30 seconds
Isoy mystery
Ripley
activation
Counting
Minion
Be cotton
Woo!
Here we go.
Welcome back. True North, episode 54. Margin is not calling. And we're back with a brand new
episode. We're going to get after it today. We've got the crew here. Despite the price of Bitcoin
being down, we are going to grind through it. A lot of despair in the marketplace these days.
And yeah, welcome back to True North, the investment grade Bitcoin podcast,
where we talk about securitized Bitcoin. We talk about Bitcoin. We talk about what's happening in
the financial world. We talk about leverage. We talk about capital structures. And I think we've
got a pretty good show for you today. It might be a little bit of a quick one, just given the
landscape of the market, and we'll crank through it. So today, we're going to talk a little bit
about capital structure, 101, preferred equity design. We'll think about the macro of the Bitcoin
landscape, kind of where we're at in the marketplace. Metalphoria, we might get into that a little bit.
risk market relativities, and then capital raises in 2026. I know Soleil has done a little bit of
research on what's going on here. And obviously a lot of noise happening with like Tesla, SpaceX,
open AI. We've got to think through what that looks like. So without further ado,
we've got a quick word from our friend, Tim Kotzman.
Ladies and gentlemen, what you're about to hear may be amazing, but it is not financial
advice. It's for informational and educational purposes only. Back to you. And we're back.
Okay. There we go. We're going to cook. All right. How are we feeling? Obviously,
what are we at right now? Bitcoin is at 71,463, just absolutely grinding down. We've got a 42%
drawdown, I think, from where we're at right now, from all-time high at $126,000.
How are we feeling?
Early, I hope.
Early?
I mean, it's pretty brutal out there, right?
I mean, pets' heads are falling off.
People are screaming for margin calls, as we've seen in every single one of these so
far.
And yeah, it's brutal out there.
Mike, Dan, what are we thinking?
You know, look, brutal. Sure. It's so much more fun when the price is going up. We all have to agree to that, that it's true. And I think what I'm looking at it, you know, all the conversations that I had over the past week with the price action, what most people are that I've spoken to that are large holders or industry players, what they've all said is basically consistent with what we're seeing on the outside.
They're baffled just like we are.
I mean, Mike Novogratz, he posted this.
There was a short video.
It was two minutes long and put in the stream.
And what he said was, look, gold is ripping silver.
Obviously, silver has dropped down, but it does not appear that Bitcoin's going along
with that.
And he seemed to be baffled also.
So that's my point.
We all thought that Bitcoin would rip higher than gold, but it appears to be decoupled
from gold right now for whatever reason.
And just weathered the storm.
yeah that decoupling i think is what is causing a lot of people indigestion is it's like okay
these things it's supposed to pump everything why are some things pumping but you know our bags are
not pumping so that's kind of like causing some heartburn yeah the debasement trade not hitting
bitcoin it's hitting hitting gold and silver and people are like wait isn't bitcoin supposed to
move with this yeah that's it it's an interesting argument i mean i also argue and like people are
saying, like this is the debasement trade. I mean, true inflation is, you know, below 1% here. We're
seeing liquidity kind of stagnate in the US markets, but we're seeing the People's Bank of
China injecting mass amounts of liquidity. And if you overlay the People's Bank of China liquidity
injections with our total money supply with gold, like they're clearly printing money to back their
currency with gold as kind of to get off the US dollar standard. So, and you know, gold is a
massive market. So I don't think it's any surprise that Bitcoin's not moving with gold here because
we kind of see the drivers of this gold trade, which is, you know, large macro funds piling on
as China buys the hell out of gold. But I think, you know, five monthly candles here in the red
is definitely tough for anyone. Yeah, but Dan, I agree with what you're saying. I'm going to give
you a good point here. The reason why gold is going higher is because central banks are buying
it right i mean it's it's not it's it's not the guy that's living somewhere you know in any state
in the u.s or somewhere around the world some guy shows up he's like oh i'm gonna buy 20 grand worth
of gold at my local gold dealer that's not forcing the price of gold up trillions of dollars right
up trillions right that's from a central bank buying it and i'm not saying i'm not making a
value judgment here i'm just saying that it's not from retail the reason why gold is ripping higher
So yeah, so I'm agree. You guys want to hear this is a concept that I haven't discussed with you guys even privately
Maybe it's an inversion and i'll explain what this is
You know, we think that bitcoin is supposed to go up because of money printing and so forth
But I think what happened is there used to be two and a half million bitcoins on exchanges and between strategy
And ibit spot bitcoin etfs
They picked up maybe net half a million bitcoins on the spot bitcoin etf
because they rolled out of GBTC.
And then you have strategy over the past,
whatever, two years acquired another half a million Bitcoins.
So there's about a million Bitcoins
that are off the exchanges, right?
So now what happens is you have a smaller pool
of Bitcoin that's on exchanges.
So from that perspective,
people that like to short and make the perps
or to make this a grind trade down,
there's less Bitcoin.
So to the downside,
They have downside convexity because the pool of Bitcoins is smaller.
Now, many people think, well, if the pool is smaller, then the price should go up.
Convexity works both to the upside and to the downside.
And I think this is why you're seeing this now.
Now, this is not as bad as 2022 or 2018 in terms of percentages.
But I think this is why the expectation now is off.
Oh, we wanted Bitcoin to come off the exchanges, right, to have this supply shock, right?
There's less supply and therefore the price should only go up.
But coupled with the Binance 1010, October 10th, with MSCI FUD on MSTR combined with tax
loss selling, that all hit, not a conspiracy theory, it just happened to hit all into mid
October through November.
And the price really hasn't recovered since then.
And so that's where we are today.
And we need to find a new bottom.
them. And then I think that from my view is that, you know, look, I've been this for eight and a
half years. If I didn't think it was going to come back up, I wouldn't be on the show right now.
Yeah. I mean, if you liked it at 126, you're getting it for 40% off, 50% off, buy one,
get 150 off, you know, right? By the way, this is not financial advice, but I would tell people
My belief is buy low and sell 20% when it's high.
But what happens is people FOMO in at the top, right?
And so that drives the price even higher.
But I think we have moved now to a true institutional play.
And the retail is kind of out of it right now.
So I think we will see the rotation.
Yeah, you know, all the FUD is pretty much the same.
It's just it hits a little different when the price is going down, right?
All the flood seems believable and credible when the price is going down and you really, you know, you can't just tell the bears to stuff it, you know, temporarily.
You're just kind of like handcuffed.
You have to sit and take it.
By the way, you know, fun fact here.
Remember, there was all the FUD about proof of reserves for strategy at the beginning of the year.
And we and when we were Jeff, you and I were on a stage in Las Vegas and I was the host.
and we were talking about it with richard byworth and ben work we were on stage talking about this
yep okay because people have short memories so we talked about it and we said there's re
michael say there's a video why he doesn't do this you're like okay why am i bringing this down
so the same fud returns again whatever five days ago yeah interestingly enough mike belchia bit go
you're like what the hell does this have to do with strategy um they took all of the employees
off of LinkedIn so they would not be attack vectors
in order for people to do a phishing or some type of attack on the employees at LinkedIn And they contacted LinkedIn to say hey we going to remove our people off because people will target us
because our people hold wallets for institutional access.
And so this is all real.
This happened live.
And people are like, oh, well,
it's not a big deal to post your wallets.
No, I mean, think about what Mike Belche just said.
And their company just went public.
And he's, by the way, in the book,
Bitcoin Billionaires by Ben Mesrick,
which I read years ago, I could pull that back out.
He was one of the guys referenced in the book.
Yeah.
I mean, it goes been around for a long time, like 2014.
They've been at the forefront of all this stuff, but it makes sense, right?
You don't want an attack vector out there at all.
Look, the attacks are real.
I got invited to be on a podcast, right?
From somebody that I know on X and it wasn't them.
Their, their account was hacked.
and when I clicked the link to, you know, to the, to the podcast, it was actually spyware
and they tried to, you know, send the code and get me to give them the, the, the access
code so they could get into my emails and, you know, God knows what else.
You know, I was able to, you know, detect it in time, but this stuff is for real.
And it's on a monumentally greater scale for these companies than my personal stash.
100%.
Hey, I want a fun fact here.
Here's the book.
Bitcoin Billionaires, Ben Mesrick.
Can you read the date on it?
I read it on...
Yeah, I'm dyslexic, so I can read it.
Right.
Yeah.
So I read it on July 23rd, 2019, and I wrote The Price of Bitcoin.
9,505. And I'm like, when's this fricking thing going to get over 10 grand? You know, I was like,
and this was after I got in in May of 17 and it got in almost a 20,000. And I read the book and
I wrote the price and I said, one day in the future, I'm going to, you know, and this is a
great book to read. You got the Winklevoss, uh, Winklevi twins in here and Charlie Shrem and all
the OGs and Eric Voorhees. So, so read the book, but look 95. And back then I was like, Oh,
if we can only get back above 10 grand and now we're all unhappy because it's,
you know, whatever it's 71,000, whatever it is right now. And so, you know,
what is, I don't think I'm an OG. I got in 2017, but
hopefully that was helpful. I don't know.
Yeah. Helpful. I, I, I'm going to share a little bit of a background analysis that I'm just doing
here. Why is it so small on my screen? I got to figure this out here.
One second.
The just looking looking at where we're at in the in the general grand scheme of things.
Looks like this is not wanting to work here.
Well, maybe we can't get over there.
Give me a second.
But I was looking at the just the backdrop of maybe I'll just zoom it in if that if this is the case.
I was looking at the backdrop of Bitcoin versus the U.S. Fed funds rate.
Let me see if I can make this bigger.
It doesn't really work.
Okay.
Bitcoin versus US M2 money supply.
So what I've done here is I've taken an image of Bitcoin and I've pasted it in the background.
And then I overlaid the US M2 money supply to look at where we were last.
And there was a 40% drawdown in Bitcoin, just the general macro environment.
So I'm going to make this more less transparent so you can kind of see the general thought here, right?
It's connected the same day.
So it goes from January 1st, 2020 to today, looking at M2 money supply and how that's changed over time.
So I'll leave it here around 50% transparency.
So this white line here is last time, last cycle, there was a 40% drawdown.
And looking at the macro environment, I think this is a helpful perspective.
After there was a 40% drawdown in 2022, Bitcoin proceeded to draw down another 50%.
So there's a lot of concerns that people are saying it's going to do the exact same thing here.
it's going to go down another 50% to 38,000. And maybe it can, right? I don't know. I don't have
a crystal ball. So I don't know exactly where this stuff is going, but I can make some connections to
what was happening in the macro environment. So at that point in time, the M2 money supply was
actually coming down. They're pulling liquidity out of the market. And you had Terra Luna collapse,
You had FTX collapse, Celsius, BlockFi, all of these exchanges and institutions get, you know, they're over leveraged and got out of control.
