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Well now, don't you just have time to prepare or orbit.

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If it hadn't opened further by the F 많+.

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Wait, what happened to you?

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Don't need to repeat this later.

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Thank you.

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please consult your own investment and tax advisors.

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And now I'll hand it over to the True North team

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for your regularly scheduled programming.

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Woo! Welcome back.

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True North, the investment-grade Bitcoin podcast, episode 59.

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We've got a new platform, we've got a new stream,

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but we've got the same crew.

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So we are excited to be here today.

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We've got a lot to talk about. Big week for Stretch, man. $1.1 billion raised on a perpetual preferred equity in a week.

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Enormous week. $1.5 billion raised by strategy this last week. $22,000 Bitcoin acquired.

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We'll talk through it. We'll talk about the implications. We'll talk about the bond market and think through what all this means.

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We'll talk about trading volume. We'll talk about bank balance sheets. We'll get into bad bonds a little bit.

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building on the preferred equity. How is this evolving? What can be made? What can be built

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with these things? And then last week, we'll talk about efficiency of transactions and AI and how

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this entire ecosystem is evolving. So I think we've got a great show for you tonight. Got a lot

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to talk about and things are bubbling. So without further ado, I'll pass it over to Dan, Mike, and

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Soleil. We'll just talk about what we're thinking about. I'm going to go over to you, Dan. We'll

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start with you. What's on your mind? Yeah. Hey, this is super exciting. I mean,

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I think we're seeing the stretch thesis play out in real time. We're getting a lot of traction,

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a lot of engagement on our posts. We're seeing stretch perform incredibly well. We're seeing,

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you know, a real bid on Bitcoin, a billion dollars of stretch last week, I think is a big,

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big deal. I'm massively, massively excited for the implications and the products being built on top

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of stretch. I think it has better product market fit than like Bitcoin for corporations, even though

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I do believe Bitcoin for corporations is the end goal. Right now, stretch for corporations is the

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current goal. And I'm super excited about working in the space and seeing what people bring to the

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table. Beautiful. Mike, over to you. You're fired up on spaces. You're arguing with people.

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You're telling people what's up. What's going on? It's everything. Look, in every cycle,

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there's a product that you have to determine if it's really a game changer. And that we talk a

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lot about STRC and MSTR. I've posted two huge articles this week, close to 100,000. It's over

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400,000 views between both of them. Just wrote one today. Strategy Breaks Bitcoin. I did a space

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on it. I had 3,000 people that came and went within an hour. Almost 600 people were in their

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peak timeframes. I've been in lots of spaces trying to educate people about how STRC works,

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what it's doing to MSTR, and the supply shock. And I'm ready to talk with you guys all pumped

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up about this. Right on. Right on. Excellent. Over to you, Soleil. You're out last week. You're

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back here you're all refreshed from vacation i'm sure you probably didn't take much time off on

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thinking about this what's going on hell yeah i sent you guys that uh that message when i was

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hiking bear canyon and said only bulls here and um i know people might get sick of me talking doing

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tesla parallels but i think musk said something like prototypes are easy and production is hard

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but the way that stretch is pumping like production is in full swing i mean it's just

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like it's flying off the shelves and uh i couldn't be more excited about it yeah yeah i continue to

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see this as a digital labor right every one of these pref instruments whether you hold it or

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whether they're selling it it's it's labor labor is happening in the risk taking and converting

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refining that crude commodity bitcoin into a low volatility instrument which is just totally

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fascinating uh i've been a little quiet on x recently we've got a lot going on behind the

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scenes. We're clearly building here with True North. We've got a new stream, new platform.

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Hope you guys like it. It's exciting. We're taking it to the next level. We are going to have a

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rebranded website out here within probably the next seven days as well. I look forward to pushing

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that out to the ecosystem. I think you guys will like it. A lot of good content and continuous

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research that's going to be funneling through there, which is fantastic. Obviously, we at

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Strive, we've got a provincial preferred equity in the market as well, approaching par. We came

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out to the market last week with a bunch of changes and updates to the instrument and guidance.

