It's faster than all internal combustion engines
ever and it's electric. Okay. You're like, wow, that's incredible. That's going to change
the world. And then you start to see that they put all these cameras in it and they're
collecting all this data. You're like, wow, it's going to change the world. But you're
like how much I have no idea How fast I have no idea I just know it going to change the world I don know when So what do people do They buy the equity And you have to have a long view thinking about this because you don know how to model it
You can't, like, we don't know what the adoption curve exactly looks like. Is it going to be 1,000x?
Is it going to be, how long does 1,000x take? You know, like, four, eight years, like, the equity might take some time.
But again, you brought up modeling the common, very difficult.
Yeah.
But you know, it's also a function of Bitcoin.
But modeling the credit is actually relatively simple.
And there's risk models that exist today where you can understand the credit profile.
So you're like, that's the product.
It's just how fast does that product take off?
So I want to give you a really good example of what happened with Tesla, but not really about Tesla.
So I've been in Silicon Valley now for whatever, 26 years.
So what happened was when the Chevy Volt came out, right, which was their hybrid car.
So in California, you could get a sticker so you can go in the HOV lanes, right?
Well, the first, so the product man, so they came out to the Cisco campus.
I was working at a spin in and you could go test drive the Chevy Volt.
And they had these, they had a whole bunch of product managers from Michigan that were there babysitting the cars.
So I get into the car and I'm talking to this product manager guy and I said, you know, whatever the car it drove fine, whatever.
First of all, the battery was completely depleted and it was only running on the gas motor.
And I said, well, you guys really can't sell this car in California.
And he goes, what do you mean?
I go, it doesn't qualify for an HOV sticker.
He goes, what do you mean?
I go, well, these guys that work at Cisco that made a whole bunch of money in the internet bubble, if they have a choice between buying an S-Class Mercedes to drive to work or a Porsche or a BMW, they're like, no, I'll just go buy a Tesla, right?
They'll buy a $100,000 commuter car because it gets the sticker.
He goes, that's not why we built the car.
We built the car because it's good on fuel economy.
I go dude we're in California people are buying Tesla's the Tesla Model S because
it has this sticker so they go in the I never heard we might have that sticker
next year I go okay so our electric car is good our hybrid cars good yeah yeah
yeah but they missed that part the part that I'm trying to say to you is how did
they miss that right and it's like oh well Tesla's doing this or the Prius has
been around, right? So these were all known entities. But for some reason, nobody thought
of what in California is that would have the sixth biggest economy in the world or seventh,
whatever it is. But nobody ever thought to ask people, why are you buying these Teslas?
So they can use the $100,000 car to drive. And I know this sounds completely out of touch
with people that are in the rest of the country. I totally get that.
The other thing that was completely out of touch, somebody said recently, like,
Well, I've never seen any robots where I live. Now, where I live, I was driving. There were five Waymo's this morning. I had to go to a dentist. There were five Waymo's all being driven by themselves. There's 300,000 Waymo drives per month in San Francisco. That's a robot. Like, what do you mean it's a robot?
it's a car that's driven autonomously that's the definition of a robot and this guy was like well
i don't see any robots where i live i'm like that's true where you live there's no robots where
i live three times because i live at the top of a hill everybody rides the robot to the top of the
hill they get out so they don't have to walk up it right so anyway so it's it's like people and
this goes back to what you were saying ben when you went to the money store thing if people are
unaware that 11.5% or 12.5% even exists. And then they ask the same typical questions. When can I
get in? When can I get out of it? That's like saying, does your electric hybrid vehicle come
with the HOV sticker? No, I'm not buying it. It doesn't matter how good it's on gas. It doesn't
meet my needs. And that's where you tell them, they ask these very basic questions. How often
do I get paid? You get paid monthly. Oh, it's like, how often do you drive to work? Monday
through Friday. This is obviously 10 years before COVID or whatever it was. So I don't know why
people miss this. And I think, you know, you know, to wrap up with what we're saying, you know,
tonight is that I don't want to put out a projection for more than two years now,
because the range is so wide. It's just so, and then people are like, if, and when I, when I do,
there's always going to be an assumption.
What is the amount of Bitcoin that's going to grow?
What's the share growth and how much of that is made up of the prefs?