They went bust. Right. So and you had a political regime that was literally trying to kill crypto and kill all of these companies.
So that's kind of the backdrop there. And you look at where we're at now. Right.
We've seen a 40% drawdown from the peak at 126,000.
And that same environment just isn't really there, right?
We're seeing macro liquidity.
I mean, Dan spoke about it just previously.
China's pumping liquidity into the market.
I think there's a high likelihood that more liquidity comes into the market in the U.S.
here in the future.
At least that's what the current speculations are on the horizon.
So from there, I also did the same analysis on the short-term risk-free rate.
U.S. Fed funds rate. And I think this one is even more glaringly obvious. And I'm sorry,
this is so small. I'm on a new screen here. But same thing. I overlaid the U.S. Fed funds rate from
January 2020 to today and looking at what happened after the 40% drawdown. So after the 40% drawdown,
there was a immediate change in interest rates. Interest rates went from zero to five.
right here we'll make it less transparent so you can see it interest rates went from zero
to five basically the risk-free rate uh effectively went from like risk on like
there was a huge incentive to be risk on and then when the risk-free rate jumps up to five
people have a flight to safety and we saw a significant reduction in all of the markets
Right. S&P 500, QQQ, Bitcoin came down. Everything kind of came down as the risk free rate went higher.
And you look at, again, the landscape of where we're at today. At that point, Bitcoin was down 40 percent, proceeded to go down another 50 percent while interest rates did a, you know, infinite jump from zero to five.
and now today bitcoin's done a 40 drawdown and you have the president of the united states
like spittily yelling about how interest rates need to come down and saying that he's going to
sue the future director of the federal reserve the future chairman of the federal reserve if he
doesn't bring interest rates down like that's that's the environment we're in right now and
And I really struggle to see, I mean, it's possible and it's probable that there's convexity here still to the downside.
But we're just in a completely different environment, completely different political landscape, completely different liquidity environment.
And at least to my knowledge, there's not as much leverage within the system as there were in past cycles where you've got bad actors.
Like the entire market has learned from what's happened in FTX.
You don't have all of the shit coin schemes.
You don't have NFTs going crazy.
Interest rates aren't at zero.
It's just a completely different environment.
Everybody's learned from the past.
So, yeah, it's just an interesting place here.
What do you guys think?
Yeah, I got two thoughts on that.
One, I think the MSCR chart is really, really interesting when I relate on all this data.
Yeah, because I believe the four-year cycle is front run via MSTR.
People started selling MSTR long before Bitcoin finally peaked in October.
And I think that was because a lot of people were putting on that long Bitcoin short MSTR hedge,
which is a great way to participate in potential Bitcoin upside in the case of the rally continued,
but also protect yourself in the case that there was a downside move or even taking puts out on MSTR while holding spot Bitcoin.
I think MSTR ultimately served as the drain of speculative Bitcoin money and a lot of hedging liquidity because of the volume in the options market and the equity, etc.
And then there was also, you know, ATM equity issuance that was pushing the price down.
So I think that came kind of front run into the four year cycle.
Now we're seeing everyone's big, OK, four year cycle, whatever, like sell everything.
I'm going to buy back next October.
And so I think there is real human psychology at play here.
and we'll see what the next few months bring.
But I agree.
I don't think the macro environment is that bad.
I mean, someone just called it the SaaSpocalypse.
And that's totally true.
Like, you know, in Jordy's recent video,
if you take out the top software names from the NASDAQ,
the drawdown is like getting close to the 2022 low.
So what you're seeing in Bitcoin is similar action to the 2022 pullback.
What you're seeing in software is very similar to the 2022 pullback.
But what you're seeing in, you know, energy stocks and industrials
is they're moving aggressively, broadening out the market,
and sustaining kind of the NASDAQ and the S&P.
So that's why I believe this idea that the indices are going to collapse this year
is completely faulty.
And then we had a massive 52.7% PMI print,
which is the largest jump in over four years,
above into expansionary territory on Monday.
I mean, you don't look at this stuff and think the economy is collapsing.
Like, labor market's soft, but AI.
So can I do a non sequitur here?
so so dan my question to you is are you going to be wearing that hoodie tomorrow
i'm gonna put on a collared shirt are you gonna shave depends if i get to bed early enough tonight
okay for those that don't know dan's asking a question on the earnings call tomorrow so uh
you get to be the analyst that represents true north and which is fantastic
has sailor repost stream yet yeah we got a sailor repost sailor sailor birthday we got a birthday repost yeah we cooking so so before we go on so i i could talk about your stuff so um all you guys
are you know what guys i was thinking maybe we should all go to las vegas and hang out there
you think that sounds like a good idea i'm down i'm down you're down when you guys gonna be there
uh yeah i'm there sunday sunday yeah i get in february february 23rd it's gonna be a good time
we we have an event coming up it is a true north inside event it's happening at vegas it is on
monday february 23rd it's going to happen from 1 p.m to 5 p.m and then there is an evening
after party as well the it's a good time to bring up the schedule there grain and i'm pulling it up
here. We've developed a schedule a little bit more. This is going to be a very unique
in-person event. None of it's going to be recorded. These conversations are only going
to happen here. And our goal is to give the highest bang for buck alpha of what's actually
happening in the industry for people that are working in this space. We've been spending a lot
of time behind the scenes getting this dialed in. And I am excited to share with you what that is
going to look like. And here is the schedule. For those that are interested, we are going to have
the first half is going to be True North discussion. We're going to talk just like we do on this stuff
every week, hit on whatever's happening that week, state of the market. We've got a couple
individual presentations. We're going to talk about the future, what the future looks like,
think about risk and our perspectives. Then it's going to be a break. And then we're going to shift
into a really unique institutional lens into the marketplace. I think this is going to develop a
bit more from where it's at right now as we're in conversations with several people. But we're
going to have James Lavish there to talk about macro and he represents the BTC Opportunity Fund.
We're going to get into digital credit and beyond and like where this industry is going.
We've got a representative from Barclays there that's been involved in several of the securities
that have been issued in the market. So he's got just such a unique perspective that
it's hard to understand what's going on until you talk to some of these bankers.
This next one is going to be, where's the Bitcoin Lebowski? We're talking about
trading and custody. How does this stuff work? Is the Bitcoin real? How does the trading
environment work where you actually go out, you take these dollars, you go into the market,
you buy the Bitcoin. Where does it go? How does the custody work? What is the behind the scenes
transaction look like just to explain the complexity because a lot of people think this
stuff is fake, but it is so incredibly complex.
And we've got somebody from Anchorage Digital coming to talk about the specifics within the
marketplace.
Then we're going to get into what's it like buying $500 million of Bitcoin, a CIO's view
of the world.
We've got Ben Workman, CIO of Strive, also a member of True North.
And then Matt Hogan from Bitwise also talking about just the landscape of this market and
what it's like actually buying Bitcoin. And then the bull and institutional case for amplified
Bitcoin, just to get people fired up. I think this is a really big opportunity with a large
landscape. And we've got a couple of people that I think you guys will be excited about
coming to talk through the bull and institutional case for Bitcoin. And then also last year we had
Fonglish stopped by and chatted. So we'll probably get some members of the strategy team swinging by
as well. Hopefully, fingers crossed, no promises. But all of this is subject to change. But this is
what we're aiming for a really high alpha industry view from behind the scenes to give a unique
perspective that, you know, we try to bring every week. And it will only happen here.
Right. And so so Jeff, how many people have signed up already?
We've got 35 tickets remaining. There's 115 people that have signed up and paid and paid.
So the tickets are available. They're in the chat. It's on the MSTR True North website.
You can take a look there. It's available via Luma. Only 35 tickets left.
And yeah, please come hang out. It will be a great time. We are going to have a great after party.
We've got some cool giveaways that we'll have there as well for people attending.
And yeah, it'll be good.
Yeah, I'm super excited. I think I'm just so impressed by what everyone at Strive has been able to pull off for this True North event.
And I think it's going to be really, really special.
Last year was special.
Like, again, and I said this before, but the people that join at this event, you know, we are the ones putting it on and kind of leading the discussion.
But people come to this event with much more experience than any of us in capital markets, in different businesses, so on and so forth.
So you go to network with these, you know, highfalutin people, and it's quite an amazing experience.
So I recommend joining.
Yeah, you'll rub shoulders with very interesting people, which is a great experience.
I mean, once I went to my first Bitcoin event, my conviction just elevated drastically when
you're actually talking to the people that are working behind the scenes.
It's really kind of funny because several of the people that I work with day to day
have no clue what's happening on X.
Like they can't even access X on their computers.
so but yet they're still working in the crypto environment they're still working in bitcoin
they're still operating behind the scenes legal environment banking environment etc and they like
are unaware uh of what's happening here but they're spending all their life's energy working
on this stuff so yeah please join come hang out we'll be a good time all right switch gears
Shall we talk about debt leverage capital structures?
Everybody thinks that everybody on the internet thinks that strategy is going to get margin
called, which is just continuously hilarious, given that they haven't done a lick of research.
So let's talk about it.
You know, when people say that margin called, I don't think they know what margin call means.
They just don't.
Look, if you go back to the 2008, 2009 housing financial crisis, those people that levered on their houses, they did not get margin called.
What happened with them is that they took out, if you go watch the movie, The Big Short, right, about Michael Burry, what happened was when those loans reset, right, and the interest rates went up, those people couldn't pay the loans at all, right?
And what's different with strategies, they have two and a quarter billion dollars sitting in cash, right, which is good for whatever, 30 months of making payments.
And like, look, if there's a bear market in Bitcoin for the next four years, you know, complaining about Michael Saylor is probably like the worst thing because he's the guy that acquired 700,000 Bitcoins.
Right. So I don't get I don't get the logic.
And and from this perspective, you know, he has the most liquid asset ever.
and i say this to people all the time what's the best feature about bitcoin you could buy a billion
dollars over the weekend liquidity the worst feat what's the worst feature about bitcoin you could
sell a billion dollars of it over the weekend you know in minutes and so you you see you tend to see
these dumps on sunday and people get demoralized when when it opens on a monday so let's go through
the numbers but yeah i think i think you hit the nail on the head right like you don't like
the capital structure does not have margin calls. Period. Like the strategy capital structure does
not have margin calls. It doesn't exist. These are senior unsecured, like the debt that they
have on their balance sheet is senior unsecured. Let's go through the statistics. We'll talk about
it. We'll do 101. We'll go through capital structure. We'll talk about the debt. We'll
talk about the preferred instruments. And we'll talk about like, what are the options here? And
you know, how to think through this. So first of all, we show this every week. This is MSTR
financial leverage looking over time. I've got the comparison this week against 11-15-22. So you guys
can see like really how different this entire situation is compared to where they were back in
deep bear market territory in November of 2022. So this column BX is as of today, so 713,000 Bitcoin.
