Thank you.
I've been too long, I'm glad to be back.
Yes, I heard that news from the news.
That's kept me hanging out loud.
I can't remember the stars, because they're giving me high.
I got the hurts, because I never died.
I got night lines, cat signs,
abusing everyone and having a party while I'm going to find me.
Yes, I'm going.
Oh, here we go.
We are back, True North, episode 57, the investment grade Bitcoin podcast.
We are here with the crew today.
We've got five of us, myself, Mason, Dan, Mike, and Soleil.
We are going to rip it.
We've got a lot to talk about, strategy world, or as we should probably call it, just stretch
world at this point, digital credit world.
We've got a lot to talk about on that front.
We had the True North event, had some great conversations there.
We can walk through that a little bit.
And we will talk about liquidity profiles of preferred equity instruments.
Maybe we'll dive into a couple, talk about some of the conversations that the team had with Saylor and the strategy folks.
And really, we'll just keep the party rolling.
MSTR at the iBit is up.
We are seeing some positive movements there.
A great day in the markets.
I think the first day Bitcoin has been up 7 plus percent in quite a while.
So great to see that.
Some of the equities are ripping, but job's not finished. We got a lot of work to do.
The world is waking up to digital credit. It's very apparent. You could see it everywhere on X.
It is impossible to scroll on X for a minute without seeing STRC labeled somewhere.
This is the most liquid perpetual preferred equity that's ever existed.
Yesterday, STRC traded about $200 million. Today, it traded about $150 million.
This is 150x the daily liquidity of other perpetual preferred instruments.
And we are truly experiencing something that has never happened before.
And we are on the verge of an explosion of innovation.
And it's just an incredibly exciting time to be working here.
So first, before I keep going forward, let's jump in with Tim for some not financial advice.
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 jeff
we are back okay so for if this is your first time listening to true north we are here we talk
about uh bitcoin we talk about bitcoin securities we talk about credit instruments we talk about how
these things are permeating throughout the global financial markets. I think this is a
massive advancement in the plumbing of the entire Bitcoin ecosystem that we
haven't seen previously in past bear market cycles. And we are now seeing
these products being created that are pulling in different pools of capital
that are getting Bitcoin exposure that are just a different investor profile.
So maybe I'll just kick it over to you guys.
I mean, how are we feeling?
What are we thinking about?
Mason, I'll start with you.
Maybe just a quick feeling on the day.
Yeah, I mean, first off, our event was incredible.
Just the support that we received.
We had people come out from Ecuador, right?
Switzerland.
Any other places I'm forgetting?
There are some more.
Yeah.
Yeah, Singapore, Germany.
There was somebody from the Federal Reserve in the room.
One of the largest institutional investors of MSTR, aside from Vanguard, was in the room.
We had Bulge Bracket Bank Barclays in the room.
We had people from Citibank that were in the room.
Bitwise was in attendance.
We had a CEO of a recent publicly traded custody company that went on stage and talked.
Somebody that operates at Anchorage that talks about trading and custody.
I mean, these are operators that not only have the people come from all over the place, like the people that were in the room were people that are operating and at the forefront of what's happening in this entire ecosystem.
I also had people that had never even really heard of Bitcoin.
They just love these perpetual preferred securities and they love them so much.
They'll get up in your face and punch you about it and talk you through it.
Jeff, there was one guy I met who never heard of True North.
he was like i don't i don't know how i got here i was like dude what are you doing
i was wondering if that was the fed guy that just didn't even know why he was there
yeah so it was uh yeah i i was i was blown away by the by the attendees and the people
that that were there um came from all walks of life very interesting people um mason if it was
the same guy i'm thinking about he he came up to me in the back of the room and it was in between
our first panel and when I had to go up and do the interviews and he's like oh so what are you
doing here and I'm like oh I'm in it I'm in the thing and he's like what I'm thinking to myself
like do you have a wristband dude like how did you get in here like if you don't know what you
bought a ticket for like what what is happening here event guys it's the new idea guys you just
go to events. Yeah. He was looking for ideas. Yeah. I mean, what a, what a great event to stumble
into. Uh, yeah, it just felt, it felt lively. I, Jeff, I think we were talking about this in our
internal, it didn't feel like a bear market, like vibes were, were incredibly high considering the,
the, uh, the price swings that we've seen. And, you know, this is a room of like pretty hardcore
MSTR heads who majority of them have a lot of their net worth in it. But I think more than
anything, they see the vision and they see the fundamentals. And you could just feel the excitement
in the air. This is a very forward-looking crowd who's in it for the duration. And it was exciting
to see and exciting to be around those types of deep-thinking investors.
Yeah, 100%. I think Eve had the best quote of the week for me from One Chair Podcast. He said,
The best part about attending, you know, True North and Strategy World during a bear market is there's no tourists.
Like everybody was hardcore.
Everybody was dialed in.
Everybody wanted to have, you know, elevated conversations.
It was kind of electric.
I was loving it.
And I think this is our first event where obviously the prefs have been out, right?
The last time we did an event, prefs weren't in existence.
And so I think the amount of-
They were brand new.
They were. Okay. And the amount of, I think, excitement around a product that has product
market fit like STRC has evidenced by its trading volume and by its peg has shown people that like
Sailor has actually, in fact, in the team at Strategy, created something that's using Bitcoin
as high powered money to bring what ultimately has the biggest use in the entire world. And that's
high yield, durable high yield to the market. So people are super excited about the product.
There were also several conversations I had at the evening event about people that are,
they're creating their own flywheel with these instruments, which was totally fascinating.
I had guys come up to me like, hey, I've got this dentist practice and I'm holding STRC on my
balance sheet with my cash position and I'm taking a margin loan out on it so I can get a leveraged
position and any income that I get on the yield, I'm buying Bitcoin with it.
And and it's like this this whole cycle that was kind of perpetuating.
And then there was another guy that came up to me, self repaying student loans and self
repaying mortgages, had some conversations on that front.
Lots of people fascinated with levered stretch.
Like it's so funny, like the people love this product so much.
They're like, how can I get leverage?
You know, Sailor spent a lot of his time talking about digital money and like a low volatility, you know, 10% product.
But there's a tremendous amount of interest in the levered type product of STRC just from the diehards, right?
Like that want even more exposure to it.
Mike, what was your takeaway?
You know, so my takeaway.
was for the True North event on Monday,
we sold, what, about 125, 130 tickets.
I want to call out and thank our sponsors.
So BitGo, BitWise, Medici Roasting.
Am I missing some other ones?
Yeah, Anchorage.
Anchorage.
So look, the people that show up,
I mean, I got to,
my interview was with Matt Hogan,
the chief investment officer of BitWise.
And Hunter Horsley was there from BitWise.
and you had Matt from Barclays.
I remember his last name.
And yeah, and you know, the questions
and the answers that they gave,
there was a summary that was written also.
James Lavash, right?
Wow.
Right, James Lavash, the four doors
when he explained that.
And I just think that the speakers that we had
were very comfortable
and they were comfortable
because they knew that we were hardcore people,
but it wasn't they were comfortable
because they were easy questions.
they're explaining what they think is going to happen.
So that event I think was right.
We didn't have a stage
and we just had, you know,
just handheld microphones
and it was really a really great event.
There was probably about a total of 100,
what, 150, 160 people in the room.
And it was pretty impressive.
People came up to me and they're like,
wow, you guys are,
you're growing your event
and your speakers that you have here
are no longer just us.
So I thought that that was,
I thought it was a really great event,
you know, to kick it off on Monday. And, and,
and the amount of information that the people were willing to share,
I thought was something that you do not get on,
on a, what do you call it? On X.
Dana Mason's president. You guys take, tell us about your presentation.
You guys presented, give us, give us a quick one minute snapshot.
Well, I think we're going to record it and release it,
put on the YouTube channel. So if you weren't there,
I think you're actually going to get the chance to, to release it.
But we, you know, Dan and I talk a lot on the phone privately, right?
We're just, we're trying to figure all this out.
And I knew it.
It was kind of, yeah, we're mostly talking shit.
Just kidding.
But, you know, we're trying to figure out what's going on in the market.
And this was kind of our macro view to some respect at a very high level view of what
we think is going to happen with traditional assets or the traditional 60-40 portfolio,
and how kind of the gravity of the capital is towards Bitcoin. The presentation was called
the gravity trade. And really, it was, you know, a layer beneath that was looking at how MSTR is
benefiting and also facilitating that gravitational force into Bitcoin.
yeah i when you when you guys did the gravity trade it took me back to i had a flashback from
one of sailors old interviews where he was talking about the physics of it and you just can't escape
physics and it was kind of like the uh i don't know there was some billionaire or whatever that
wasn't paying attention and backed off of the great wall of china and it's like you can be the
richest person on earth but if you don't pay attention to physics then you get wrecked and
people who are not paying attention to what bitcoin is doing it's it's it's like the center of gravity
and it's just sucking up everything totally i've got i've got some conversations next week with
some capital managers uh in new york thinking about like part of the conversation i'm having
with them is just informing them what's going on hey fyi there's a company out here that's got 50
billion dollars worth of bitcoin and they've got a perpetual preferred equity instrument and they've
sold you know eight billion dollars of these pref instruments and they're selling the liquidity on
them is a hundred million dollars plus a week they're better than every other credit instrument
that's ever been created they're more liquid higher yield it's a digital credit form and
just kind of walking through it like put them on notice hey fyi if you're not paying attention to
this you're going to get left behind this entire industry is going to get left behind and there's
so many things we can do with this. So it's, uh, yeah, it's going to be some fun conversations,
but the gravity is definitely there. And it was so, it's funny. There's, you know, some of this,
um, there's been some attention recently on the Strait of Hormes, uh, like lockdown,
like the insurance companies in Lloyd's of London are not ensuring the transport of these
oil tankers that are going through the Strait of Hormez. And the US response was the US government
is going to basically be a backstop of risk for any of these vessels that are going through the
straits so that energy can kind of pass through. Now, the reality here is that strategy has more
capital than Lloyd's of London. It's a big deal. It's a big deal. We need the energy.
And Lloyds of London is important.
They're systemically important in the insurance industry.
But their stranglehold on the capital world is diminishing.
It's diminishing relatively rapidly, especially if you can see the size and scale of capital
and where it's moving globally and how it's changing and shifting.
So I think it's like it's one of those moments of, yeah, this is a big deal.
Like we need energy to be transported safely, securely, and we need oil to be able to move.
But the scale of capital at play is a little bit smaller than I think it would have been considered to be in the past.