And you're like, OK, there's three variables.
OK, now what's going to be the price of Bitcoin each quarter going?
So now you have your variable Oh wait I not done What the MNAV So now you have five variables and somebody like why you pick an MNAV of only 1 or 1 I want to be conservative So then you got
five variables and everybody's like, can you just do the projection? Yeah, I can do it.
But I kind of, if I do everything conservative, your numbers are low. So that's where I'm at.
So I'm not going to, I'm telling you guys, I'm not going to post my projection
until Tuesday to see what happens on Monday.
I think those model projections are kind of futile.
Like, you know, my point I was getting at with Tesla is that the market cap went from $40 billion to $1.2 trillion in, like, 20 months.
Like, the business didn't really change.
So, like, all of those models, the people that were projecting the Tesla stock price, also broken, right?
But at some point, you've got a moat large enough.
You've got a capital large enough.
You've got a product with a huge moat.
It goes to the top of the leaderboard.
I'll tell you guys a secret.
So two of the guys that I'm still friends with today, and you met one of them, two of the guys, one of them is playing constant.
We were all working at the same spin-in.
It was a startup company, and we were talking about Tesla.
And we could not figure out how this, because the amount of cars that were shipping were so small.
It's a $100,000 commuter car.
We didn't see it.
We did it.
We knew all about it.
We knew about Elon Musk.
We knew all about it.
You know how many shares I bought?
Zero.
Okay.
Then I bought Apple when the iPhone came out and Baidu and a couple, and then Facebook a year after the IPO.
And I promised myself because I missed Tesla, I refused to ever have that happen to me again.
So I have to do enough research to understand what I'm not getting.
And that's why in Bitcoin in 2017, when Brian Kelly says on CNBC, as everybody knows, Bitcoin
hit its all time high last week of 2000.
I was like, oh, my God, another frickin Tesla just happened to me again.
And I refused to miss that.
And that's because I did not get what Tesla was doing.
I missed it.
And I'm able to admit that.
And that's why when the iPhone came out, I was like, oh, this is a big deal.
And that's why when Facebook, after their IPO, which was a disaster a year later, that's when I bought into that one.
And that was in 2014.
But you have to do enough research to understand, is this just going to shoot up and drop down?
or is this really going to change the industry?
And by the way, when the iPhone came out,
many people said, oh, this is for a 16-year-old kid in high school.
I don't know who's going to buy a $1,000 phone
for a 16-year-old kid in high school at that time.
It's not a real device because the email is not secure.
BlackBerry email servers are in Canada,
therefore they're more secure.
And it had a physical keyboard.
But when I saw the iPhone, I'm like, oh, God, this thing.
You know, I believe Steve Jobs. Now, in retrospect, of course, everybody saw this and BlackBerry's dead. Anyway, with that said, I think that these are very hard to see when they happen. But when they do, you're like, oh, I wish that I put more into it.
Yeah, mega trends. Mega trends are difficult to see. All right, I'm fading. It's late here,
East Coast time. I've been up for a while and I've got early flight, but let's pass it around.
Final thoughts. Maybe I'll go to you, Ben. We'll go first.
I think to Mike's point, all your models are broken. All our models are broken.
But some are useful.
Well, the sub are useful. Well, you know, the thing that's really encouraging in this space is that there's so many people that have now come in that are getting really passionate about this, that like the advocacy side and the education side of talking about Bitcoin and talking about all the different ways and the different products that Bitcoin enables people and companies and institutions to work into their models is going to be hugely helpful.
right the burden isn't just on strategy and sailor anymore this is evolving there's a lot
of people with skin in the game and so i think over the next you know 12 24 months the awareness
is going to increase and i think you're going to continue to see the demand for the products
i keep telling people don't you know take price always as the indicator of demand right look at
the liquidity, see what's trading. Trading is what shows you the demand. Price simply shows you the
price today. So, you know, it's going to be one of those spaces that's going to evolve so quickly
in front of us. You know, and we've been saying that some people might say, well, you guys have
been talking about this for two years. I'd point back and go, look at how much has happened in two
years. We are so numb to the rate of change that is happening around here because we talk about it
so often that it feels like it's happening in these tiny increments. We are in such a different
place than even I expected the industry to be two years ago.