I think the price of Bitcoin has dropped to 71,000 here since then.
Let's just do it.
Let's just update it.
71,000.
Okay.
MSDR price, $124.
So they've got $50 billion of assets, 50.6.
USD reserve, 2.25 billion, 8.2 billion of debt, 8.3 billion of preferred.
So the net capital that they're holding on the balance sheet in USD terms is 44.6 billion.
The annual preferred obligation is 888 million.
So they have 53 years of dividend that they could pay with a net capital held on their balance sheet, assuming that they sold the Bitcoin and they paid off the debt as of today, which they do not have to do.
It's just a conservative perspective.
So their debt to asset leverage ratio, their leverage ratio is 11.8%.
Again, Mike, you bring this up all the time.
When anybody goes to put 20% down on a home, you are 500% leveraged on that house.
That house can light on fire.
A lot of things can happen and you're 500% leveraged on the house. This company is 11%
leveraged on debt. Very different place. The coverage multiple on the balance sheet is 3.1.
And then including the preferred equity, which again, the equity does the notional value of the
equity never has to get paid back. The total amplification is 31%. So the Bitcoin price needed
for the assets to be worth less than the debt is $11,197, which is another 84% drawdown from where
we're at. This next column shows a 50% drawdown from where we're at, getting down to 35,000. I
personally think that's unlikely, but I think it's helpful to look at the perspective here.
Even in that scenario the leverage ratio on the balance sheet would be 23 and the debt plus preferred total amplification ratio would be 60 Okay so how does that compare to November of 22 The leverage ratio
on November 22 was 130%. The debt plus preferred total amplification was 130%. When everybody was
losing their heads in November of 22, yeah, maybe that actually was a little bit of a better time
to be losing your head about the future of this company. The future of this company was far more
uncertain back in November of 22, when they had $2 billion of balance sheet assets and $2.7 billion
of debt. Granted, that debt had a long term. It was convertible debt. They had some term debt
and they had to power through the price of Bitcoin going back up in order to get to the position that
they're in today. But you look at the health of this balance sheet, even if the price of Bitcoin
went down another 50%, I would say this balance sheet still looks incredibly healthy compared to
my past life working in the insurance world where companies like insurance companies would have
their premium to surplus ratio would be three to one. So that means they would take in three times
the amount of premium in the door than they had surplus on the balance sheet. So let's say you had
$3 billion of premium and you'd have a $1 billion of surplus. Now that $3 billion of premium, you
might have $10 billion of liability risk in the balance sheet. And these corporate vehicles are
only making like 6% to 8% returns a year. Wait, Jeff. Okay. I understand your math. You're bringing
in three dollars for every for every one billion dollars that you have in your balance sheet what
they do with the other money and you if they only make six percent a year just pay out claims they're
paying they're paying out claims with premiums that are coming in the door oh okay got it okay
yeah yeah so so 90 so if you make a six percent net 94 of what you're bringing in is just going
out for claims yeah they've got like reserves and you they hold the float right so you've got like
three the three billion dollars the surplus is like surplus the extra that they're holding there
but uh yeah the balance sheet returns are you know not fantastic so okay so i've never seen this
i don't wait you showed this before right yes yeah okay sure so if you look at column e uh row nine
right so in in i understand they had two billion dollars of of btc assets and millions and then
As of today, they had 50 billion.
Rough math, because this is what the clowns always say.
Oh, strategy is only made.
Let's say they're negative on that.
They're negative on their balance sheet.
Meanwhile, they 25X their balance sheet, right?
They 25X it because two times 25 is 50, right?
So they 25X the balance sheet.
The debt to asset ratio dropped by more than 10X.
It's now one-tenth the size, right?
It went from 130% down to about 12%.
So it's now one-tenth.
So they de-levered it.
This is where everybody says, oh, Saylor's levered up.
He's got massive leverage.
No, in a notional amount, you may say he's got whatever, $8 billion in debt and $8 billion
in preferred stock.
But his leverage ratio is only 11.8%.
And even if the price of Bitcoin gets cut in half, it goes to 23%.
23% and 23% is approximately one, was it one sixth of the 130%. Did I get that? All right.
Yeah. Right. Cause six times 23 will get you right, right about there. Sorry. Five. Yeah,
no, more like five times. So with that said, they're in better shape right now. I think the
biggest problem that we have is that people who are the people, there are accounts that have 500,000
followers, 800,000, a million followers or 100,000 followers that can't do a table like this
from first principles that say stuff that is factually untrue. And what we call that is FUD,
fear, uncertainty, and doubt. I don't know why they do it, probably because they don't like the
guy that has increased his market cap by 25X since 2022. And if you were to start that with a company,
What was their market cap, you know, prior to?
No, in 2020.
Oh, it was like a billion, a billion dollar.
A billion.
So they've done 50X.
So I would tell anybody watching this, if you have 50X your net worth in five years, you're probably okay.
Probably, right?
I mean, unless you start with a dollar, right?
So I think that's the big thing.
They 50X their market cap since the start.
Yeah.
And there's people in the chat right now that are complaining about the share price in the ATM.
You can complain about that.
And the balance sheet has accreted value.
There is more Bitcoin per share now than there was back then.
Like you have more exposure.
Like 1x MNAV is going up and it's rising into the future, right?
There's a point in time, there's an inflection point in time where Bitcoin moves fast, right?
Bitcoin is going to move incredibly fast like it does, right?
It makes most of its gains in 10 days.
And so we've seen this multiple times in the past.
Bitcoin went from, what, $30,000 to $100,000 in like 50 days.
strategy at that point went from $100 to $543 in 50 days. Go back even further. All right, 2024
strategy went from $250 to $2,000 in like 30 days. And those are the opportunities that this
kind of convexity can provide. Like they are building this balance sheet and they're cranking
it tighter, cranking it tighter, getting the preferred equity, taking long-term perpetual
liabilities. And as that balance sheet begins to turn the other way, this thing can be incredibly
explosive. We haven't seen the PREF business model in a bull market. We've seen what the
convertible bond business model can do in a bull market. What does the PREF business model look
like in a bull market where they have six different instruments that all have ATMs on top of them,
where as the price of Bitcoin rises, the relative risk profile of all the preferred stocks start
decreasing. And they can be selling shares of the preferred instruments without even potentially
touching the common. I'm sure that they will. But theoretically, you could do that without even
touching the common and just use the common to pay dividends. And this thing could get incredibly
explosive and that's that's what they've built here they've built this incredible engine and
they've got the uh the balance sheet stability with the usd reserve as well the ability to pay
dividends for two years into the future two and a half years into the future it it quells a lot of
the uh the the fud and the concerns in the market but people are still going to yell because they
don't get it which is like i mean also sailor said it on a recent interview too it's like
just because if you buy a stock and it was overvalued at the time or the price goes down,
it doesn't mean it's a bad stock or the capital structure is messed up. I mean,
clearly the market was going to take it to one MNAV. Everything's clear in hindsight, but
markets took it to book value. And I don't think the ATM ultimately took it to book value any
quicker than it was going to. There was hedging mechanisms in the market, lots of short pressure,
like let's go on book value now here we are at book value with 30 leverage i like to trade i think
bitcoin is going to pull a 5x or so what is it we got a 7x to 500k bitcoin based on mstr's current
just amplification if it continues to trade at book value you know you'd get roughly a 10.5x
if mstr just stays at book value so i mean that's a beautiful thing this is like this is the time to
enter for sure. And I remember I was talking to Mason a little bit about this. It's like,
now are the times when it's like, okay, what are the lessons I learned last cycle? What are the
lessons I learned during the pits of the bear last time in 2022? You know, what were the macro
indicators and what were the undervalued kind of equities across the board? And obviously,
MSCR was undervalued. Like, were there calls I wish I had bought? Did I even know what a call
option was back then? Could I have created a put spread? Could I have sold some puts to make maybe
a better entry right you can sell puts to enter here if you're buying you know maybe make a little
bit extra cash there's a lot of things you can do here i think it's just important not to get
emotional yeah i mean they raise so much capital in such a short period of time in 2024 and 2025 i
mean they've got 700 000 bitcoin look in 22 they had 130 000 bitcoin right that that's crazy to
to your point dan right if bitcoin does a 5x let's just do the math here you're talking oh
Oh, not going to zero.
Let's not do that.
Let's do 71,000 times five.
You're talking about a balance sheet.
The assets on the balance sheet are worth 250 billion
if Bitcoin does a 5X.
Yeah, and I think these things will take time,
but that's what we're looking at, right?
And I don't know.
It'd be interesting to see what software does
for the rest of the year.
Like Jensen might have put a floor in software
coming out and saying, you know,
I don't know, software shouldn't be this oversold,
but I think I'm really looking forward to the day
when Bitcoin starts to trade a little bit more
like a risk off asset and it's gonna take time.
But I think this is a critical year
with kind of the OG selling out of the asset class.
But over time, I mean, this thing,
like if you look at the gold chart,
the gold chart is really remarkable
because it's pretty much just like up
and then stagnates for like a very long time.
And that's the benefit of having a non-cash-flowing asset.
And then Saylor talks about that as being the benefit of Bitcoin a lot of times too.
And so, you know, it's still an immature asset class.
Yeah, Jeff, what you said about we went from convertible bonds to the preferred strategy,
and we've never seen what that can do in a bull market.
And it reminded me of something that Tony Siba said.
He did a really good series called The Great Transformation.
and one of the things that he said that really stuck with me was that a butterfly is not a
caterpillar with wings it has to cocoon and when it comes out it's a completely different creature
and and i think that's what's happening to strategy right now it it used to be built on
this convertible bond model and now it's you know it's metamorphosizing into something completely
different and you know when this next bull market comes we'll see you know what the butterfly looks
like. Absolutely. And, you know, we talk about this a lot at our company internally
about the fickleness of capital markets. And when a door to raise capital is open,
you don't just like walk through the door. You kick the door open and you go get it.
right and you you have to do it because that window can close on a dime and so i mean you
think back to what what's happened in 24 and 25 and like how this marketplace works they capitalized
on that opportunity in 24 and 25 and they're now sitting in this position that they're in right
they've got a 30 leverage balance sheet because they kicked the door open and if they wouldn't
have done that. Maybe the price of the stock would have gone to $5,000 and then came back down to 20.