Yeah, I think an interesting critique that I've been seeing, and I think it's actually a bull case from our perspective, is that, especially on Twitter, it's kind of a dichotomy.
At the event, we're all very, very excited about the future because we're seeing what the volume is doing on stretch.
It's progressively increasing and they're able to issue more and more volume above $100.
That's a professional bid on Bitcoin.
And they're also matching that kind of two to one or three to one with MSTR common equity issuance,
which is totally accretive right now considering we're trading at a 1.2 times MNAP.
Online, on X, people say that can't exist.
And you ask why, like, why can't that exist?
They just say, well, they can't do that forever.
There's not always buyers.
I'm like, well, there's buyers beneath one MNav and there's an infinite demand for STRC.
And if there's an infinite demand for STRC, then obviously there's an infinite bid on Bitcoin.
If there's an infinite bid on Bitcoin and leverage Bitcoin, all MSCR, there's kind of an infinite
demand there. So everyone, I think the big talking point now is like, there is like,
this has to break somehow. But I don't think people are thinking about the implications.
Like if STRC actually works, this isn't just about STRC, this is about the Bitcoin market.
The Bitcoin market fundamentally changes if it's the backbone for the best credit in the entire market.
Finite supply.
Infinitely scalable.
This thing is infinitely scalable and can grow to be...
They could issue $10, $20, $30 trillion worth of this stuff.
And if they're issuing $10, $20, $30 trillion of this stuff, what does the price of Bitcoin do?
Exactly.
No, it's like at some point the price budges.
At some point, the price goes nuclear.
Dan and I had multiple moments where we're sitting at the conference and we go like,
when it finally kind of sinks in, you're like, holy shit,
Stretch is going to drive Bitcoin to a million dollars.
Exactly.
Stretch alone is going to drive Bitcoin to a million dollars,
not to mention all the other chaos and disruption and everything else that goes in Bitcoin's favor.
Just Stretch alone.
And we talked to that. And I referenced, Graeme, a little bit there because you know how, Graeme, you always mention the stock buybacks, right?
Like Apple generates $100 billion in free cash flow per year and uses it to buy back their stock.
So that's why, and we've heard these anecdotes of people who are like, oh, I just put my money in Apple because they're always buying back stock and the flow is always being lower.
What is Stretch? It's the Bitcoin buyback, literally.
Yeah, it's the Bitcoin buyback.
The fiat capital into Bitcoin.
So if stretch continues to work, which I believe it will, there will be a potential buyback or bid or sequestration of Bitcoin into MSTR that won't move.
You know, the other part related to now that you bring that up, the prefs are not counted for the assumed diluted shares outstanding on strategy and not for the basic shares outstanding.
It's issued as shares, but it's not included those two metrics because legally it's considered, even though Sarah calls it digital credit, it's considered to be debt.
So equity, right?
But the reality of it is it's not counted in those shares.
So it does function like a stock buyback because it's acquiring more Bitcoin without increasing the denominator.
Right?
Yeah.
Right.
Bitcoin per share.
So shares are on the bottom.
Bitcoin's on the top.
It acquires more Bitcoin, but those shares aren't outstanding.
Now, there is a drag on that.
We did get a bunch of questions from people.
How do you model the prefs going forward?
I don't have a good number for that.
And I think that what's a good amplification rate?
I think right now we're in a phase where we figure that out.
And I did ask that question to Saylor.
And he said, look, it's going to be right now, I believe it's 33% on their website.
And he said, look, sometimes it's going to be higher.
Sometimes it's going to be lower.
but I think the average for the year
will be about where it is today.
And I think we don't know what the amplification,
you know, Jeff, I talked to you the other night.
You know, if you have a lot of amplification
during a down market, when it's bearish,
when things get bullish, that amplification rate drops
because the price went up, right?
And so that's when you're like,
oh, I guess I should have levered up more.
But you don't want to do it
because you have to be responsible,
you know, running a company.
Yeah, you've got to be responsible
running a company you've got to well the market may not give it to you as well i mean we're in
this like stretch is eight months old like the the thing is trading 200 150 million 200 million
dollars a day it's eight months old and this thing has a two three year four year track record
i mean the amount of capital that's gonna be coming in the door with interest in this type
of thing is going to be incredibly high the the really fascinating part about this is that
Both of these products are so symbiotic.
And so as the demand for the credit rises, their ability to issue more equity will also increase because the technical valuation, that excess volatility is flowing to the common stock.
So that drives more interest in the common stock that drives more open interest in the derivatives market that drives more trading and people that are disagreeing or agreeing with the valuation right They going to short it they going to long it they going to do all of those things And that increases the
relative volume in the common equity, which is increasing their ability to raise capital in the
common equity. So it's like, if one moves up, the other gets more liquid and more interesting,
which gives them more access to the equity capital market. So it's like leverage,
D leverage, leverage, D leverage. They're like climbing a ladder to the top of the publicly
traded markets via these instruments. And like we're in like the first inning.
Yeah. Mason, to your point about, you know, stretch getting Bitcoin to a million. So I asked
Grok, I'm like, okay, if strategy sells like 1% of the $300 trillion, you know, fixed income market
over 10 years and maintains amplification ratio, you know, selling common, you know,
how many Bitcoin do they end up with and what's the price at 1x MNAV?
And it thought longer than it has ever, you know, Grok thought longer than it's ever thought on any
question I ever asked it and then told me they were going to get 26 million Bitcoin. I'm like,
okay, well, maybe not, maybe not quite 26 million. And then I had to try to like rationalize with it
and do some sanity checks, but I got to work on my prompting.
But Grok is pretty bullish.
Yeah, I think that's a really good, and it illustrates a point, right?
Like, so we think these products over the next three,
like the first three years need to execution has to be flawless.
Then after three years, the big money, the big capital can start entering.
But what matters is that the products are set up correctly from the get go.
Like if they had a misstep or the preps weren't constructed with all the proper covenants, if the capital structure wasn't pristine, X, Y, and Z, then the instruments are no longer durable.
They can't remain strong instruments for three years.
And they can't really be changed.
They can't be changed after issuance.
So I think that's what's so amazing about strategies capital structure, obviously strives as well here, is the capital structures have been gotten right via the preferred model right off the rip.
no converts, no secure debt above it.
Therefore, once these things are seasoned after two, three years,
there won't be any problems in the capital structure.
It'll be pristine and they'll be durable and able to last in the next 10, 20 years.
They don't need to be changed.
Yeah, Dan, I told it to follow the power law model too.
And what I thought after it gave me the insane calculations is like,
maybe stretch breaks power law to the upside.
I think Bitcoin could turn into an exponential at some point.
Yeah.
Then you bring up the capital structure and that design.
It's a Sailor's presentation.
He talked about the different types of debt and like how that changes your capital structure.
It's senior or you could go get margin margin leverage on an exchange.
That's the shortest term.
It's like a day.
Then you could go get senior secured debt and that might be a year.
They'll tell you it's a seven year term, but it's actually more like seven months.
like a year because they know you need to refinance in between that time.
And then you can go junior secured and that's a higher interest rate and it may be a longer
term. And then they found the prefs.
So basically like they kept running away from the type of leverage and covenants and then
they found the prefs and then they were running until they found the perfect instrument where
they had the largest demand right off the bat and they're seeing the scale with massive
liquidity. And now they're leaning into that particular instrument.
I think the other instruments will have material demand in the future once there's a multi-year track record.
But Stretch has become the clear winner on how to scale this instrument.
And it's the main reason why we at Strive made a very similar product.
We saw the success of this product.
We watched all of it.
I've been watching and talking about all of these things for quite a while now.
And we saw the demand there.
And it became very apparent that there's going to be significant opportunity for multiple issuers of this into the future.
So, yeah, a lot of learnings and a lot of scaling potential now that the capital structure is in place, they've got the PREF model and ready to go.
I agree. And I think the underrated instrument is Strike.
I know Strike doesn't have product market fit right now.
It's actually had some of the worst product market fit.
once mstr gets to 500 600 700 800 that thing is going to be humming ripping people are going to
want the downside cushion they're going to want the especially in a zurp environment or something
it is going to be humming because like what if you want to enter it three times mnav
but you're nervous about mnav compression to one strike solves a problem right like that bond floor
is massively valuable i think to people wanting to participate in the equity without risking the
volatility the equity obviously well if we're playing favorites i still like have a soft spot
for strd and i made that post when i was sitting at the airport because when strd came out i was
sitting at the terminal and when we were coming back from vegas i was sitting at the exact same
terminal you know waiting to fly out and i'm just it just brought back those memories um because as
soon as they announced stride it was like okay well now we have to figure this out because we
have to cover it on the very next episode. So like I have to like know and understand this thing
immediately. And the way that it's trading now, you know, well below par and with the possibility
of interest rates coming down, STRD just seems like an insane bargain right now. And I thought
it would just fly off the shelves. Like I thought it would be doing what STRC is doing, but you know,
obviously I was wrong with that. But eventually, you know, once it's seasoned, you know, maybe they
all start selling like hotcakes but i i still kind of like strd with the uh the benefit with
the interest rates maybe coming down yeah it's an interesting like because they've got multiple it's
an interesting model right because any capital that's issued at strc would theoretically be
senior to stride too so like the risk profile of it might stay like depends if the price of bitcoin
goes higher and they're able to continuously issue strc at the same time that uh the relative risk
position might stay constant. Whereas the credit profile of all the other instruments is getting
better. However, the biggest question here is does the market recognize the risk profile of
these things as appropriate or not? Yeah, because I'm assigning almost zero risk.
I would agree with you. You're a Bitcoin bull. We're all Bitcoin bulls here. You would say the
entire capital stack is investment grade. They could probably crank the interest rate up to
15, 16 is still probably investment grade.
That presentation that Saylor put together, right?
You could see the curves of like, where would be investment grade and high yield based on
that risk model and risk portfolio.
But like, I think that's the concept, right?
Is the market doesn't get these things yet.
And there's alpha within that.
Yeah.
And full disclosure, I don't actually own any STRD.
I'm still a, you know, a leveraged long junkie.
So I can't bring myself to peel off any strategy shares.
One interesting thing is how poorly Stride's been performing relative to Bitcoin.
It used to be almost like one-to-one Bitcoin correlation.
But right now, it's performing just terrible.
Not terrible, but it's not going up at the same rate of Bitcoin.