Like I couldn have drawn this Yeah So what going to happen in the next two years now that we already got momentum and we got way more people here you got people within organizations
that are advocating for it that are trying to push the messaging forward like the rate of change over
the next two years i think is going to be astonishing in this space so i'm here for it
it's going to be a fun ride yeah i'll wrap it up you know you know something my friends asked me is
What's the next narrative?
What's going to drive the price higher?
And I think that narrative right now is the race between Ibit and strategy to get to a
million Bitcoin.
It's just an easy number that people put their heads around.
Oh, there's a race between these.
And there are two different types of entities.
We already discussed that.
And they're like, oh, there's like a rate because they're not off by much.
They're off by, I don't know, like 5% between the both of them.
And now the narrative is, oh, this is going to happen this year.
And does it happen sooner? Probably. And so the takeaway for that is it's an easy narrative for people to pitch. Well, you know, strategy had no Bitcoin in 2020, and now they're closing in on a million six years later. And I think that's a very easy narrative for people to get on to.
The other thing is I don't believe in Bitcoin.
Okay, but inflation's killing me.
Great, there's a product called STRC.
And then some people are saying on Spaces,
well, you get no upside with it.
Okay, but you kind of get no downside also.
I'm not saying it's a guarantee.
It trades in a target range,
and they pay you monthly.
So people are like, oh,
so it's like the gateway instrument.
And the other thing that I noticed on Spaces
is that people are willing to listen.
I think that now that I've said this, one of the reasons why I do the space is if people aren't willing to listen, I drop off the space.
But people are like, I ask when I'm done, do you have any questions?
And I get some really good questions now.
I'm not getting this weird stuff really anymore because if you can articulate it, then people are kind of getting into this.
So like you don't want to buy Bitcoin or too volatile, you don't want to buy MSTR, okay, STRC.
And so thank you guys for building the products.
And congratulations.
I did read your posts today, Jeff.
So congratulations on making those changes.
I read that.
Congratulations on buying STRC.
I'm going to go read Matt Cole's post that he did a couple hours ago on the primer on balance sheet liquidity.
So thank you.
Send my thanks to Matt.
And you guys have a safe trip home from New York.
Yeah, thanks, Mike.
Appreciate it.
Yeah, Matt's article is great.
It just talks about how corporations historically across all industries will issue debt and hold other paper of other corporations in the same industry.
It's actually, it's like incredibly common.
So it's, there's been a lot of noise about that on X.
So Matt felt very passionate and I think it's a good read.
I have gotten through a little bit of it, but I'm going to read it on the plane tomorrow.
But my final thoughts, thank you to everybody that are building in the space.
honestly. Rohan, STRC Live, people that are building dashboards, people that are talking
in the space, people that are going on spaces and going on podcasts, building in different industries
and talking in different places. I'm just incredibly thankful. I mean, it's allowed us
to be in front of the people that we were in front of today. And, you know, it's like we're
almost passed off the torch a little bit to other folks that are taking and running with a lot of
the analytics and the capabilities that are happening in the space.
And it's just so awesome to see this entire space exploding and getting a lot of the credit
and attention and noise that it should be getting.
In terms of the market, I think these instruments are just, they're so fascinating.
And I think it can really clean up capital markets, like just credit capital markets.
For example, every dollar that goes into these instruments is likely a dollar that's not
going to go into another credit instrument.
So you think about some just really crappy business model that historically would have
gotten access to capital.
The incentive structure is gone, right?
Like that crappy business model, you're already seeing it.
Like, I think JP Morgan came out and said, we're not allocating to private credit anymore.
Like we're stopping our future allocations of private credit.
That's happening.
Like these instruments help clean up the credit markets.
And how long does that take?
I'm not 100% sure, but I'm here for it.
I'm ready for the industry to 1,000X and 10,000X.
And I look forward to building that future.
And the final thing I'll leave you with, Graeme, is we are not selling Seda below 100.
And you can poke me anytime you want to.
Do not sell something that people want at a discount.
Okay?
If they don't want it, why is something discounted?
It's like a Porsche.
Because people don't want it.
Yeah.
And that's it for episode 58.
Thank you everybody for joining True North, the investment-grade Bitcoin podcast.
We will catch you next week.
Cheers.
Thank you.