MSDR price of $17 where it was in 2022. If they wouldn't have had everything in place and worked
to build all these tools and things and to harness that capital and to be able to accept that capital,
I think we'd be in a completely different scenario with a riskier balance sheet. I mean,
this balance sheet is completely de-risked. And the interesting thing that I've been thinking
about too is that we've got this, a lot of uncertainty with the Clarity Act. And it seems
like everybody's been a little bit away from crypto because the Clarity Act is kind of floating
through Congress, unsure if it's going to get approved. And there's some back and forth between
Coinbase and these other constituents. But then you look at what strategy has done and it doesn't
matter. Like the Clarity Act doesn't really matter. Like would it be a tailwind potentially?
Sure. But they've already, they've integrated these, these products with the traditional
financial system. And it doesn't really matter what happens there or not. Like these are
institutional grade products that people can buy, institutions can buy, regardless of whether or
not anything happens with the clarity act,
which I think is a,
another important part to like conceptualize and contextualize here with
these things.
Hey,
you know,
you,
I don't know if you guys are,
you guys ever hear of a company called fidelity?
They have a brokerage company.
Yes.
I've heard of fidelity.
Yeah.
Brokerage.
Maybe people have heard of it.
You know,
It's kind of interesting that they just launched a stable coin and it's called FIDD.
Now, it would have been kind of funny if they would have named it F-U-D-D, called it FUD.
But with that, the fact that a brokerage house and Fidelity was very early, they accepted Bitcoin.
And this may be unknown to the people that are new to this.
But even back in 2017, what they said was, oh, Abigail Johnson, who is running Fidelity, they started mining Bitcoin to see how it worked prior to 2017.
And they accepted Bitcoin in the corporate cafeteria going back prior to 2017 just to see how this whole thing works.
So the fact that a major brokerage house has launched a stablecoin, they're not going to launch a stablecoin if they're not eventually going to be able to pay interest on that to the people that buy the stablecoins.
That's why they probably want the Clarity Act also.
So I think you're going to see a proliferation of stable coins.
And they will pay some form of yield to the people that buy those stable coins.
Right now, that violates the Howey test, which makes it a security so they can't pay that.
But once the Clarity Act gets passed and they allow to do that, you're going to see a mad rush for stable coins.
Now, they're going to have to back those stable coins with something.
is probably going to be US treasuries, maybe some Bitcoin, maybe some gold, right? Maybe STRC. I
don't know. Does anybody know a company that's doing that? You know, so, right. And so, so I just
see that the marketplace is going to change really fast. I'll tell you the last thing that I'd want
to be right now. If I was the CEO of a SaaS business, software as a service, it's not that
your software as a service business is going to go away in the next six months or the next two,
three years, right? Because of AI. What it is, is, is that if you have a premium service on that
SaaS business and you're paying $500 a seat or $250 a seat per month, and you're a CIO and you're
like, wait a second, we're paying all this money. You know what? Maybe we'll ratchet some of the
people down to the basic service. And what we'll do is we'll build some in-house advanced layer
and we'll keep this, not getting rid of the whole thing.
Just saying, you know what?
It's the perception that we don't necessarily need
as much SaaS services going forward.
And that's the difference between everybody,
oh, the SaaS, they're going out of business tomorrow?
No, you're going to keep it,
but you're going to right-size your subscriptions.
And what you're going to do
when you negotiate those contracts, people,
what do you do if you're a CIO
and you're negotiating the contract?
You say to them, well, you know, this AI thing
is we're building part of this internally. Even, let me tell you something, even if that's BS,
they still say it. So they say it to their salesman that's at the SaaS company. Oh, we're
going to build this internally using Claude or whatever we're going to use to build it on, right?
They have no intention of doing that. They'll just say that as a negotiating tactic. The salesman
goes back to say, dude, they're thinking about doing this in-house. We got to give them a price
concession. That's the reason why you're seeing the SaaS companies come down and be re-rated.
Not because they're all of a sudden going to go out of business in two years, is that the threat
to reducing what you're paying to them is causing them to be re-rated. And that's a simple way to
look at this. Does that make sense? Oh yeah. A hundred percent cashflow. The cashflow is
threatened. The cashflow is threatened and their income statement driven companies. Now you got
this bot, AJ, that's in the comments. Look, Bitcoin treasury companies, they're all balance
sheet companies. They're based on FASB fair value accounting and CAMT. And as soon as somebody says,
we got to look at the cash flows. You know what, guys? That's not the way these companies were
built. They're built on the balance sheet, not the income statement. Yeah. Yeah. I rant's over.
100 percent 100 let's uh let's talk about balance sheets uh because i like that let me share my
screen again and let's go to this one somebody asked how many of these bitcoin treasury companies
are going to be around uh all right and i i had a theoretical construct i wanted to walk through
here so let's let's think about this a little bit all right this is the top 100 bitcoin treasury
companies, I think it's helpful to think about the entire landscape. And some people are in the
comments are saying metaplan is not going to be around. They're like 11%. They have 11%
amplification from a PREF only model. So I think they're doing just fine. They're in a great
position. So just think about the scale here. You've got strategy with 713,000 Bitcoin,
and then you have all of these other companies.
The total of the top 100 is 1.13 million.
Okay.
So strategy, if you pull strategy out,
the net of the top 100 companies is 419,000 Bitcoin.
If you even assumed that 5% of these companies went out of business
or 5% of the Bitcoin associated with these companies went out of business,
which I think is like incredibly extreme and very low likelihood.
You're talking 21,000 Bitcoin.
I think strategy bought 21,000 Bitcoin in the last two weeks with the price at 90K.
Right?
What do we have in the last three weeks?
Yeah.
24,000 Bitcoin in the last three weeks with the price at 90K.
So I, you know, people give me a lot of shit.
Like, why do I focus on strategy?
Well, you got to know what the leader is doing because the leader has a pretty big impact on what happens in the entire industry, because literally all of the other top 100 don't make up, you know, less.
They're a little bit more than half of what strategies entire holdings are of all of the companies across the entire globe that are publicly traded, also holding Bitcoin.
So we've got to know the health and the stability of number one, because that is it is a big indicator of what's going on in the marketplace.
And asking the question, you know, how many of these companies are going to go out of business, like compared to what? Companies that don't have any Bitcoin?
Right.
If I had to ask myself if a regular person was more or less likely to go bankrupt and you asked me, you know, hey, one of them is a Bitcoin. I'm like, he's not the one that's going out of business.
Yeah, right. Right. He's got a long term view of money and how the how the world works.
Okay, so let's think about capital structure here
because debt has come up.
There's been some concerns,
at least like Wall Street Journal come out and talked about the debt and you seen a couple of these people talk about what going on in the balance sheet So let talk about the debt on the balance sheet So strategy has both convertible debt and the preferred equity So they got these two
tabs on the website, debt and credit. And you can look at all of the individual debt instruments here,
different convertible bonds with different expirations. Over here, the final column on
the right hand side, you see conversion price. So conversion price of $183, 672. You see that
all of these converts are technically out of the money. Basically, the conversion price is higher
than the current trading price of the stock. So that would be a little bit of a concern
if you are holding this instrument with no other opportunity. If the balance sheet was small
and the conversion price is out of the money, you would be a little bit concerned.
However, what we just rolled through is that the company is sitting on $44 billion, $45 billion of net capital, even if you subtract out the debt.
So they've got significant coverage over and above the debt sitting on the balance sheet.
Let's look at it.
Eight and a half times more capital than the entire debt stack on their balance sheet.
That's pretty safe, right?
Mike, you want to talk about like you've got 850% coverage?
compared to, again, thinking about buying it out and having 500% leverage.
It's like the complete opposite.
So that's the problem.
People don't get that.
They cannot understand this at all because they look at this.
And so this is debt.
Excuse me.
The converts are debt and digital credit is debt.
And that's why they're not in.
if you look at if you look under uh shares that's why it's not counted in the shares over here
while the converts sorry the converts are there but not the press right that's correct right but
they're in they're legally two different spots here but those haven't converted yet but they
still account for it here so my point about this is that um because the metrics are so
reversed or inverted because they're so good people just cannot understand this they're they
just can't and as soon as i say this to somebody you know with the house analogy or something else
they're like oh i look the simple number is that let's say the company had a billion dollar market
cap before they started buying bitcoin and now they're worth 50 billion they've done a 50x return
in five years, right? And that's to say, if you started with a hundred grand, you'd be worth $5
million, right? Now, if somebody was like, oh, I only have a dollar. Well, your problem, you just
didn't have enough money and your nominal amounts were too low. So I think that this is the
difference here. And they just cannot understand this. The other point was that strategy made a
point out of saying, go back to the previous one on the credit. So here they made a point to say
that the total PREF notional amount is greater for the PREFs versus the total debt. And they
tweeted about that. So when somebody says something publicly, there's two things. Take it at face
value. It must be important that they said it, right? Because they said it. And two, what's the
second order effect. And what happens is, is that they started off with the converts.
And once they figured out how to do the preps, that, that changed things. Because if you,
you never have a maturity date that that's the key part, there's no refinance risk with this.
Yeah. And so people cannot understand the perpetual nature of it. I get it. It doesn't
make sense. You know, what people don't understand also is the finite, the finality of Bitcoin.
you know,
Saylor uses a metric.
He said this on the Jordan Peterson interview.
He said,
well,
gold's growing at two per 2% a year.
So that means,
you know,
after 36 years,
basically the supply is doubled.
And Jordan Peterson's like,
what?
That's called the rule of 72.
And why'd he pick 36?
Because the math is easy.
Two times 36 is 72.
And that is the rate per cycle that it takes for something to double or to
have.
So I use that metric the reverse way. If money, if the M2 and CPI is growing at 7.2% a year,
after 10 years, your buying power is cut in half. It works in both directions.
And so he says this all the time. So again, people just, they never, they never think about
how these metrics work. And if somebody wants to know what the technical term for this is called
applied mathematics. It's not computational math. Computational math is Excel spreadsheet,
doing derivatives and addition, subtraction, so forth. That's computational math. Applied math is
to say, oh, how does this math work in the real world? And that's where things become kind of
weird. And that's why when they post this and I say stuff to people, they're like, they're like,
Mike, why is it a big deal that Bitcoin per share goes up? I'm like, because that shows that
it's not being diluted it's more concentrated yeah and they're like i don't understand what
you just said i'm like i can't it's a creative i don't know how any slower that i can go
or the rule of 72 now the interesting part is they don't teach the rule 72 in school
because that's like back in the old days even before me because they taught a lot of mental
math and then what happened is they changed the way they do it oh let's teach people how to use
calculus. I want to tell you something. I've never had to use calculus after I graduated college.