I think it's because the market's starting to price in the kind of domination of STRC relative to all the other prefs.
so people are like on they're thinking like okay stride is going to kind of be pushed down in the
capital stack because of the massive stretch issuance and i talked to a guy yesterday who
talked about right now he's saying he runs a little hedge fund he's like the only people
trading these things are the hedge funds and this is kind of how they're thinking so i think it's
part of why stride isn't catching the bid the same way we might have expected so that meme where the
uh the mom is like paying attention to one kid in the swimming pool and the other one's like drowning
like that's strd yeah i think i think they have simpleton models of the bitcoin credit
and they use like if it's 3x over collateralized or 5x even though like pretty much stride is as
credit worthy as the rest of them like barring all that mathematically like like mathematically
if you if you take bitcoin going to probability of bitcoin going to zero off the table
then mathematically the credit quality of all of the instruments are pretty pretty similar
Exactly. Yeah, exactly.
Like it's so high. They're all so high.
No, yeah. The world, I mean, this thing's going to chug. I would say the world's not going to know
what hit them, but nothing's going to hit them. It's just these things are going to keep chugging
along. Bitcoin is going to keep getting purchased. It's going to go up. People look back in 20 years
and be like, strategy is on the Bitcoin and the price of Bitcoin is higher.
I was thinking about that earlier today. Like nobody knows this is happening.
like outside of this world and like uh you know everybody's x profiles and whoever's working in
the industry like not many people know that this is happening right they probably just saw the price
of bitcoin go down 40 50 percent and they're not going to look at it for another couple months
they're like oh scam died again you know and uh that's i think the reality of where we're at and
then you know if this thing starts if bitcoin starts ripping again maybe people pay attention
and filter in here maybe uh so i i being the the older gentleman in the room um look when i got into
bitcoin i knew about bitcoin in 2014 didn't buy any and then i went all in in may of 2017
at that point i thought i was six years late right or seven years late because i should i should have
bought earlier i remember what the price was in 2014 but what i'm saying now is that i'm going to
coming up in my ninth year in may and you guys were all in this before any of the press were
launched and i know exactly what's going to happen three years from now you're going to be like
remember when we were talking about this and we didn't talk about in the first true north and it's
now three four years from now strategy stock mstr is whatever two thousand dollars a share and we'll
be like remember in the old days three four years ago it's going to go by really fast i know you the
young guys, you don't see it. It's going to go by really fast. This is our second true north that
we had at Strategy World. I think we'll have a whole bunch of them. And I think we're going to
look back and be like, wow, that went really fast. And we had no idea how we knew it. We knew it was
big, just not now how big it was. Right. And I think that's what we're going to see unfold.
You know, if we get the bull market continuation. And I want to chime in on something else.
When I heard that we bombed Iran, I woke up, I'm on the West Coast, and I'm like, oh, God, I don't want to look at the price of Bitcoin.
It's going to be in the 50s.
It's going to be a five handle.
And I looked at it, and this was like a few hours after it happened, and it had already recovered back to $66,000.
And I'm like, oh, I guess it wasn't as bad as I thought it would be.
Now, if you would have said to me whatever day that was, Sunday morning or something, if you would have said that we would be at $72,000 a few days later, no, I didn't think that at all.
And so everything seemed to change really, really fast.
So that's what I'm trying to say.
There's two things.
The long term seems to go faster.
It seems far away, but it seems to happen a lot faster than you think.
And I think the price can catch people off guard.
I was kind of actually expecting a little bit of a pump because if the market doesn't like uncertainty, it was kind of like, OK, you can see that the forces are building up and like we're expecting this to pop off.
But you don't know until it does. So if we had, you know, reached an agreement and like, OK, we reached an agreement, then uncertainty is gone or we just start dropping bombs, uncertainty is gone.
And so the market's kind of like responding positively to something happening instead of just what's going to happen.
And, you know, this is it sucks that that that things like war pump our bags.
But like the drones that Iran has cost 50 grand a pop.
We shoot them down and it costs us a million dollars a pop.
so if they have a hundred thousand drones and we shoot them all down one for one which sometimes
it takes 10 to shoot down one like even at one for one that's a hundred thousand million dollars
we have to print so you know larry leppard was like okay we're gonna get the big print and then
lynn was like well maybe we get the gradual print no we're getting the big print it's it's printing
yeah every every bullet every missile every time there's one of those is shot another one's getting
made that's the that's the crazy part is it's all it's all still going right like uh it's not like
you deplete reserves and you don't build up more reserves of all these instruments i mean that
stuff is infinite um capital deployment at the moment yeah and i'll give a comparison you know
last week at strategy world we talked about mostly about strc we had our event on monday then we had
bitcoin for corporations so i think that that went really really well but i don't think anybody had
predicted this week that kevin wash should be nominated in the morning that kraken i didn't
even know kraken applied for a fed master uh license right and then it was granted right nobody
brought that up. And so I think, you know, last week we were all there thinking about how these
companies are going to build out Bitcoin on the balance sheet. And we've got a whole bunch of
really good information just even today coming out. And I thought that that was, you know,
pretty interesting that nobody last week was even talking about that. Rule number four,
Bitcoin is powered by chaos. 100%. Yeah. Yeah. This definitely feels like one of those weeks that
And I think Dana mentioned this, right?
Like decades are happening in a week.
There are decades where nothing happens and there's weeks where decades happens.
And this is definitely one of those weeks.
It's just like news, news, news, news, news, news.
And I think this is like a five year period of like a century.
Oh, my God. Yeah, it's incredible.
Mike, you brought up an interesting thing about the price of Bitcoin and markets
and thinking about strategically like.
Donald Trump is very clearly a markets guy. Like he came out and said, we're going to war with Iran
midnight Eastern time on Friday. Markets are closed. And you gave us gave the whole weekend.
And so you saw the price of Bitcoin go down and pop back up. You gave the whole weekend for that
uncertainty to kind of like work its way out while the markets were closed. And then that way on
Monday, the markets opened and like, it wasn't too terrible, right? There wasn't like a huge,
like VIX spiked a little bit, but it wasn't too much. The price of Bitcoin kind of went back to
where it was pre the announcement of all of these things. And it's just, it's fascinating to see
the decision-making process that went around it too. It's like, that's definitely a markets first
guy. Yeah. You know, something that I started doing, I don't know, about three, four months ago
is that starting on Friday night at about seven o'clock,
I try not to look at anything,
no Bitcoin charts, X.
I try and refrain from it
and then just have a normal,
like, you know, just do my weekend thing.
So I didn't really,
I didn't know that that had happened.
So that's why when I woke up on Saturday morning,
like what the heck is,
and then I realized,
oh, I think this,
I think the price recovery will happen by Monday.
and you know it was surprising so the other thing is that um would you just said there are you know
weeks where years happening years where weeks happen and i think that's true what i was trying
to say is that the days are long and the years are short so as we're living this it's like well
you know it seems to take a long time during the day for something to happen and then when you look
back in retrospect how did two years go by very quickly or three years or four years and i think
that's where we are with this. I think it's, you know, I'm not a fan of Trump. I didn't vote for
the guy. And anybody that's critical of him from the Bitcoin perspective, I point out he pretty
much delivered everything he said he would do, right? Big, beautiful bill, not Bitcoin related,
got the Genius Act, has a strategic Bitcoin reserve executive order, SAB 121 repealed,
freed ross ulbrich um ended operation choke point you know 2.0 and a whole slew of of politicians
that are that are bitcoin friendly so if from a political standpoint again don't like the guy
didn't vote for him but from a bitcoin perspective he he put these people into place and so if you
don't like the price action it's probably not due to the politics yeah yeah and these products are
going to change politics too. So I don't know if you guys saw that the Netherlands
is trying to get an unrealized capital gains tax. And if they do this, at first I thought, okay,
well, you know, maybe that doesn't even affect stretch because it's not going to go up in value.
It's just going to stay pegged, but no, they're going to, they're going to tax the dividends too
at like 36%. And I thought, okay, that's just going to drive all the wealth out of the country.
and even the people who are stuck are not going to have access to something like stretch
and be able to appreciate these fixed income products.
And so it's literally just going to hurt everyone in these countries.
And other countries are going to have to take note of that
and be more friendly, I think, to these type of products.
Agreed.
And by the way, I just thought about this recently.
I think there's two hurdle rates now.
Previously, the hurdle rate was Bitcoin's CAGR.
And so over the rolling past five years, it's about 26%.
And so people will be like, well, what's your Bitcoin CAGR?
Pick a number between 20% and 30%, right?
And there could be diminishing returns coming in.
That's one CAGR.
But now the new floor CAGR is STRC.
It's 11 and 1.5%.
Let's say it drops to 11%.
The new CAGR, right?
If you could just put money into STRC and it pays monthly,
That's the new floor for your CAGR.
The high floor is going to be whatever you layer on top of it, right?
Buying straight Bitcoin, putting in cold storage, or buying IBIT or MSDR stock.
That's your upside.
And so if somebody is like, oh, I'm only getting 3% on CDs or government bonds, that's a choice
on your side.
I had a tweet about this.
So there's the concept of UBI, universal basic income, right?
Now we have UBR, universal basic returns.
And that's what stretches.
It's like if you're a Bitcoin maximalist or you have belief in Bitcoin, it's the base floor for your short-term money.
Yeah.
And you know what, Mason?
I think you're right.
And the other thing is I think we have a new trading pair with strategy.
And the trading pair is, hey, I'm super bullish on MSTR stock, but I think that this downturn could last a little while.
Well, I think the bottom is in.
But it's like, well, maybe I'll sell some MSTR, buy some STRC, get some monthly gains or buy some STRK.
And then I'll use that in the bear market.
And then, oh, I feel more bullish.
Then I'll allocate, I'll rotate in from STRC back into MSTR.
and i think that's what we're going to see now so do i think that in bull markets st i think
scrc still goes up in the bull markets without a doubt but i think people will trade between the two
yeah strc if it's if it's pegged it has to be an uncorrelated trading pair this is not going
anywhere and whatever else you're trading is going to go up or down it's good it's going somewhere
this is this is why i created the pentagon the bitcoin defense department because it's infinite
trading pairs like you're going to be trading in and out of all of these different things and you
could set it up with a computer a computer can run it you could set up calculations such that when
this is this and this and this is then if then statements and it just bouncing along you could have an ai figure out what the trading pair should be and you could run it you give it 250 grand and just run it and have it go back and forth and earn your yield and make
consider return of capital treatment and like that's where the stuff is going those computers
are going to be in and out of these things in in different points in time for different reasons
and everybody's going to build their own different reasons of as to why they're going in and out of
these things and that's yeah future i want to bring up so there was a presenter the gentleman
from prevail on energy yeah and and he he said yeah i'm just going to put whatever an eight
figure so more than 10 million dollars into strc and basically he goes i'm going to buy and sell it
basically use it as a checking account yeah and and he said this on stage and and the guy was
he's like oh i'm a big bitcoin believer and i think was he the cfo is he a cfo or the controller
for the company. I don't know what role. Yeah. Yeah. And then he just said, I'm going to basically
use it as the check. Cause if I have money that sits there, I might as well get paid. And I was
like, wow. I mean, that's what we wanted to hear. Now, is he building the whole company on this
to, you know, to build some other product? No, but it's, if I can get paid 11%, why wouldn't I
take it? 11 and a half. And then he said he wants to push that holding to nine figures.
yeah yeah so i think that that was one of the great one of the really good presentations that
happened last week um what about for you guys that you sat through this there's by the way
there's this guy dan hillary and he presented on some some you know stable coin built on strc but
besides that i was there yeah you were there i was there also i had a presentation too grain
Well, tell us about your presentation.