Never once. I've used calculus, but I'm a nerd. I do it for fun.
I use calculus to calculate the area under my MSTR share price.
Oh, banger calculus joke.
Okay.
I want to come back to this convert, this capital structure for a moment
because the reality about this capital structure,
everybody's losing their marbles.
But the reality is nothing happens with this debt for another 20 months.
the first put date on the first convert is september 15th of 2027 so they have 20 months
to figure out what like if the price is still below the conversion price
strategy has to pay back the one billion dollars of notional debt by september 15th of 2027
okay so you got 20 months i want to make a minor minor clarification there and and
and i think this applies to all the pref sorry to all the converts i believe that they could pay
back as either all stock all cash or a combination of the two uh yeah i'll i need to confirm that but
it's it's definitely it's usually i believe it's all three so let's say the price was 160
they would say oh i'm going to give you the shares and make up the difference in cash because
there's usually like a 40 uplift in in addition to whatever the coupon was that's listed there
so but i believe that's the case for for almost somebody could fact check me yeah we'll have to
double check that we'll get the uh we'll get the ai's working on anybody in the uh in the stream
want to work through that the 8k uh the 8k is from september 20th check it out it's got all the terms
you could go read all of that stuff and plug it into ai and pull it out um i think you might be
right there. Uh, but even if, okay. So the reason I brought this up is because they've got 20 months
to figure out what to do with the first one. The next one comes due, uh, what is this? The,
the put date is June of 2028. So they've got another, what is that? Um, 10, nine months to
figure out how to get the next 3 billion. So I was saying this before. So look, this one's at
672. And this is something on whatever the stock is, 50 vol, 70 vol, whatever it says on the website,
if you look at MSDR right now. So what that means is if you want to make sure that you're deep in
the money, you want to have the stock price more like 800, 900, 1,000 bucks to account for the
volatility when you get close to that 672 number. Somebody's like, oh, we'll just do 673 and we're
all in the clear. No, it's a 50 vol stock. So you would want the price to be like 900 bucks
because you want to account for the price fluctuations on a monthly basis and daily basis.
Right. And I was wrong here. You've got the put date here. You've got 3-1-2028 on the 2030B,
and then you've got 6-1-2028 on the convert 2029. So those put dates come due in 2028.
So we're talking 25, 26 months from now.
And there's multiple ways you could do this.
You can also think about what we just did at Strive.
We inherited similar, or we acquired similar.
We inherited their convertible debt.
And we did a secondary offering of our perpetual preferred equity.
And we exchanged convertible debt for perpetual preferred equity.
and we were able to retire 90% of the convertible debt
in exchange for perpetual preferred equity.
That's interesting.
I was wondering when they were going to start copy trading you on that one.
Yeah.
We're blazing the trail along with each other.
So Jeff, I know that you work at the company.
Yeah.
Was that hard to do?
Like, did they just, like, did they agree that that,
I mean, has that been done before?
I don't know.
Whatever you're allowed to say, say.
Yeah, I think there's been negotiation.
Like everything's in negotiation.
Like these are big financial deals and like the companies that hold this stuff they don want the company to go out of business Right They bought this product to make money
And so if they're holding this product and they're still kind of like, it's still kind of long the company.
Like the worst case scenario is that the company goes completely out of business.
if you're holding a convert and you hold short positions,
best case scenario is it converts, it goes into the money,
you make a ton of money on the upside,
and you've got to hold this downside protection.
But thinking about the strength of the balance sheet,
I think you could definitely strike a deal thinking about strategy.
They could strike a deal for converting some of this
into perpetual preferred equity.
Now, maybe they like the terms?
I don't know.
Like the terms and the negotiation on that front is tricky, right?
So maybe they don't want to sell STRC or STRK at a discount.
It kind of depends on market conditions, market terms, what else is available.
Maybe it makes more sense to go issue more convertible debt with a farther out maturity
and go retire some of this stuff.
Maybe it makes sense to just use the USD reserve and buy it back in the open market.
Like all of these instruments also trade.
in the open market.
So right now, if you think about where they were issued
and where they're trading now,
they might be at a discount to where they're issued
and they could have the ability to buy these things back
in the open market as well.
And considering they're sitting on a two
and a quarter billion dollar USD reserve,
that's another lever that they have that they can pull
to do these things.
So there's so many things,
the optionality is huge here with this balance sheet.
So I modeled that a while back.
And that's kind of like, for instance, think about on the flip side.
Let's say you're the 2028 holder and the conversion price is 183, correct?
Right.
If you were to say to that holder, hey, look, I'll make you whole at 183 and convert you now.
Right.
I'll do shares.
They got the cash and split that out into a combination of PREFs and MSTR shares.
If you were to make that offer to them, the question is, do they want to do that?
Or do they want to play that Delta hedge game?
I think that's an interesting concept.
And by the way, you notice how maturity on below that column, it says 4.1 years.
It's kind of, was that always there?
Because that's a countdown timer.
Yeah, I think that might be new.
I saw that for the first time today as well.
It's like a blended.
Oh, it is.
It is.
I didn't know if that was new.
I think that's a countdown timer.
And I think what's going to happen is, look, I do think it's kind of odd that they did the 2030B, which was in 2025.
They did one.
That's the last one that they launched, I think, because it was the last one before the preps.
I think in their view is, and the fact that it was, I think they want to get rid of these sooner rather than later for a variety of reasons.
Well, they've said they want to do that.
i'm sure they'll talk about it tomorrow on the earnings call so can we switch to that now what
do we think they're going to say in the earnings yeah what kind of surprises we're going to get
yeah we can talk about that um yeah let's hit it that would be a good surprise though if they
announced that they were converting one of these over you know you know i i guess some kind of
raise what i wanted to get by here is that they had the optionality and flexibility and they're
They're in no rush.
There is zero rush.
There is zero margin call.
There's zero, like they don't have to post collateral.
These are all unsecured debt obligations.
And they have so much optionality because they have the Bitcoin on the balance sheet,
because they have all these other products.
All the other products are liquid.
And Mike, to answer your question a little bit further, it was pretty fascinating to me
when we were having some conversations on our transaction.
some of the buyers that were interested in our products were convertible desks.
Because the convertible desks are the ones that kind of handle these strange or odd instruments
that are like perpetual preferreds or they're considered like more atypical from the market.
and that was a pretty fascinating discovery for me.
It wasn't like I was talking to specific pension fund managers
that understood the risk profile of these things.
We're still talking to niche money managers
that are interested in high-yield strange products
that are new to the market.
And that's kind of just where this landscape is at.
Like it's not, it's not, it's trickling into a more mature world, but these are unrated instruments paying high yield where people don't understand the, the risk profile of these things.
And you think about the, the coupons here, the people that are holding these instruments are making money on the volatility, like Delta hedging consistently.
And so you look at like the 2028 convert, the coupon payable here is 0.625%.
If you come to them and you say, hey, can we convert this into my perpetual preferred
stretch instrument with $100 million of liquidity every day that pays you 11 and a quarter?
You know?
Yeah, but there was like a 30 or 40% uplift also combined.
The coupon that shows there is correct.
But if the stock was at $100, he agrees to pay you $140 plus the coupon.
Yeah.
Yeah, yeah.
No, I get that.
Yeah.
But your point is still correct.
Yeah.
So look, I asked AI all about this.
And this is why what you're saying is interesting was the response that I got back from multiple
questions about this, is that the convert buyers, conversion bond buyers or convertible
equity buyers, like the Delta hedge, they're used to it and they may be mandated to be in that type
of space as their own rules. But what you're telling me is they may be more flexible than
what AI knows. Is that about right? Sorry, say that again.
Are they more flexible? If a guy's in a convert, he would say, okay, great. What you're saying is,
hey, if I'm going to convert now that pays not even 1% and I'm going to switch you to a pref
that pays 11% or pays 8%, you're saying that they would be enticed to switch?
Yeah, yeah. Potentially. It's a pretty good value proposition, right? Think if you're on the other
side of that trade. You're like, okay, I have this product where I got to do a lot of work,
right? You got to do the work of Delta hedging. Or I have this product where
I get paid 11 and a quarter.
You know?
And like one of the comments here is
that you sell it at a discount to par.
Obviously, there's hedging that can,
you know, happen from like where
the instrument is sold at a discount.
We saw this with all of the IPOs.
All of the perpetual preferred IPOs
were sold at a discount.
There were people that were buying into the IPOs
and selling it as it got to par.
But the really interesting thing here
and thinking through that,
like the mindset of that buyer is that the downside is like with a company you think about
strategies capital structure with a company that's got two and a half years of capital of usd reserve
and you know you're probably going to get paid your dividend for at least two and a half years
assuming zero additional capital is raised your incentive to exit that position like you just in
no rush. Even if you're hedging and arbing the discount, you're in no rush. Worst case scenario,
you hold that position and you get paid the interest rate that's over and above everything
else in the market by 3x or 2x, whatever. It's just an interesting value proposition. It's a
good product. The prefs are a good product. And I think they fit a really interesting buyer.
The other thing, Mike, to your point, with all of these things is liquidity.
I mean, I'm sure most of the people watching this call don't have like a Bloomberg.
But if you have a Bloomberg, you could go see that like these convertible bonds don't trade very much.
And if they trade, they trade in size, like $45 million will trade hands.
$50 million will trade hands.
and the alternative is like okay if I exchange this like incredibly illiquid thing the convert
to the pref that is liquid trades you know every day the market's open and a trade I don't know
stretch trades a hundred million dollars a day all the other instruments combined it's like 150
that's a that's an interesting value proposition uh in a in a negotiation so I'm not I'm not saying
that they're going to do this, they might. It's just an option that they have on the horizon.
And they've got so many things that they could do from here until 2027 before they even have to
make a decision. Meanwhile, everybody and their mother, their heads are exploding because they're
worried that strategy is going to have to sell some Bitcoin. Yeah. And to Vorj's point in the
chat, I mean, could they just cover these with the reserves? I mean, you look at the notional,
they've got 8.2 notional like they could cover
two and a quarter with the
with the reserves yeah
and then like so this whole thing is
almost just like six green dots
on the chart yeah
not even three done
and
and Jeff so if they did this so let assume just just for argument sake they they raise enough cash and they retire all of these right So it billion right
Go back to the other one where it says credit, right?
So it would be $8.2 billion.
So they sell the stock to do it.
So the shares, right, the shares per Bitcoin, Bitcoin per share would drop, right?
Because they raised cash.
But then they would have no converts.