No, the most fascinating thing, Mike, and you hit the nail on the head, is that companies are thinking about this as treasury capital.
And this is one of the conversations I had with a sailor afterwards at drinks.
If you're a corporation and you're thinking about short-term capital, you've got one month, two month, three month capital.
historical. Historically, you'd have two options. You can have a liquid low yield instrument in
money markets, or you can have a illiquid higher yield instrument like in the bond market. You go
get like five or 6% and you've got to take on just a little bit more credit risk in the investment
grade market, but just incredibly illiquid. So your time horizon is much longer. And so now
the entire capital world is being flipped upside down because you have a digital credit instrument,
which is high yield and high liquidity. You got both. Historically, you had to pick,
like, which do you want? Do you want liquidity or do you want yield? Now you got both. That's
fascinating. That completely flips capital management upside down. Now, how much do you
deploy? Like what's the kind of a rule of thumb? And Saylor was talking to me about rule of thumb,
like thinking about capital management, because I asked him, would there be a situation where
strategy would put digital credit on their balance sheet? Thinking we've got a digital
credit instrument, what would it take? And the concept became, or what he talked about was
effectively, you don't want to have a position that's greater than the average daily trading
volume if you've got one month money. Because you need to know that I can scale in and out of this
without having a drastic impact on the price. So my mind instantly starts to go, okay, what's the
average trading volume? Thinking about stretch, it's about $100 million. Okay, that's interesting.
And so you hear the guy at Prevalon Energy,
so if they've got an eight figure position in SDRC,
let's just say it's $20 million,
they can feel pretty confident that over the course of a month,
they're likely going to be able to pull their principal out and still earn the yield on it.
That completely changes capital management, like capital allocation globally,
everywhere, every company on the planet, private company, public company.
public company, your hurdle rate is now SDRC or digital credit instruments because of
the liquidity profile and the yield. And that is like transformational in how people are going to
manage capital. I mean, you've seen it, right? Anchorage added it to their balance sheet.
Orange BTC added to their balance sheet. Prevalon Energy added to their balance sheet.
I can bet you over the next two to three months, we're going to see several companies
add this to their balance sheet and think about it as a treasury reserve asset
for short, short, moderate term capital. Nothing has really existed like it before.
Jeff, what's, what's crazy to think about is that it's, it's probably, you know, it's too small
still for, for major capital to come into it. Right. So in some sense it has to be bootstrapped,
right like it it needs it needs uh it needs you know whether it's retail or smaller companies it
needs like the the initial capital to come in and and create that liquidity and boot bootstrap it
in order for the huge institutional capital to feel comfortable to come in right it's it's like a
it's a process this whole thing's a process that there's yeah there's alpha opportunities for those
that are at the forefront, right?
Like you're helping build the liquidity profile.
The most fascinating thing, and we also talked about this, is I asked the moment, who's selling
stretch at 99.98?
Like that's that's more interesting to me.
Like forget who's buying it, who's selling it, why are they selling it and what does that
look like? And so he taught he gave an anecdote like he watched.
So if you ever go to a Bitcoin event and you see Saylor sitting at a desk, he's always got his computer open and he's watching the tape trade every single day and every trade that's happening.
It's like a movie.
You can see how it's moving.
Anyway, he mentioned this trade where it was a $40 million market sale of STRC and it dropped the price from $99.98 down to like $99.40.
And then the price ripped right back up to like 99.98 or 98, 99.96, something like that.
And so that's fascinating for multiple reasons.
So that means there's an incentive structure for somebody to ARB that, bring it back up.
So somebody was buying it after there was a big sell.
There's a likelihood that that $40 million liquid was a liquidation in DeFi.
Somebody was posting it as collateral in a DeFi leverage situation, got liquidated,
and then it was market sold.
Why would you market sell $40 million of this instrument when you can scale out of it in
two hours and not have any change in the principle?
So it's fascinating to start thinking about the incentive structure.
and the incentive structure works because strategy and sailor have come out and said
we are not selling stretch below 100 so he's leaving market opportunity for anybody else
that wants to buy and sell and operate under and below 100 so there's arbitrage like recognizing
that he's also told you i'm going to increase the interest rate if the price if the vwap
the 30-day VWAP is under $99. So it's not only did they create a financial product that's
brilliant and elegant, they created an incentive structure that incentivizes liquidity to be there.
Like that's the unlock is the liquidity profile and the incentive structure.
Like often overlooked, people don't even care. Like when you turn the lights on,
you don't need to know how like the energy got to your house, kind of the same thing.
But that's why it works.
That's why the liquidity profile is building is because there's incentive structure to build on it.
So I made this post and I want to share it again because it's totally fascinating.
This is traditional credit for digital credit as a comparison.
And I wanted to look at liquidity profiles of other perpetual preferred equities to put them on a level playing field.
So I pulled bank perpetual preferred equities and KKR, which are some of the more commonly traded prefs.
And so these are the tickers over here on the left hand side.
They're all highlighted in blue.
And the effective yields range from 5.5% to 7.27%.
percent. Okay. Notional outstanding ranges anywhere from 850 million to 4 billion or to 6 billion.
So decent size relative to STRC or SATA. And you look at the daily volume, average daily trading
volume, the highest average daily trading volume is the JP Morgan pref at $4.2 million.
STRC traded $150 million today. This is a bank instrument that pays six and a half percent.
And you're like, okay, I can now have an 11.25% instrument with very high liquidity.
Okay, that's interesting.
And so you got to think about relative liquidity too, because these all have different notional
size outstanding.
So when you normalize the daily trading volume relative to the market cap of these instruments,
the numbers are staggering, right?
Like the average 30-day volume relative to notional outstanding.
So this is the 30-day volume divided by notional.
You get 0.23%, 0.08%.
So if you wanted to scale out, if you had any scale in any of these instruments, let's just
say you had $100 million, it could take you months to scale out $100 million based on
the average daily trading volume.
So historically, if you bought this instrument, you'd have to hold it through the duration of the instrument in order to get your yield out of it.
Okay, that might be like 10, 12, 15 years.
Okay, what can happen in the next 10, 12, 15 years?
What's the risk of the next 10, 12, 15 years for banks or any company that's issuing a credit instrument?
I think AI has just made the uncertainty umbrella significantly larger.
The certainty of those cash flows in these business models, I think, has just drastically changed in the last year.
So that's fascinating when you think about the ability to get liquid on any of these things.
If I were holding these, this is not financial advice, but this is a crappy instrument.
These traditional credits look crappy relative to the yield profile and the liquidity profile of these other instruments.
it's just it's just math like it's just the data that we're seeing and like why does this exist
it exists because it's transparent like you you can see the risk profile on strategies balance
like on strategies website on strives website we have the data of the capital that sits on our
balance sheet the relative risk profile you can go calculate it 24 7 365 and that's that's
interesting and it facilitates a liquidity profile because they are, because it's incredibly
transparent. Can we also talk about the novel architecture of a stable principle,
perpetual preferred security, right? Like in these other perpetual preferred securities don't have
stable principle and the stable principle was, is a direct result of strategies, prefs, and now
SATA being the first perpetual preferred instruments with an active ATM shelf registration.
registration. If that wasn't the case, you wouldn't be able to limit the upside on the price.
And then plus you need the variable rate monthly dividend. But those two things combined allow for
the management of stable principal. And so you don't have interest rate exposure, which is a
completely new paradigm, something which you've only gotten exposed to via money markets, right?
So this is a new category of fixed income security, completely new category. And I think that's one
of the reasons it's having massive product market fit everything digital is better than everything
analog ever i mean you could argue that like records are probably better than you know mp3 but
let's not let's not go too far but like i mean the the digital like the digital world and the
digital economy has always been better like there's there's advancements and things like
this, like these are innovations that have led to materially better products. And I'm not surprised,
right? Like this is going to continue again, stretches eight months old.
When, when it's a year old, two years old, three years old, like imagine what this future looks
like. I mean, this might be a hundred, a hundred billion dollars of notional outstanding. The
entire credit market is going to have to rethink the relative risk of all of their instrumentation
all of them so hey Jeff Jeff can I share my desktop for a second yeah yeah give me a second
here do this I want to show you what I just did let's see if that works is it sharing okay what
I did was I screenshotted what you just shown right and then what I did is your estimated days
to cover is your last column. Yeah, days to turnover. Sorry, days to turnover. And I just
told ChatGPT, I said, recalculate the last row, but make STRC, make STRC 1.0 and give us the
multiple. And so that way you don't have to divide 28 into them. And so when you do that, so
um say that so strc is 1.00 uh sata is 1.04 equivalently the same and then if you look at
the other ones like for instance you said what was it the jp morgan was the second biggest one
yeah or the biggest one it's 20 it takes 25 x longer in order for that to cover it's just 25
time given given that so if you want 25 x less liquid it's 25 it's 125 the liquidity that's the
way you look at it or strc is 25 times more liquid and and that's the best one out of out of all the
ones you you saw there so you again whether it's 125th or 25 times again strc and sata are 25 times
more liquid than the next one and that and that's a that's a crazy multiple that's why i like to make
these integers really easy you know so nobody has to calculate anything and this takes two seconds
So you did the hard work by getting all the data.
So thank you.
But that's the way I represent this.
But the other ones are crazy.
Look at the Wells Fargo one, 146X.
Right.
So if you had a $100 million portfolio in there,
it would take you 144 times longer to lever out of it,
which means effectively it's stranded money.
I just don't know why anybody holds these things.
like I think if you're going to go issue
equity
and you're like a traditional company like I think
you're dead like your access to that market is
like in my it should be gone
like if I yeah I'm Barclays which
which I'm not but and
I don't know if I'm Matt Gannon
who came came to the
the true north event
you know
and and you and somebody's coming to you like
hey I want to go issue pref capital at
at eight percent
and you're like well i just issued 11 you know 11 percent pref equity over here and it's backed
by capital like four to one yeah you know what's funny why like what do you know the cost capital
is now 11 you know like what people come to these events for for alpha but that guy got the more
alpha than anybody barclays came got interviewed and he got like more alpha than anybody attending
Yeah, I mean, he was brilliant when he was talking about. And I want to go back to something. So look, I'm a credit investor. People are like, oh, if I had access to the private markets. When you do a private placement, the minimum is typically five years.
So if you fork over a hundred grand, let's say, and sometimes they have a hundred grand as a minimum buy-in, right?
And you're like, it's five years.
And they're like, well, I want to get out of it in six months.
There may be no redemption clause for five years.
You were inside that investment for five years.
And you're like, well, if there's no secondary market for it, you're stuck.
So any investment, if you want to do a private placement, right, you're a credit investor,
and you can make 11% on STRC, and you're like, you know what, after two years, I want to go put
my money in something else. You sell it all, market order, and you're out of it. And I think
people, they wish that they were able to get into private deals. But then when I tell them that
you're stuck in it for five to seven years, they're like, oh, I want to get out. You can't.
And I think that's the reason, that's the point where you're trying to say right here.
If you have a big position and you want to go sell it, but if you're selling, it's going to tank the market, then it's not really a good position to be in.
Yeah, agree, agree.
And that's like a Warren Buffett kind of way of thinking.
He's been asked, okay, why do you buy public equities as opposed to real estate, private equity, private debt, et cetera, et cetera.
He's like, well, there's money to be made in most markets.
Like markets present opportunity and capitalize on them.
And there's massive value in being fully liquid in your position, whether that be to raise cash, to deploy more, et cetera, et cetera.
That optionality of a massively liquid equity is very valuable.
So what I think you guys are telling me is that the fixed income market is officially disrupted.
Like if you're a fixed income fund manager, your services are no longer required.
And my recommendation is just take two weeks off and then quit.
Yeah, look, look, I agree.
Look, Charlie Pielo, there was just a chart.
The bond market has been in a 67-month bear market.
67 months.
That's five years and seven months.
The previous bear market was 16 months.
This is the worst bear market for bonds ever.
And it's going on five years.
And if you're in an illiquid bond, right, then, you know, it's weak.
And so, look, where we are today, it's just going to take time for people to, for this
to sink into them.
I do want to show, can I show another thing?
Yeah.
Yeah, okay.
Share a window.
Here, so let me share this, share this window.
So Rohan, met him for the first time, but I've been talking to him on the phone.
So he's a true North fan.
He's not a coder.
And he has coded this site, Bitcoinquant.co.
And I've reposted this.
And he has, when you log into this, you could see that, and he doesn't charge for it, but you can see my name, my real name is right there logged into it, which is fine.
But he has a Bitcoin Preferred Equity Digital Credit Dashboard.
And I love this one over here with STRC volume.
And then he shows you what the volume is above 100.
And then he has this whole analysis on it.
So one of the reasons why I like his page is he says ATM as a percent of volume.
And then over here, I believe he has it set the default setting as a 40%.
And you could drag it lower.
Oh, it's showing you on the right.
It's 25% there.
And you could say what percentage of the amount over $100 were ATM.
And then it tells you the estimated ATM proceeds.
proceeds. So if you want to be more conservative, you say only 25% above the hundred bucks will be
used. And then it tells you the equivalent Bitcoin and it calculates, but you're like,
oh, let's be more aggressive. So we'll go to 40%. And then it tells you on each day,
how much Bitcoin they can conceivably buy. And the total for the week here is 2,500.
So, yeah, in three days.
So look look there lots of smart people there And what I want to say about it is that Rohan is not he a business guy He taught himself how to vibe code makes this website right
And he made the original website.
You know, there's two different, not logins, two different pages for Bitcoin treasury companies.
But he does this and vibe codes the whole thing.
And he keeps on updating it.
And this amount of information, you don't have this with other companies.
Like with Apple, I'm unaware of an Apple website that tells me how many iPhones they're shipping and computers they're shipping.
I just don't – or maybe it exists for Tesla, you know, how many cars they're shipping where people guess it.
But this type of coding that you see is just truly unprecedented.
So I just want to point this out.
And this is where we get – you know, people are like, who do we talk to?
Yeah, I have the benefit of talking to Dan or Mason or Jeff or Soleil.
but you know these other guys that come about to do this work it's just brilliant work
totally i mean that's that's like there's so much opportunity to build here i like that that is uh
it's going to be used everywhere i think there's another one strc.live strc.live yeah i found out
today has like a a bunch of different tools so bi-weekly paycheck simulator drip compounding
calculator, rotation back tester, STRC yield calculator, STRC versus savings. And basically
just build a bunch of different tools on top of this to look at different perspectives. Like,
that's so cool. That's one person that's just building this thing. I think, I don't think it's
multiple people. Yeah. I think these are one guy that there's always, it seems to be a dude,
all the guys are like, Oh, I just coded this up. And you're like, and they're like, they're like,
I just whipped it out. And like, you know, they're all like geniuses. Right. But they're using AI.
They build these websites.
They do the auto update and they're brilliant.
The color.
And I love how you could just do like you could drag the columns and you can move them over.
So again, this is some amazing information.
And he does, like I said, when you log in, you can click to the preferred equity versus the Bitcoin treasury.
And then they have their overview.
And again, everybody's got different versions, Bitcoin tax model, top 100 table.
So I just think this is brilliant with the community put together.
Jeff, can I change topics a little bit?
Yeah, sure.
Bring something up.
So this week, there was this report put out by Bitcoin Policy Institute that said,
Frontier AI agents prefer Bitcoin over stable coins and other forms of money.
it asked over 9 000 ais you know during a conversation what's your what's your preferred
you know what do you think is the best payment method for i'm sure you know i didn't look in
too deeply but i'm sure it was along the lines of like agentic payments or something along those
lines and overwhelmingly it was bitcoin and and fong quote tweeted it and he said how long will
take for ai agents to prefer digital credit and strc over traditional credit and other forms of
investment. I was like, Hmm, that's a, that's a super interesting tweet. And so it started,
it started, uh, you know, I started thinking, I was like, Oh, holy shit. Like AI is way better
at perceiving risk. Like it's literally a calculator, right? It's a computer. It's a
calculator. It's way better at, at viewing risk in its full reality probabilistically
than any human will ever be.
So Soleil, what you just said about if you run a credit fund,
well, I think you're fucked anyway
because why would you trust a human over something
that can see the world more in 4D,
more transparent than a human ever could?
And so I responded,
when an AI can fully price risk probabilistically and act on it.
Once agents can model counterparty risk, duration, regulatory, tail risk, end-to-end,
capital allocation stops being narrative-driven, kind of emotional, and starts being mechanical, right?
It's just like, here's the risk, boom, boom.
At that point, digital credit and BDC-backed instruments win on expected return per unit of uncertainty
and not ideology or tradition.
So it's not some like gray haired credit manager who's saying, oh, what's this Bitcoin shit?
Like, no, the AI.
Underwriters disappear.
Yeah, yeah, yeah.
The computer is the underwriter.
But then I went like, then I started thinking about this.
I was like, okay, so what like for all forms of, you know, traditional assets, whether it's credit or it's equity.
I was like, what is like the biggest perceived risk right now?
And I was like, I think it's disruption from AI, right?
I think that's the biggest perceived risk.
So I was like, wait, the AI is the one modeling the risk,
but it's also the one disrupting it.
I was like, when has that ever occurred in history
where the thing that's modeling the risk is causing the risk?
I don't know if that's ever occurred before.
Maybe like the computer, but I think this is just another.
Yeah, it's absurd.
It's when the price.
Right. It's when the disruptor is also the disruptee. It's like, really, you're, you're, you're, you're, you're injecting, you're changing the whole market, but yet you're, you're, you're not seeing that. So I think that, yeah, this is crazy.
You think about like the private credit market.
It's like, again, the rate on private credit is going to go to like 20%.
Like if you want to do a private credit deal, like if you're having to compete with digital credit, the rate's going to have to be higher, not lower.
It's going to have to be 15, 17, 18, 20, because there's no incentive to give your money somewhere else for an opaque risk that I've got to lock up for an uncertain period of time, and I'm uncertain on what the outcome may be.
That market should dry up.
It might take a decade to dry up.
You can dream and imagine a scenario.
Junk bonds too. Like if we're going into a world where a lot of businesses are going to be disruptive, disrupted, a lot of them are going to be grasping for, you know, some kind of injection. And I think what stretch does is it actually speeds up creative disruption. It speeds up capitalism because now there's a, you know, a new floor, a new, a new hurdle rate. And if your business sucks, like the capital is going to go elsewhere.
that's just another way of saying that the risk is mispriced risk is mispriced yeah the cap the
capital can flee and it can it could move fast i think here's an interesting trade short hyg long strc
hyg is the high yield corporate bond etf here's the here's the performance since 2010. so you
You could see here's the last five years performance is down 7%.
The volume is high.
The relative yield is 5.7%.
That's interesting.
If you think risk is mispriced and these instruments are completely different, right?
That might be a very fascinating trade because you have this liquid bond ETF.
If you think this entire market, like cost of capital is going to get repriced.
If the interest rates rise, the prices fall.
So if the interest rate associated with these instruments rise, the price of this should
theoretically fall.
It might move the opposite direction, right?
Because if the actual cost of capital, Fed funds rate drops, maybe the price of this
rises.
So maybe a difficult trade on the short term, but on a long term basis, I think that seems
like a really fascinating comparison.
And this is like the only other highly liquid, higher yield alternative to, I guess, money market funds.
And it's more volatile, right?
Like if stretch is planning to be pegged at 100, you look at this thing.
And back in 2021, it was $88 and it dropped all the way to $72 and back up to 80.
and it's only paying 5.7% yield
because their capital appreciation here, right?
Like, do we think cost of capital is going to go lower?
I don't know.
So, yeah, it's...
I think risk is just completely mispriced.
Like, the computers are going to be able to calculate this stuff way faster.
It's all transparent.
They're going to understand it quickly.
I think that the future of this stuff would be that
your only access to the capital markets is if you do have
Bitcoin on your balance sheet because you can,
if you had Bitcoin on your balance sheet, your base risk decreases.
Just the base level risk decreases where if you have like
money, you have money.
You have money to do stuff with.