So my takeaway, if they raise $6 billion in cash, what would that do for their debt?
The debt would be gone.
Yeah.
Right?
So in your formula that you did on your Excel spreadsheet to start-
Leverage goes to zero.
The leverage goes to zero.
Zero.
Okay.
So am I missing anything?
No.
I mean, look, the last earnings call, they talked about this.
The target goal is by 2029 that they have a zero leverage balance sheet and perpetual preferred only model.
So is there any reason for them to accelerate this and pay this off in half the amount of time?
They don't have to.
They don't have to, but would it be beneficial?
They won't.
I don't think they won't.
It creates bad blood with the issuers.
Right.
Yeah, I don't know about that.
I mean, based on some of the conversations I've had, like, I don't, I don't know if that risk is as big as, I mean, maybe it's there.
But I don't think.
I've heard that there's pretty much zero world in which they pay these off early.
Probably not.
I mean, the rational thing is wait because they don't have to do anything.
So what do you think is going to be the biggest surprise for tomorrow?
I have no, I have no idea.
Yeah, I mean, Saylor's been pretty quiet last couple weeks.
I mean, I haven't seen him on too many things.
Since he's dropped the bombshell on Danny Knowles,
I think he's been relatively quiet.
So, I don't know.
I think they've been cooking on something.
I think you're going to defense mode.
You're probably fighting off every institutional investor
who's pissed at you.
It takes a lot of courage, a lot of conviction to stand strong here.
But, by the way, I've got to take a pot shot.
You guys ever hear this guy, Jim Kramer?
Who's that?
Yeah, anyway, so he's some bald dude.
He said today,
oh, Sailor should do a big convert
and stabilize the whole market.
Dude, really?
I mean, that's the level that you're at,
because we know about the Delta hedging.
That's not what he wants to do.
And I don't know how we...
After a while, you're like,
do you put any effort into understanding
a balance sheet company?
I don't know.
yeah i thought that oh go ahead go ahead so i was gonna say um i thought they were gonna come
out with at least one more preferred before end of 2025 so maybe another preferred i guess they
need an iphone for europe right they already got stre so they need a an strc for for europe right
but they said canada they said canada and europe yeah we got stre so i think the more interesting
look, I don't know what they're going to do.
What I can tell you, what I think they are going to do
is I think they're going to,
when you look at the statements that come out
when they buy Bitcoin,
they always make a change.
They always show you how much is left on the ATM
for each line item.
And so from that perspective,
I think they're going to provide,
I think they're going to issue it.
Look, this is what I can tell you.
They're going to issue a 2026 plan.
I don't know what it is.
The 2026, right.
Here's their targets and metrics
how they're going to judge themselves.
BTC yield is the amount of Bitcoin per share.
They'll probably pick a number for that.
I don't think they're going to put a target.
They represent that as a percentage,
not as a number, as an integer.
So I think they're going to put up some percentages.
I think the key thing when we watch this
is to see what's different from what it was,
what we expected.
And look, I don't think,
I think that them raising the cash, they realize because the cash raise happened December 1st.
Yeah, not that long ago.
It wasn't, but it happened after the October 10th Binance crash.
So my view was them.
That was them, not because they wanted to get defensive and the MSCI FUD.
They chose to get.
I got a yacht and going to college.
Dude, that was so.
So I'll come in.
But I think the crazy part about, not the crazy part, the rational part was, hey, what happens if this thing trades sideways?
Let's acquire some cash, which is what they did.
You know, by the way, the fact that he showed up, I'm like, I refuse to say what files they were in.
But they're like, oh, we can't blackmail him because all he's interested in is driving around in his yacht and he's too much being like autistic.
I'm like, no, maybe you're just a dummy and he's too smart.
I like how they label all the smart people.
They must be autistic.
No, maybe they're too smart for you to realize what the hell they're saying.
I'm going to hold that whole situation.
I don't even want to get into it.
No, we're not.
I don't even want to.
With how much that they raised with the stretch ATM that one week,
are they going to have to announce a bigger ATM?
They'll blow through that.
That's a good question.
I'm curious.
I think maybe an announcement for that tomorrow.
How big is the stretch ATM?
I don't know.
I've thought in my head.
um i'll look it up right now yeah it's it's less than the eight billion on some of the other props
so either four or eight billion four four billion four billion it's so interesting they came out
with a 20 billion dollar or what was it 21 on strike and it just like there's been just not a
ton of interest in that one so far which is uh which is pretty fascinating another another question
will there be a super bowl ad like what's the cost of a super bowl ad it's like 15 million
for 30 seconds?
Will there be a Super Bowl ad?
I don't know.
Like a stretch Super Bowl ad?
Maybe.
That would be funny.
I did see a YouTube short
popped up and they're trying to feed me
something through the algorithm.
It was a stretch short
and had Michael Saylor's face on it.
That's cool.
I don't know if he'd
bother with it. It wouldn't bother me
would that be a good use of a million bucks or whatever?
I don't know what the 30 second ad goes for,
but 15 million, how much is it for a 30?
I think it's like 15 million.
Jesus.
Well, I don't know if that's a good use of funds,
but they have two and a quarter billion making money on,
you know, and treasuries.
So it's like peanuts.
By the way, did they ever,
did they ever say what they're going to put that cash into?
No, that's, that's what I think they'll talk about tomorrow.
cash plan for 2026.
What is the cash plan?
One of the comical things I saw somebody say
when they announced it was,
oh, they should put the cash into STRC.
Yeah.
Well, I know another instrument
that they can put some cash into.
No, it will be fascinating to see
what they talk about there
because another thing that may come up from that
is rock dividend status.
because think about it, right?
You've got two and a quarter billion making 4%.
I don't know what the number is,
but it's hundreds of millions of dollars
and that would technically be profit.
So how does that change rock dividend status?
Do they care?
Do institutions care?
One of the things I'm most interested in watching
is like, what do the four institutional analysts
ask tomorrow, right?
Like, Dan, I know you're going to ask a killer question.
but I want to know what the trad that way, wait, not, not to put pressure on him,
but you're representing us. You better ask a good question.
I want to know what the four trad five guys are going to say.
Yeah.
Or what they're going to ask, right? Like, what are they going to,
what do they care about right now? I don't know.
I think a lot of it's going to be like dispelling there.
I think they're likely going to try to dispel some of the nerves of their peers
at the financial institutions.
So they'll probably target their questions around that.
Like what happens if Bitcoin sells off and you have to meet dividend?
Like I think there's going to be one of those softballs that Saylor's going to answer the same way as always.
Like what do you do?
You don't have to make a decision for 20 fucking months.
Exactly.
It's like or we'll sell Bitcoin or we'll sell derivatives.
It's a great answer to kind of a silly question in my opinion.
But I expect like a question like that to come up, I think.
Yeah.
Do you guys want me to allude to one I'm thinking about asking?
We can workshop it right here.
yeah let's go ahead uh yeah but then ask something completely different to put them you know like
throw them a curveball i uh i'm really interested in how the stretch yield curve so now that
stretches yield is being moved up and right now it's being moved up to try to get the price up to
100. it's affecting the entire yield curve of strategies press yeah and they're not really
trading independently necessarily on a duration basis right kind of like they're kind of like
They're floating up with a stretch.
So that creates a weird dynamic where the press actually are kind of all just stretch in a weird way.
And so my question is, how do you build out a yield curve if these are all just kind of stretch-dependent preferred equities?
You've set essentially a floor on the credit spread of all the other preferred equities by moving up the stretch dividend.
But isn't that a good thing?
I know.
No, like theoretically.
You're pushing the cost of capital up on all of your instruments.
Yeah.
Wait, hold on a second.
I'm not a bond guy.
Right.
But on the other ones, those are fixed yield.
Sorry.
They're fixed.
I don't.
They're fixed dividends.
Right.
But they're fixed dividends, whereas stretch is the only floating one.
Right, Graeme.
So if you jack up the interest rate on stretch,
or you get it.
Yeah, I get it.
The prices fall on the other one,
so the relative yield is rising.
At least that's what we've seen.
Obviously, there's a ton of other market dynamics at play.
There are, but I also think,
I think this is the main one.
Yeah.
The senior prefs.
Go ahead, Soley.
Yes, but if the rates do come down,
won't that pump up the other prefs more than stretch?
It will.
Or will it still be more attractive?
I think that's what Dan's saying.
It's like a rubber band.
If you pull one up, it pulls the other ones up with it too.
If you pull one down, it's going to pull the yield down with all of them.
That's a great question.
It's something I've been thinking about a lot too.
Something I'm most fascinated with these products is that you create a yield instrument with so many different trading pairs where you can calculate the risk 24-7, 365.
Stuff like this hasn't existed before.
Like what other bonds have this much liquidity?
HYG has this much liquidity, which is an ETF fund of bonds.
So it's like giving you yield, but it's a fund full of bonds and there's like a cash buffer and the company manages it.
It's like an ETF.
But like you're creating so many different trading pairs that you can have between all of these different instruments,
which is kind of what you're alluding to is like if you have if the one interest rate goes up,
you would sell some of the other ones to buy that.
It does kind of artificially change the curve
based on what the arbitrage opportunities are
relative to the risk.
And I guess the real question
I've been trying to wrap my head around is like,
does the market,
I don't know, I say this all the time,
risk is mispriced.
How does the market view the risk of these things?
Is it completely unplugged
from everything else in the world?
like how why are these trading like this why is there so much volume who's buying them who's
selling them like why is there a hundred million of volume like what did stretch trade today
so let's look it up i think 168 million of volume today
that's crazy in my mind it kind of comes back to this idea and i know you guys did it at strive
but it's like ultimately the ultimate capital structure is just a stretch sitting senior and
nothing else. And I think that's what we're kind of running into with strategy. The other products
are cool, but ultimately the apex cap structure is Bitcoin and then a senior unsecured perpetual
preferred monthly short duration.
Why?
Because the other products
will trade relative to that
interest rate.
Yeah, it's interesting.
Having duration on that
instrument makes
it such that the interest rate
on the fixed,
not in a perfectly efficient market.
They've all got different risk
profiles, theoretically, right?
Yeah, but I want to make a
distinction here. The duration for all of these is perpetual. The payment schedule is either
quarterly or an STRC is monthly. And I think the market would rather have a monthly payment schedule.
And then with everything you're saying about these credit spreads between them is,
I agree what you're saying, Dan, is that on STRC, because it has, what do you call it?
it has a variable interest yield that they could change.
And by the way, it's rule-based based upon the VWAP,
the last week of the trading month,
that then changes the credit spreads and all the other ones.
So I think from that perspective, it kind of affected those.
Look, I have a 1% belief that they will change the ATMs
for each of the different preps.
They could change those shelf offerings and say,
given what we see here, we could change that. Or they may just leave them the way they are
and increase STRC. Yeah, I don't think they would do that.
They wouldn't change that. So STRK has got plenty of room left on it. So for instance,
I pulled it up and I'm looking at it right now. STRC has got $4 billion left on it. STRK has got
20 billion left. STRF is only 1.6 billion. Sorry. STRC is 3.6 billion. STRD is 4 billion.
So there's only 3.6 billion left on STRC. I think that that'll be interesting. And I think they're
going to give us a view on MSTR stock. There's only $8 billion left on that. I think they're
going to revise all of those. Well, they're going to revise the ones they're going to revise,
but I think the big revisions are going to be an STRC and MSTR.
Yeah.
That makes sense.
Yeah.
Well,
it will be interesting to see if they have any,
any revisions in the MSTR.
Are we going to have an after hours,
like right after that to,
to give a quick talk?
I'm going to be on an airplane.
So I can't,
but hop on a space,
do it,
rip it.
Yeah.
Okay.
Dan,
I'm available tomorrow.
So how many hours we think it's going to go tomorrow?
Two hours.
Get yourself a window.
Whatever.
ever say it's like scheduled for 60 it's gonna go 120. it'll be interesting to see how many people
show up for the call yeah yeah absolutely yeah um cool i i mean you know i think that's that's
really it i i think we've we've hit on most of this stuff should we talk about other capital
things happening in the market i mean yeah yeah so so lay you uh you did a little research or
There's obviously some buzz happening in the capital raising world.
You've got XAI is now a part of SpaceX, which is fascinating, a fascinating development.
And you think about that potentially getting enrolled into Tesla.
What's capital raising look like in the future?
Open AI, maybe going IPO.
Yeah, a lot of moving pieces here.
You've been following this pretty closely.
What are you thinking about?
Yeah, I was looking at that and how it compares to, you know, what the Bitcoin treasury companies are doing.
And so there's this guy I follow named Stephen Mark Ryan from my daily, you know, Tesla hype.
And he said that SpaceX was requesting to launch a million satellites for orbital data centers.
And if they were going to fund this, they'd need like 50 or 60 billion.
And they'd need to be valued at like a $2 trillion market cap in order to make that raise kind of reasonable at like a 2% of their valuation.
and I went back and looked at some of Tesla's old raises.
And in 2017, they raised like 5% of their market cap.
2019, 2020, they raised back-to-back years.
They did a little under 2% of their valuation.
And what I really started to wonder is like,
how often can they get away with this stuff?
You know, can they just raise every year,
every quarter, every week, every day?
And even if they could,
like if shareholders had infinite tolerance
for capital raise,
Tesla couldn't actually do an infinite capital raise because they can only sell so many cars.
They can only build so many factories.
There's only going to be a certain maximum number of cyber cab rides possible.
So Tesla can't really raise infinite capital because they can't put infinite capital to good use.
And so that's limiting factor number one, efficient use of capital.
But like, you know, what about Bitcoin treasury companies?
You know, when do they want more Bitcoin?
Well, that's a trick question because they always want more Bitcoin, right?
So if there's a continuous need for all people and all companies to buy Bitcoin 24
seven then there is an infinite demand for capital to buy more Bitcoin which brings us to limiting factor number two which is how much ATM can the market actually handle per day If your trading volume is like a share a day then even
selling one share ATM would double the daily volume and tank the price, right? So that's where
the liquidity comes in. And that's where the phrase volatility is vitality actually starts
to make some freaking sense. Because the bigger the average daily trading volume, the bigger the
ATM a market can tolerate. And that daily capital raise can be immediately deployed
to purchase an appreciating asset. So, you know, while investors usually have to wait years to see
if their gamble paid off, a company that raises capital to buy Bitcoin is not limited by how fast
they can deploy the money. They still have to wait for Bitcoin number go up technology to kick in,
but that's not really an issue for Bitcoiners, right? We don't care.
So to bring this to a close, every company should buy Bitcoin with their income. We know that. But there are a few companies like Strategy, Strive and MetaPlanet that have market caps and liquidities to continuously raise capital to buy Bitcoin. And so the obvious name that I came up to describe that is continuous capital raised companies or CCRCs. And I'll just pause there to see what you guys think.
continuous capital raise companies i mean you bring up you bring up a bunch of really good
points here like the the liquidity and the ecosystem that these uh these companies get
connected to you think about like um mstr i'm just looking today today was the 33rd large public
33rd largest publicly traded company it traded 3.3 billion dollars of stock the enterprise mnav on
the company is what 1.13 so they're still trading enterprise value premium relative to the underlying
bitcoin held on the balance sheet so i mean they theoretically could be in the market
you know like why does this work like why i think about this a lot this is why i post it every
single day the liquidity is just so important because that like there's so many different
trading pairs very similar to what we're talking about the credit instruments there's so many
different trading pairs like mstr is part of bitcoin ecosystem it's like a pure expression
of the Bitcoin world. So you can operate in the derivatives market. There's incentive to operate
in the derivatives market to hedge certain things because it's moving, it's correlated, it's amplified.
There's a high correlation and connection between the two. So there's so many instruments that
like the computers can go in and out of any given point of time, any time of the day, long, short,
any which direction in and out of the pref instruments etc and that provides this liquidity
to be in the market and just kind of dripping out dripping out shares when you want to
when it makes sense which is part of the whole thing right so i want to mention something else
about this which is which is pretty interesting is the fact that there's there's options on this
and with the preps, right, you could trade these pairs.
And by not using options, you're not triggering theta decay and expiration date problems.
So you typically have large gamma with short expiration dates.
And so by trading with the preps against MSTR versus against Bitcoin or versus Ibit,
it gets rid of that expiration date piece.
And I think that that's one way to trade this also.
The ecosystem is quite large now.
And I was on a space with, I don't know, a couple of days ago, and people are like, how
much larger do you think is the derivatives market on Bitcoin than the value of Bitcoin?
And I'm like, well, it's got to be at least 10x on the low side and 25 to 50x on the high
side on the derivatives part of this.
So people ask, is that a good thing?
I don't know.
What I can tell you is it's inevitable.
And what I can say is this, is that when you do get a supply crunch and you do want physical delivery of Bitcoin, they're not going to increase the amount of Bitcoin that can be produced.
That is what we're all waiting for.
That cannot be changed.
Whereas with silver, specifically, as the price ramps up, they can make more silver.
I get that it's an industrial metal, but that can happen with silver and they could pump up and make more silver to do this.
With Bitcoin, we know at the next halving, the net new supply keeps on getting cut in half.
And there's the difficulty adjustment.
And the difficulty, yes.
So that component, I've been thinking about this a lot, that component of the difficulty adjustment makes Bitcoin interesting to computers.
That's what makes it fundamentally far more interesting to a computer than a physical asset like silver or gold.
like the the difficulty adjustment is it like that is that is the biggest thing um and
because like you can underwrite you could underwrite the risk of these like the computers
are going to be able to compute the risk of these instruments relative to like gold or silver and
they're not going to want gold or silver because the computer can't hold gold or silver um but it
could hold a digitally native asset and you see the expansion of all of these ai bots and all these
tools move so quickly, these things are going to want to hold a digitally native currency,
like digital scarcity. And I saw a comment on one of the posts I made about this. And it's like,
who's going to pay the taxes? And I just started laughing out loud, like giggling, right? It's like,
well, what jurisdiction is the internet? Like, okay, good luck going to get the AI bot based
on the internet to go pay taxes on money that you can't access. Good luck. Yeah. I want to,
I want to, I want to talk about hash rate for a second before we go on. So here's this site is
bit info charts. People should use this. Can you see it? I got it in one second. Yeah. Hold it up
here. So, so when you look at this, this is in linear scale and this is the Bitcoin hash rate
historical chart over the full lifetime. Now, one of the things about Bitcoin is you change it to
log scale and you look at it in log scale and you're like, oh, the little dip that we have over
here is barely representative in the hash rate. And so if you let me back up for one second,
we'll change it. Let me show you why it gets scary. If you look at the six one year chart
in three years you see this big dip that we have over here that was because of the big um
it was a winter storm wasn't it when winter storms right over here that's this big dip
but as soon as you flip this to log scale right then it's like that dip barely appears on a
three-year chart or skip all time it's it's it's a rounding error so that's where this becomes
whether it's the risk curve or production rate whatever term you want to call this
it's it's been running consistently and people could you know they can model this so i think that
that's interesting um i i just think this is a great this is one of the first sites that i found
you know previously here's a rich list i talked about this on the part yeah and and this just goes
to show you wallets and so for the people that are listening right now here's a little bit of
hopium okay and you're like it kind of feels like you know i'm doing this all on my own
And you kind of are, and that's a good thing.
And let me explain why.
What this shows you are the amount of wallets
that are more than 10,000 coins or 100,000 coins.
And you're like, okay, now each wallet
could be owned by multiple people right So if there an exchange let say Coinbase or Fidelity they co the Bitcoin this is okay And so there multiple owners for one wallet
but typically that wallet will be large. On the flip side, one person can have multiple wallets,
right? You could have eight wallets, right? So it kind of both balances out. Why am I talking
about this? On the bottom over here is if you have $10,000 worth of Bitcoin,
I know it's fiat dollars.
You were one of less than three and a half million people in the world.
That goes to when I saw this in 2017, that's what made it click for me.
If I believe that this is a great asset, I want to have an ownership share in that.
And for me, I have an old chart.
I had to use the way back time machine.
But if you have 10 grand in Bitcoin as of right now, you're one of less than three and a half
million people out of 8 billion people, right? And that's the way that I look at it. It's an
ownership metric. And now if you have 100 grand, which is about equal to a little more than one
Bitcoin, you're equal to one and a little bit over a half a million, right? One in 654,000.
And now out of 8 billion people, that's not a lot. So then it gets kind of skewed when you go to the
bigger wallet addresses, but usually the distribution curves are about the same.
You have a few very wealthy people and then the vast majority of people are much lower.
So I think that if you have $10,000 worth of Bitcoin, you're one of 10 million people
in the world.
That's just the back of the envelope math.
And I think that's something awesome.
That's just a crazy statistic.
It's a crazy statistic.
And I didn't make this up.
that's on here and people are like, oh, well, a bunch of rich people have the most of the Bitcoin.