Like if you just have any, any amount of Bitcoin or your balance sheet, and if your whole entire goal is to take your cash flows and buy more Bitcoin, like your access to the capital markets should be greater.
Like it's pretty clear with MSTR that they've got really great access to the capital markets because of the business model.
okay should other businesses do this like if you want if you want money
if you want access to the capital markets this is a pretty interesting business model
can we can we talk a little bit about the
you know when we when people talk about bitcoin they say like bitcoin had a had an adoption curve
and strc now has its own adoption curve because it's you know it is bitcoin but it's it's a it's
a layer four or layer three right it is you know helping the trajectory of the bitcoin adoption but
itself as a product has its own adoption curve like do we have any predictions like when when
does strc when do they sell a billion dollars worth of it when does that yeah in a day in a day
i think fong was saying i think i think the next benchmark is 500 million dollars of daily traded
volume average 30-day trailing i think that's possible in a bull market and so like what are
what are they selling right now at a hundred dollar like they're selling about 50 million a day
right with their current trading volume assuming it trades around 100 100 so that would be like 250
million a day in sales if they can sustain that which is just absolutely insanity at some point
i think it will like there's gonna we're gonna see like a sustained period at like 99 and a half
like a little bit just because like once the market gets flooded it's going to take a little
bit of time to reset but then arbitrage has come in so i think it's going to take time to build
that liquidity but i think it'll happen with a euphoric bull market and i think the leverage
makes them like the first people to get a 2x strc etf out there i think it's really going to change
the landscape like massively it'll be like the next misty it'll be like the next misty except
it's just like every single way yeah without decay it's like you're not selling upside well because
you can also do you could also do a total return swap i don't know i'm just putting it out there
for whoever wants to build this instead of doing you know how like you can lever it by doing borrow
like you borrow at 4.8 and 2x lever you can get up to like 17 and a half percent um just on 2x i
mean you could do like a total return swap and potentially get that dividend rate without the
cost of borrow with a lower cost of borrow by transferring the risk it's difficult but it's
doable and if you did that it would just be absolutely insane and then like we talked about
before like the put market right the put market you'll be able to sell these puts because there's
a little volatility theoretically at a rate higher than the actual dividend income so it won't be rock
dividends but it should be higher income stream over time i mean you can create an etf out of that
yeah so so i was just going to say so um strc uh the week of november 17th it did nine it had um
$987 million traded for that week.
And then the week of February 2nd to the 6th,
$957 million traded in a week.
So it looks like the average is getting up there.
And getting into five,
Dan, you said $500 million in a week average?
In a day.
Yeah, so 4X from here, 4X from here.
Well, it's done over a billion in a week.
So it really just has to get that out.
I'll make that a feature request for Rohan to add in the weekly,
to get that trend line going up with the weekly averages.
What's the trend line of the average 30-day volume or the 60-day volume?
What's that looking like?
Yeah.
I mean, part of it is just scaling it up and getting it out there.
In order to get the volume out there, you need to issue it.
And, I mean, they're well on their way.
I think even at the beginning, the average daily trading volume was much lower.
There was a period of time where it was much lower.
Yeah.
And I'm going to go back to what Matt was saying from Barclays on Monday.
What people don't realize is that if Saylor wants to sell any of the prefs or any MSDR, he needs institutional buyers.
And so what Matt was explaining, the mechanics, how it works, he has four different desks.
He has an equity desk, he has a pref desk, he has a convert desk, and he has a bond desk.
And then he goes to different desks and they're like, well, we want to, we want, strategy wants
to sell this. He has to call the institutional investors and say, this is what we're trying to
sell. And then those guys then sell it off to their clients. And, and, you know, he can only
sell what people want to buy. And I think that's, you know, what we're seeing from STRC. That's the
validate. It's not that the seller doesn't want to sell really the other products. It's that that's
the one that the buyers really want to buy that they're honing in on so that's that positive
feedback loop yeah i i think he doesn't want to sell strife because strife should be 250
he thinks the value of strife is much higher things that probably is very similar to dan
where strike should be ripping at a future point in time when bitcoin is ripping um stride is
probably
yeah I don't think
it'll just always have
I think stride is so dependent on
strife
that'll be interesting to watch
like the delta between the two
yeah exactly
so Dan you brought up the put market
can you walk through that
you think that the put market for
STRC will be one of the
most liquid put markets
on the planet
absolutely I think it's super interesting
because considering the call the options the call options market above 100 will be pretty
won't really zero
maybe i'm long i'm long maybe like the you know the 100 maybe it's like 100.1 there's a call option
market there at some point whatever okay but below it ultimately there's always going to exist some
sort of deleveraging risk like if if for some reason leverage gets flooded into strc which i
expect it will i think it's going to be like massively levered and then if like bitcoin shits
the bed or something happens with strategy blah blah blah or the dividends decreased one month
which ultimately it will be you know maybe it trades down to 99. okay it turns out in 99 cascading
liquidations for all the people leverage trades out in 97 96. okay but if you're if you want to
to hold that leverage and you can't sustain that sort of drawdown in strc then i think there's
going to be a real market for for protection for principal protection in that scenario so you can
pay the put cost at 95 96 97 every single month and it eats into your yield but we're what you're
ensuring is that that razor thin sort of price difference between 97 and 94 that could wipe you
out, you're protected against. So therefore, I think there's going to be a massive market there
for people who want protection, principal protection. There also will be a market for
people who want to sell it, right? Because when you sell a 98 strike STRC put, you're essentially
selling the obligation to buy STRC at 98. And as we've talked about throughout this podcast,
who wouldn't want to buy it at 98? I mean, you're locking in 2% plus the yield. So therefore,
and you have the, those will trade at a premium to the dividend because, especially the $100 puts,
because people will be paying for the protection.
And since people are paying for the protection,
there's a small amount of alpha
in selling the protection to those people.
Plus they're not rock dividends.
So I think selling puts will be a great way to get leverage
because you don't have to actually hold the capital
to sell the put if it's not a cash secured put.
Wow.
That was a lot to rip through.
But like-
There's a lot there.
But you're talking about an institutional model
of insurance and downside protection
on a levered trade.
Exactly.
This is like the most certain levered trade
that you could probably take in the entire market,
which is guaranteed yield.
I probably shouldn't say those words.
Levered trade.
High likelihood.
High likelihood of outperforming like S&P 500 and QQQ
and even probably Mag 7 on just the yield.
If you're levered that yield, it's worth buying the downside protection if it's into a couple points of the yield.
Well, and think about the 90.
Let's just say you bought 90 puts.
You're essentially capping your terminal downside in the case that SCRC goes to zero at 10%.
So you're paying upfront for that protection.
But for an institution, that's a pretty cool trade.
it's like you're probably getting seven percent or seven and a half or eight percent annualized
return after paying for the 90 puts while only risking 10 in the case that this security goes to
zero which is a fantastic you know risk profile for someone who thinks the outcome is binary here
that should be an etf yeah yeah it should be well let's let's start working the put market we can
get some automation plots going on yeah get the put market rolling but i mean it comes back to
mason's point right like the the county like the these that infrastructure just us thinking through
the idea right there like it will happen right it will happen because there's incentive to do it here
right it will happen because it's going on youtube and then the ais will scrape the youtube
data and then they'll uh they'll like looking for alpha to steal it yeah they're just following
dan hillary for alpha trades on uh lover at sdrc that's gonna be weird because they're gonna be
launching tokens right like they don't have access to brokerage accounts yet so i mean the amount of
we've got a lot of competition here at buck
yeah man okay holy moly so much there's so much happening do you want to go through
Jeff, the slides that you have.
Oh, yeah.
Yeah, I pulled a couple of slides from Sailor's presentation.
I just had a screen grab them.
But digital equity absorbs the excess return.
I guess let's talk about this one.
Really digital capital, right?
Like what is going on with STRC and these instruments?
The excess risk and the excess return is being stripped off
and providing a low volatility digital credit product.
That's kind of that like more stable flat line,
11 and a quarter percent yield.
And the digital capital is the Bitcoin, right?
Like that's, if you zoom out
and you look at Bitcoin's price,
that's effectively how Bitcoin's been moving
just up into the right super volatile capital asset.
And how does this all work?
There's a conservation of energy and that excess risk and that excess return that you stripped off of the capital asset to provide the credit gets shoved into the equity.
So there's massive volatility because there's effectively like that energy needs to go somewhere like that excess energy that you stripped off of the credit instrument needs to go somewhere.
And it goes to the common equity.
And that's why we've seen this just incredible volatility in MSTR.
are and we haven't seen the volatility to the upside of the perpetual preferred equity model
in the bull market yet and uh yeah hopefully we've got that on the horizon here soon
i think every one of those if you look at the chart sorry to drop if you look at the digital
equity if you notice what's interesting about the chart is that it dips below like whatever at about
year seven, but after year seven, the digital equity does not drop below digital capital.
It goes higher.
It has much higher lows and then higher highs. In the previous cycles, they're saying that
you could trade below the digital credit and the digital equity, which is the MSTR return,
could be as low as whatever, 1%. But then it shows that after those two cycles, then it runs up.
I think that this chart is right.
The only question is you don't know which peak we're at.
Yeah, you don't.
And the thing is, you're never going to know.
Like, you don't know you're out of a bull market or out of a bear market until you're past it.
You don't know you're out of a bull market until you're past it, right?
Like, hindsight is 20-20.
So, you know, it just depends on your horizon on how you're viewing this entire ecosystem.
The one thing that's fascinating is, like, the 1X MNav bears, they're all, you know, running around.
to like, oh, yep, strategies at 1x MNAV.
It's going to be there forever.
Like these things go in both directions, right?
Like there will be a period of MNAV expansion.
We're seeing it right now on MSTR relative to IBIT.
I wouldn't be surprised if it expands farther
than it's expanded in the past as well.
Maybe, maybe not, just depending on the business model
and how this all plays out.
But like there will be expansion there
because there's this excess energy that's going into the equity, right, that we haven't seen
before. We've got this new instrument that's shoving this excess volatility into the common
stock. So it's just a fascinating relativity. Does that top chart also start to diverge
and stops intersecting? Yeah, it does. Yeah, at first I was thinking every one of those
intersections would be an opportunity to rebalance your portfolio between the two.
but at some point you just have to either rebalance periodically or just
hey it's up or something's down time to rebalance
i i mean even that concept like rebalancing bitcoin products five years ago that didn't
exist but what do you talk about rebalance my bitcoin product like i have bitcoin that's it
yeah you know like i guess i go rebalance into cash and some other stuff like what if i think
you know bitcoin has a blow off top but now you're like wait a minute this we've talked about
this since the launch of the press this is the ultimate business right like as as there are
quote unquote blow off tops people are going to rotate and they're going to rotate into the
equity instruments and that capital is going to get you know they're going to atm that capital
and go smash buy Bitcoin with it.