I'm like, well, yeah. Oh, my God. And the way it works. The crazy, the crazy part, like in the
world. Right. And people have ran into people around the globe that are buying Bitcoin and
utilizing Bitcoin, like in Africa, for example, I've chatted with a couple of people out there
and they're they're doing you can send Bitcoin over SMS text message.
and like there's all of these uh informal economies that exist there in africa like that
they like hoard cash and like they'll literally have a house full of cash and like a late like
if you want to go to the atm you like go to this house and a lady opens a window and she's like
she's the banker and she's got like a house full of cash and so there's like all these type and
And they're shifting over to Bitcoin because they've got these primitive phones or even
smartphones, depending on where they're at.
And they can move money via SMS message, which is like a crazy innovation.
And so in that society, debasement has been part of their life.
And so they understand the problem very quickly and they adopt this money and they're very
interested in holding this money.
those economies kind of like work and work in this way. And so that's just like one example of
what's happening to other places in the world. And so, I mean, if you're, if you're privileged
enough to hold some of this stuff, like you could think of yourself relative to these other people
in the world, a very privileged position, right? I don't, I don't think this, I think the likelihood
this stuff goes to zero is off the table. And when, when you think about probability theory,
if you wipe the probability of zero off the table,
like your average skewed distribution just balloons to the right.
Like there's a huge fat right tail.
So what I say to that, as soon as somebody says to me,
well, what happens if you wake up tomorrow, Mike, and Bitcoin goes to zero?
I'm like, oh, what happens if I wake up tomorrow morning,
the price goes to infinity?
Bigger risk.
Much bigger risk.
Yeah.
Like, oh, man, I said that the other day, too, is like, yeah, the bigger the bigger risk here is being short this stuff and you wake up and it moves, it moves in your face.
Right.
And you don't know the bottoms in until until after you've experienced it.
You know, like you don't know the bottoms in until it's behind you.
Yeah.
And, you know, right.
You know what I'll say to people?
Look, the best time to invest is always yesterday.
And people are like, well, why yesterday?
Because it's the time value of money, right?
And so I know it's going to happen.
Bitcoin eventually is going to rip higher.
I'm not exactly sure when.
I do think it comes after the Federal Reserve.
You know, whoever gets confirmed and goes into that,
cut interest rates in a midterm election year.
So I think that we will get positive news.
There's always positive news that comes out.
You know, we don't talk about the end carry trade blowing up.
Which one are we talking about?
The one in 24, the one in 25 or the one in 26, right?
We don't talk about Greenland anymore.
It's like, oh, we resolve Greenland, you know?
So I think that once the price goes higher, we'll have the same question come back in
from people.
Oh, when's it going to drop so I could buy more?
I'm like, well, I guess you should buy when the price is low.
And that's when nobody wants to buy.
Yeah.
And so it's funny.
I see a couple of comments in here.
like market will test sailor, which I think the market is probably doing right now.
As well. You think about strategy is going to come out and they're going to pay dividends.
They're going to pay the dividends. They're going to pay the quarterly
dividend. They're going to pay the monthly dividend and they're going to keep doing it
for months. If the price stays down here and they're going to keep doing it for months.
And people, they're going to do it right in everybody's face.
These are credit instruments. They've made the commitment to pay these dividends.
They have cash to pay the dividends. They have a liquid common equity.
They're going to pay the dividends.
And I think the likelihood that it stays extended down for a long time is, in my opinion, relatively low.
But I'm always planning for the probability that it does.
But you think about the entire environment.
Like, strategy isn't the only player here.
They have 3% of the network.
There are so many other people that are – like, think about Tether.
Look at Tether's assets.
The USDT just hit an all-time high.
It's like $183 billion.
dollars so when that stuff gets minted they're buying like gold treasuries and bitcoin and so
clarity act right like if stable coins are you get to get approved and we got clarity on what this
looks like now you're going to have coinbase usdc and tether usdt probably exploding
and they're they're going to be buying treasuries bitcoin gold all these other things so it's not
just everybody just thinks it's strategy like strategy has a shitload of wow i got an idea for
sailor if he's watching right now convince um if they're allowed to convince fidelity with fiddd
to have them buy strc but dan that'd be competitive to what you're doing
but just you know it's it's a small portion right they could do a small portion i mean tether can do
it. Right. You know, provide, yeah, I can't see why they're not allowed to. It's different for a
publicly traded company than for a stable coin. That's why you say that, that's why we say that
MSTR is equitized Bitcoin and a stable coin is basically, you know, it's a, it's a crypto
wrapper around U.S. treasuries and, and Bitcoin and gold. So it's the reverse.
right so i look you want to wrap wrap it up and cover the last thoughts yeah let's hit it
dan you want to go first final thoughts what do you think about
you getting ready for tomorrow uh big question he got to go find an iron to iron his shirt Grant I got to go pick him up with a dry cleaner Come on
I think price action is terrible.
Macro outlook isn't that bad.
I wish Bitcoin wasn't trading with the SaaSpocalypse.
It will come out as hard money.
I liked Grant's chart of the hashrate
because the hashrate is the ultimate source of truth
when it comes to Bitcoin's overall adoption trend.
So, I mean, we had the winter storm, but things are picking back up.
That brings me a lot of confidence.
And finally, I think people need to really take a look, step back.
I saw a post from Chris Camilla today.
He's like that trader guy.
And he's like, take a look at your brokerage account or your Bitcoin wallet.
There's still money there.
You'll be all right.
And instead of just thinking like it's all gone, you're all right.
And then make the best decisions you can moving forward.
Yeah, absolutely.
Long-term view.
Long-term thinking, right?
Long-term thinking.
You've got a long-term asset with a long-duration liability and a 50-vol asset.
If you're going to hold a 50-vol asset in Bitcoin, you should probably hold it for eight years.
If you've got a 100-vol asset in something like MSTR, you're probably going to want to hold it even longer term than that.
So long-term thinking, very helpful.
Look at the Apple chart.
Look at all the 50% drawdowns in the Apple chart.
Amazon, any big company.
Look at Tesla.
Tesla had a 60% drawdown
in 22.
And it just got
ripped back higher the other way.
And that was a drawdown from what is like
almost, it was like trillion and a half
down to like 600 billion.
Yeah.
Anyway.
So Leigh, over to your final thoughts.
Yeah.
So for the bears that like to say that
you know, Bitcoin treasury companies don't make anything or, you know,
that it's just kind of ridiculous because number one,
there's a hundred and trillion dollar bond market to service and their
products are better. And number two,
if you're a company that makes cars or widgets or whatever, you know,
you can build too many and now you don't have a buyer,
but there's no such thing as a Bitcoin that you shouldn't have bought.
absolutely no such thing as a bitcoin you shouldn't buy
over to you over to you mike yeah look um you know ben workman said it you know don't don't
get your conviction from somebody else or don't rent it and i think that you have to look at these
assets and think about where you're going to be in the future um after you've been in for a while
like i said when i you know i showed the book right here and the price you could see it is
9,000. And I was like, is Bitcoin ever going to get back above 10 grand? Was I, and was I,
have I been, how do I say this? I don't want to say, do I think the price action sucks? Yeah,
it does. But with that, I have to be grateful for what I have. And it always comes back up.
In eight and a half years, the only question is how long does the down cycle last? And then it
comes back up and you're like, I wish I bought more in the down cycle. You always think back to
that. You're like, so, so my view is, um, you know, we're human. Like the people that are
listening to us, we, we get them watching the death. Don't doom scroll, keep on reading these
feeds. And what I would say is, um, come to Las Vegas, talk to us in purpose in person,
meet Michael Saylor, meet the people that we're going to have there. I think that once you go to
one of these events and you talk to real people that are there, especially our event, you're like,
oh, these people really do care about this. And that's the part I want people to realize
is that we see what's going on in the price. And sometimes just recently I decided to go on a
motorcycle ride. I'm like, I'm not looking at the price. Right. And I'm just like, I'm going to do
something else with my time. So that's what I think sometimes, you know, I don't know who said
it sometimes the best thing to do is to do nothing and don't look at it yeah go touch motorcycles
whatever you whatever brings you fun yeah absolutely thanks grain yeah my final thoughts
is there's the ecosystem seems healthy strategy balance sheet is incredibly healthy compared to
where it's been in past cycles there's no instruments that are fitting products that
are fitting markets that haven't existed before you got different capital pools that are buying
these instruments that have never bought these instruments before. The plumbing and the architecture
has changed. You've now got Bitcoin ETFs. The Bitcoin Ibit purchased 700,000 Bitcoin in the
last two years. Some of that's GBTC, let's say 300,000, but Ibit, right? You got 500,000 Bitcoin
that Ibit purchased in the last two years. They're going to be front running the 2028 halving. They're
going to have all of their salespeople going to sell the best performing ETF on the planet ever
and front run the 2028 halving.
Well, we got a halving coming up right in 2028.
That conversation is going to happen.
That is going to be hitting people's portfolios.
That's on the horizon.
And yeah, somebody else brought this up
and thinking about long-term generational holds here.
The reason I got interested in this entire space
and the reason everybody's interested in this entire space
is because we're long Bitcoin bulls about changing the future.
right we want to upgrade the world we want to upgrade the world to a digital money uh digital
scarcity every like the world should be a better place that's why we're here and thinking about
what that looks like in the future companies are going to hold this stuff and i want to be
connected to the companies that are leading the charge here and i think back to many conversations
i've had with like my grandparents and my uncles and stuff and when i was younger they would say
oh man, I could have bought Apple at 82 cents. And my response was, well, you didn't. And here's
where you're at, right? Like, I don't want to tell my grandkids that I had the, like, oh,
I bought strategy at, you know, $20 and I sold it at 150 because I got nervous about a 70% drawdown
in 2026. And I didn't have the conviction to see the future. And like, that's the difference here
is that I think this industry is worth spending time in,
so much so that I quit my traditional finance job
to work in this space full time,
to do the stuff that strategy is doing,
and to make the world a better place,
and to accumulate as much Bitcoin exposure
as I possibly can across many different avenues,
and to fix the world, upgrade the world.
So that's why we're all here.
That's why we keep doing this every single week.
That's why we talk about it.
This is the most,
this is the biggest story in all of finance.
Right now it's the red,
the most red story in all of finance and that sucks.
But, you know, we're all in it together.
And yeah, the world can be a better place.
Cool. Thanks everybody.
Appreciate the time.
Yeah, Dan, good luck tomorrow.
And I hope everybody watches.
Mike, maybe you host a space if that works.
I'll do a space after it.
If Dan wants to join, I think that'd be great.
And we'll, we'll see what, we'll see what they say.
I'll do a quick review.
So I will schedule that.
I'll just do a pop-up right after it.
It ends right on.
Right.
Okay.
All right.
Thanks everybody.
Appreciate the time.
We will catch you next week.
See ya.
See y'all.