So it's just like, I mean, the plumbing,
the architecture of this market
is just fundamentally changed.
And the incentive is to hold like all of these things.
Jeff, can you scroll down to the,
yeah, this one, no, yeah, that one.
So digital equity, that's just MSCR common
And I think the important thing to note for MSTR common holders is that your alpha in this trade is the ability to get on the roller coaster and be on it for 10 years and you can't puke.
Right. And it's a violent roller coaster.
It's it as insane lows and insane highs and does, you know, backflips and it's uncomfortable at times.
but at the end of it, you're paid handsomely.
But it's two things.
It's not only the volatility, but it's also the duration, right?
And I think those two things in combination break people.
I think people can hold something for a long time if it's not very volatile,
or they can hold something for a short time if it's insanely volatile.
But those two things together, it's a really tough hold for people.
yeah can you overlay my 1080s on this chart
they hit the white line to fizzle out unfortunately you want to talk about getting motion sickness
yeah no mason that's a really good point but like and that's actually an interesting parallel
soleil it's like with a call option right you could just be levering long on ibit with like
call options or something like that or perpetual futures but you end up hitting this white line
and when you do in fact hit that white line on the bottom that's zero dollars you get liquidated
right something happens theta decay liquidation whatever it is this is all risk this is all
volatility associated risk but because of the nature of the new perpetual preferred structure
no longer do you have this zeroed out risk because of some liquidation preference it's
more like liquidation clause or margin clause etc etc so that that's what mason's saying is actually
the duration's real here now the duration's forever you know you can write any form of
volatility yeah so i can just buy some digital credit and then with my dividends i can fund my
uh 1080 addiction for forever yeah and what i would argue is you don't need the 1080s anymore
yeah like i don't know it's just a meme at this point yeah
I was, so the idea of funding things forever, I think that's a really fun idea. And I think that
should be a marketing ploy for strategy. Like the idea of you can fund something forever.
And I was thinking of like, you can fund, like if I died and I had a fund that had stretch in it,
I could fund getting flowers delivered to my grave every day or every month.
I know that's morbid, but it's a really powerful idea, especially if you're, I don't know,
I was thinking for like nonprofits, just the perpetual nature of this is really something
to behold.
And we've never seen anything like it.
I had several people come up to me trying to incorporate this into their business and
thinking about like, can I pay my employees in stretch?
or like have bonuses in stretch or how can I, how can I incorporate this?
And then I had somebody else come up to me like, okay, somebody needs to raise capital.
It's funny.
All this stuff ends up getting pitched to me.
I'm like, why don't you do this?
Somebody said, you know, you can go raise capital and buy stretch and fund a golf tournament,
like a professional golf tournament.
and it's just an annual golf tournament happens every year it's just funded by stretch it's once
once a year all of the capital raised just kind of rolls into stretch and when you need to pull
it out like you pull it out at the end of the year just so you can fund the event and you bring all
the pro golfers it's like the stretch event and it's like strategy sponsored and like these are
these are great ideas like these are all great ideas and like people are going to start doing
this stuff because there just room This is something that sailor talks about as well it like what uh the the basis point fee uh when blackrock sells instruments is like 50 basis points
25 50 you're like okay well the the delta between the other you know credit products and these new
new credit products is three, 400 basis points. Like, okay.
Like there's, there's room to five X the expense ratio on these instruments,
just by building a product built on digital credit.
You had to hear Mike.
See you Mike.
Yep. I'm going to drop off. You guys are doing a great job. Take care. Thanks.
I'll see you next week.
Well taken. And I'd agree. And I'd also say it's like, no,
not no, like, yes, like this is just the idea of not losing value over time.
Like we keep talking about like these perpetual financings and this, that,
and next thing. It's like, yes, that's all cool,
but that's just the way it should be. Like if you own capital,
if you own money, whatever it be,
like it should just be more valuable over time.
Like that's the idea behind owning the S&P.
Wow. Novel idea, Dan. You should like not lose money.
Exactly. And like every year you should, I mean,
you theoretically could earn interest on it, you know,
god forbid like there's so there's all kinds of things that we're saying here that are like whoa
and like breaking our minds but when you step back you're like oh my gosh that's just like an
effective capital world that's just an effective monetary policy you know like so that's my two
cents on that whole thing oh that's just debasement not outpacing inflation like or that's not you know
stretch is just money that doesn't get debased like there you go that's it that's it that's it
Mason, I've got a couple more here. Do you want to walk through these?
Nice diggity. It's kind of hard for me to see.
Yeah. Okay. Well, maximum dividend yield to be investment grade. I thought these were,
it was a fascinating little presentation there where he walks through
different assumptions on BTC ARR and duration and what the theoretical
the theoretical risk quality of these instruments based on those underlying assumptions.
So like at a BTC rating of four, BTC volatility of 30 and a 30% BTC ARR is that the effectively
saying that it's within this green zone, meaning that the credit spread is associated with
the same risk quality as investment grade instruments.
So it was really just pointing out that like the interest rate could be higher.
The BTC rating can be lower.
If you're a Bitcoin bull, the interest rate could be higher.
The BTC rating could be lower.
You can issue a very large amount of this instrument depending on your volatility and ARR assumptions and still have effectively investment grade style risk profile.
I think that's fascinating, right?
Like, I don't know.
in our we've got a perpetual preferred equity instrument out there at sata and it's just an
interesting market dynamic where people are comparing our instrument to stretch quite a bit
which which i think is fair it's a very similar type instrument but really like the entire world
we should be looking at everything else in the market we should be looking at all the other
credit instruments and the credit spread between the actual risk return credit spread between those
instruments and these instruments like this is a new bucket of credit products in the market
and that relativity between what exists today and what exists now is it's like that that's where
in my opinion i think everybody should be focusing their energy shining a light on the risk profile
of everything else relative to these things so that's effectively my call to action is like
build more comparisons to everything else in the market.
Like everybody's done a great job on building out
all of this analytics based on these instruments.
All phenomenal, all fantastic.
Keep doing it.
But the real unlock is shining a light on the relativity
to the rest of the world and being able to share that with other people,
like other institutional managers.
Like it would be amazing if I could walk in the door
at an insurance company and say, hey, insurance company A, I analyzed your balance sheet.
Look at all the instruments that you hold and look at this one.
And just have all the data. Look at the website, like see everything here. And that would be
fascinating. I think there's a big, huge hole that can be filled that will help equip all of
these people that are operating in the market environment to communicate this to the rest of
the world. So, uh, what struck me about the event was when these slides are going like people at my
table and around the room are screenshotting them because they would be up on the screens
and they're like screenshotting. Cause they're like, okay. And they'll just plug them into AI.
Now they're like doing research in the middle of the thing, or, okay, I'm going to save this for
later. And I'm going to do a bunch of research. It's just kind of crazy that, um, the people who
are just into this are so far ahead of the people that you're talking about that haven't even
like contemplated making these comparisons and like we're definitely in a cult because
the obsessiveness that you know people are you know the lengths that people are going to to go
to these events and like take pictures during the five seconds that this is up on a screen
just to bookmark it and do the research you know stuff that you're talking about later
is uh it's just insane and it's going to continue to grow
yeah i had people taking pictures of my my risk presentation and talking to me afterwards about it
and uh yeah there's just there's so much opportunity to continue to grow in the space
like i'm i'm honestly surprised too like i'm i'm figuring out what my role is in this is in this
entire world and ecosystem and figuring out like getting closer and closer to capital and how to
how to integrate these instruments into the traditional world it's uh yeah it's a fascinating
fascinating time we need you training the llms to understand uh digital risk right somebody's got to
do it all right here's a here's a uh a question when does strc overtake the preferred uh aggregate
outstanding market cap when is it 300 billion 300 billion what year is it 100x from here it's 100x
from here and it's 2026 today honestly i think like 2031 2030 2030 2030 that was they sold 8 billion
last year okay so what if it like what if it what if it triples every year yeah i was gonna say like
the second bull from here yeah are we in a bull right now so are we in a bear no i'm saying from
the next one you know if we get one this year 2027 okay okay then the next one after that
we probably get there look i don't know what you guys are talking about we're just going up only
until 2030.
It could be.
It could be Apple.
Probably not.
But it could be.
You think about, again,
it's like it all comes back
to risk profile,
these things, right?
Like, I mean,
if they sell more of it,
they have more Bitcoin.
Credit quality goes higher.
You know,
like the BTC rating gets better.
And it makes the equity
more interesting.
They raise more capital
on the equity.
Like the credit profile
gets better.
the price of bitcoin goes higher the credit profile gets better like that it's all about
credit that's another big takeaway i've had my conversations with sailor this is all about
credit profile like the credit impacts the equity the equity impacts the credit and they're both
symbiotic and they both rely on each other so you know one of the questions i asked him is like you
You know, how, how do I like, how can I think about amplification?
What's too high of amplification?
You know how does this how does this like whole thing work together And his response to me was just because your airplane can pull the G without the wings flying off the plane doesn mean your passengers won be dead by the time you get off the plane
it's like you know the like you might be having a great time flying this airplane
and uh you land and you know wipe your hands and you're like woohoo that was fun and then you go
back and there's just blood everywhere because everybody killed each other it's like this these
are jumbo jets and they rely on everybody being happy like if you're if your guy is sitting in
first class spills his wine he's going to sue you you know so and what what he was meaning by that is
the the instruments are so symbiotic and they they work they work in tandem together like if you're
if your credit investors are happy your equity investors are happy um and that that relationship
is just critically important. And there was one comment that he made in the interview. It was
Fong and Saylor at the end on the Bitcoin for Corporation panel. And he said, somebody asked
about, I think it was like dilution or ATM. And Saylor's comment was, every decision we make
is focused on the credit quality of the company in the short term or the long term. So I think
the response was effectively like, I don't care about your MNAV numbers. I'm raising capital to
improve the credit quality of my company every day. Every decision I make, is this credit positive
or credit negative? Is that improving my company or not improving my company?
Fascinating response. Why did he say that? Because the preferred equities are the product.
that is the product like if you want to go sell and i don't know if you noticed there was hardly
any talk on mstr during through the entire event like very little some of it was about like uh you
know this conservation of energy excess volatility goes to common stock but all of it was about the
product the digital credit product mstr will figure itself out right people will figure out
what the valuation of mstr is the market will dictate what that is it's probably going to be
be significantly higher than it is right now. But the product and the focus and the credit
quality of the product is the biggest, most important thing for the company, period.
Yeah, I really like, oh, you want to jump? See you, Dan?
See you, Dan.
I like that response to that question. I think he said pretty bluntly, we don't make,
you know, dilutive decisions or something along those lines, right?
We don't think dilutive decisions, like every decision is accretive, credit accretive.
Yeah. So people who are, you know, the Twitter trolls or the journalists.
The dilution bears, I guess.
Yeah, yeah, yeah.
Dilution bears.
It's not real. Like everything they're doing is accretive, right?
Like the incentive for them or for a sailor as the largest shareholder, right?
Like obviously it's to do the most creative thing possible.
And be consistent, reliable, transparent, understandable.
Like, you know, whether you're shorting the company or longing the company, you need to know like this is what like that's what he's going to do.
Yeah.
These morons saying sailors diluting the shareholders.
He is the largest shareholder.
man he's not he's not diluting himself yeah his whole thing is like i want more bitcoin exposure
period like how do i how do i do that how do i create the most efficient vehicle to do that
i i create digital credit i sell digital credit and that amplifies my equity my digital equity
yeah uh yeah there's a lot of uh dilution bears out there it's a it's a creative they're all
accretive transactions.
Like you think about it again,
like look at the balance sheet.
The balance sheet of the company in 2020
was they had $500 million.
Now they've got 50,
I don't know,
$55 billion worth of Bitcoin.
I think that's pretty accretive.
So what?
They sold a bunch of equity.
Like they've got $55 billion.
Like who,
like would you not,
like do you not want that?
Do you not want to go from $500 million
dollars to managing 50 billion dollars and probably like the largest company and the largest balance
sheet the world's ever seen 10 years from now like no that's a no-brainer everybody wants it
i think uh one last thing we should touch on before we wrap up was the the conversations we heard
in the the banking realm right from from morgan stanley and and city um they they came out and
kind of confirmed what I think Saylor has been alluding to for a long time, but also recently,
which is banks are building infrastructure. And actually, they need to build this infrastructure
because a lot of the capital, when it goes into the crypto ecosystem, it doesn't come back in.
right so so it's really a threat to their whole entire business model in general of course so
i think i think the banks are put in a position of adapt or die and and what i think we've started
to see is they're starting to adapt at their own speed but in time yeah as soon as that capital
leaves it's gone you got you got jamie diamond sitting on uh uh the news saying like oh if you
want to offer yield like go be a bank and it's like okay then cracking gets announced that they're a
bank and uh you know it's just the timing is just so crazy but you're completely right you've got
to operate within this ecosystem and think through it or else you're going to get left behind
so you got perspective yeah the the guys that i interviewed um it was uh it was anchor wait
anchor schedule i think was the first to have the charter right and then uh
bitco um mike belshie's bitco also had um ended up getting a charter as well so they're
they're making these things happen and one of the questions that i had asked was
like uh simon dixon tried to get this done a long time ago he had been kind of an insider in the um
the the financial system and he's like hey i want to build a bitcoin bank you know like
no rehypothecation and just like hey we take deposits and then we just we don't uh you know
do all this funny business and they wouldn't give him the charter he's like they're like no you you
can you can do that but you have to work with another bank that's going to do the rehypothecation
for you and um they just wouldn't do it so the landscape is either changed or you know
know, to allow these things to happen. But the whole economic system is kind of being,
their hand is being forced to adopt Bitcoin and make way for Bitcoin.
Completely. I think I'm just pulling up here. Yeah, Mike Belshi, boom. He responded to Jamie
jamie diamond uh share my screen here oh did he yeah he did he said right so this is the jamie
diamond interview this is why i saw it so jp morgan is joe jamie diamond pushes back on crypto firms
says stablecoin rewards are the same as bank interest and he said we did become a bank and
we have all the same requirements diamondless in addition to that we have better liquidity than any
bank even better than jpm because we hold all assets in 100 reserve no rehab application and
uh it's just an epic move you got a publicly traded ceo that's blasting back on jamie diamond
about um banks providing or stable coins providing interest it's i mean this video is so cringe if
you haven't seen it go watch it yeah it's it's it's pretty pathetic like i i they have to adopt
Because otherwise like stretch in a tokenized version like buck and then just a stable coin and then Bitcoin like what else do you need That is an economy outside of the traditional financial system That is it already big It already half a billion people
but it's only going to get bigger over time. And like the incentives to stick with the slow system
are getting close to zero. Yeah. Like why, and especially you're going to have,
You know, older people are going to die off.
Younger people are just natively computer, right?
They're natively working on iPhones and cell phones and digital digitally native.
And they just are going to want to do things differently.
And they're going to operate with the companies that they grew up with.
Like, I'm probably going to want to operate with BitGo and River and, you know, whatever other company that I'm used to interacting with, because that legacy system.
I mean, I just got off of like my JP Morgan, like my Sapphire Reserve credit card because they were paying me all these points and the points were getting debased and I couldn't use them.
And I'm like, this is bullshit. And I just cashed them in for cash, you know, cut up the credit card, deleted it.
And now I shifted over. I've got a Gemini card for now.
But like, why would I not get all of the Bitcoin back credit cards or the Bitcoin reward credit cards?
And especially when the price of Bitcoin is down 40%, right?
Like the rewards have doubled effectively.
And it's like, why not?
Like if those products are available,
like I have no reason to use any of those like legacy systems
that are just dated and they're not keeping up with the times.
Yeah.
And then you add like AI agents into that
and the speed at which they will transact
and the volume and traditional systems
aren't designed for that.
We're going into a fundamentally
a new world.
I think one of the coolest parts
about the preferred equity
is it's using existing
traditional finance wrappers.
Okay.
I can understand banks
pushing back on stable coins.
You're like,
I can't track this.
It's different from the track.
It's on its own blockchain.
It's somewhere else.
It might be based in the Cayman Islands
or something like that.
And it sounds sketchy.
it's probably sketchy for even politicians to try to understand because they like can't wrap their
head around it but then you look at like stretch and sata and the other perhaps it's like this is
publicly traded it's an equity it sits in a brokerage like you could get it on robin hood or
any other brokerage account and like all it takes is reframing reframing like how you think about
like where that money sits and all of a sudden you're like if my bank account is an app that i
I have on my phone and it's just tracks some numbers that sit there.
Who cares where it sits?
You know, like if it's in Robin Hood or yeah.
Yeah.
Who cares?
Who cares where it sits?
Like, well, I can wait.
Okay.
This is this is a digital world, right?
Like historically, if you had to go to a bank or something like you might feel differently,
like to go get money, you actually had to go somewhere to go get it out.
Like I don't, I don't need to go anywhere.
Like I can move my money and I can just sit on an app and sit somewhere.
Like why not have it where I can have like be earning capital on it.
And I don't have to do anything weird or new or novel.
Like it's just the existing system.
So yeah, man, I mean, it's cool.
Super cool.
Okay.
Final thoughts.
We got to wrap it up.
we'll pass it around. Soleil, final thoughts. Yeah, so I always get encouraged when the
control system starts to bend the knee, but then my paranoid crypto anarchist starts to kick in a
little bit. And sometimes when it seems like the control system is capitulating, it's really just
kind of trying to transition from the proof of war military industrial complex and money debasement
financial industrial complex to a technical industrial complex. So they're going to be
introducing AI, stable coins, CBDCs, social credit scores, all that junk. And it's less of a system
collapse. And it seems like it's a little bit more of a controlled demolition, if you get my meaning.
And sometimes it gives me a little bit of a false sense that progress is being made when the old
system falls, but it's kind of all according to plan. And so they're trying to replace the old
control system with the new and only Bitcoin exists outside of all control systems. So the
only thing we really have to do is stack sats and cold storage, run nodes, join a decentralized
mining pool. And none of the paper Bitcoin FUD really matters. Just stack sats.
Stack sats. Always be sure.
Yeah. I'll second that. I think what stretch is an amazing innovation for short term
money, right? If you're a Bitcoin or if you believe in Bitcoin, this is an actual tool that
we can use that's going to be helpful in our lives. I think same thing with MSTR. I think it's
an amazing trade, but of course it doesn't have the properties of Bitcoin. So as we're having
these conversations, keep in mind the wide range of risks and tail events and
You know, Bitcoin, there is no second best, but I am I am super excited about what is being created here and how it's going to progress Bitcoin in, you know, to the next level.
Yeah. I completely agree with both of you guys. Stack and sats hard.
The coolest part is you're aligned with Saylor.
You're stacking sats.
You're like, great.
Now a company is going to orange pill the credit market and bring more energy into this market, which is good for anybody that's holding cold storage Bitcoin.
And you want to hold this long term as a capital asset.
like there will likely be a point in time where the price of Bitcoin is as such, you might be
willing to part with your Bitcoin because the MSTR shoving as much capital as humanly possible
into it. Or you're thinking about, you know, like building a business on top of it. So you want to
run your own flywheel and try to help convert the world onto a Bitcoin standard of truth money.
So, yeah, I mean, I'm incredibly bowled up here.
It was a big day in the Bitcoin market.
I think I'm watching volume every day.
I'm watching these instruments trade every minute and how they're trading and how they're moving.
I think the equities are incredibly exciting.
And, yeah, this is everybody spending a lot of energy to build out the digital credit ecosystem.
and there's no better place to be working in right now, in my opinion.
So figuring out how you can incorporate digital credit into your company,
your corporation, your life is energy worth spending.
Yeah, I think that was the biggest takeaway from Strategy World
was go out into your community and you now have this tool,
show people this tool.
it will improve their life.
It will improve the Bitcoin network.
It's like showing people the wheel.
Like showing people Bitcoin is like showing them fire, right?
Like you show them fire and you're like, wow, that's crazy cool.
And you're like, wait, this could kill me.
And then, but like STRC is like the wheel.
You're like, okay.
Yeah, yeah, yeah.
You know, like it's not going to kill you,
but your life's going to be a lot easier if you use it.
STRC is like a space heater to fire, right?
It gives you the warmth, but none of like the, you know, burning fire, smoke, all that.
It's just the warmth.
It's just, you know, you could turn it on and it keeps you warm, but it's like.
No carbon monoxide poisoning.
Yeah.
None of the other benefits of the fire.
So, yeah.
So thank you everybody for being here.
Please like and subscribe on the YouTube channel.
It helps us, helps amplify the message and get it out further and appreciate the time.
and we will see you all next week.
I think I will be on the road,
but yeah, we'll catch you next week.
See y'all.
Adios.