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So excited about how that's kind of getting accepted within the market. And we're seeing

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that dynamic play out. Obviously, Bitcoin's seen a pretty significant bid to the upside,

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which is great. And I keep coming back to this concept of the plumbing of the market. The

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architecture of the market is just so much different than it was in 2022 in the last bear

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market. Right. I think I saw I saw somebody post, you know, like, oh, it looks exactly like exactly

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the same as the 2022 bear market. But then I overlaid the Fed funds rate next to it. And it's

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like the 2022 bear market. As soon as the Russia Ukraine war broke out, interest rates also went

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from zero to five and they ripped higher within 12 months, just as the Fed came out and said

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inflation was transitory. You know, don't worry about this. And then they came out and ripped

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interest rates in front of everybody's faces at the fastest rate that they had since, I think,

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1980. So completely unexpected and not a surprise that the risk market sold off significantly. And

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then obviously there was the fallout with FTX, Celsius, BlockFi, and all those other bad actors.

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But I mean, you think about where we're at today, regulations change, you've got the ETFs that's

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change, you keep following the ETFs that they are constant buyers coming in on the ETFs. You'd think

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with the price being down 40 or 50%, there would be some outflows. But I think the amount of Bitcoin

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that BlackRock holds, I think is about constant, which is a bit surprising, right? That's signal.

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And you think about where we're at in the cycle, we're approaching 2027, 2028. We're going to halving

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on the horizon. We like to think they don't matter anymore, but they really do, right? They're going

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of matter for marketing too. And anybody going out and selling the best performing ETF in history

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is going to go front run the halving probably all of 2027. And, you know, think about that as well.

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And that should coincide with the maturity of these prep instruments, right? I think

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February was when they were launched in 2025. Stretch was launched in July of 2025.

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As they mature, get into year two, year three, these and the dividends continue to get paid.

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the interest in these instruments is going to grow, is likely to grow pretty significantly.

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So let's, I'm going to jump over to, we haven't done this in a couple of weeks,

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and I've got to jump into the balance sheet because we've got a hit on this. The balance

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sheet looks significantly different than it has in the past. And we usually start every stream

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with this. For those of you that are new here, we talk about Bitcoin, we talk about Bitcoin

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securities, we talk about MSTR, we talk about preferred equity, we talk about capital structure.

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Our goal is to cover everything in the complex financial ecosystem of Bitcoin.

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So what you're looking at here on the screen, this is the strategy balance sheet.

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So as of, oh, that's wrong.

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As of 3, 18, 26, 761,000 Bitcoin held.

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Bitcoin price prior to jumping on the stream was around 71,000.

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MSTR price 140.

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So strategy has about $54 billion in assets on the balance sheet.

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USD reserve, $2.25 billion.

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The debt, $8.2 billion.

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$10 billion in preferred stock.

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And why do I have two of these?

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Let's hide one.

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$10 billion in preferred stock.

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So net capital.

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If you're just to back out the assets held on the balance sheet minus the debt, right?

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Like it's all convertible debt, but let's just assume it didn't convert.

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If it didn't convert, they would still have $48 billion of net capital on the balance sheet.

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against a $10 billion of preferred stock and a billion dollar annual preferred dividend payment.

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So they can effectively, just with a capital held on the balance sheet, if they had to sell it,

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which we don't anticipate they will, if they had to sell it to pay off the dividends into

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perpetuity, they'd have 46 years of capital coverage just based on the Bitcoin on the

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balance sheet, let alone the USD reserve to buffer in between. And so you look at the leverage ratio,

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right? Like a lot of people still don't understand like the leverage ratio and the design of this

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corporate balance sheet and strategies leverage ratios, incredibly small, 11%. You're looking at

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the debt relative to the assets on the balance sheet. And then looking at total amplification

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being the notional value of the preferred plus the debt on the balance sheet. That's a 32%

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amplification ratio. You start to think about relativities, right? Like, Grain, you talk about

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this a lot with homes, right? If you get it, if you put 20% down on a mortgage, you're actually,

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you know, oh, you're, you're five to one levered. You're five to one levered. So the 500% leverage

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ratio, right? The relativity of your asset relative to your liability. So, so thinking about

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the design and scale is incredibly important. Now, why does this work? This works because you've got,

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You've got a significant pool of liquidity that's sitting behind a very relatively small,

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compared to the balance sheet, monthly dividend obligation.

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So this billion dollar is an annual dividend obligation.

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If you divide that by 12, the monthly dividend obligation is $90 million.

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Well, they've got $54 billion.

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So you've got significant liquidity that's sitting behind this.

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You've got this enormous pool of liquidity that's sitting behind it.

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Bitcoin itself is liquid. Dollars themselves are liquid. So you have these expressions of Bitcoin

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that are fascinating, right? You've got amplified Bitcoin being the common stock,

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and you've got digital credit being the low volatility instrument. And what they've done

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is they've taken this raw commodity and split it into two pieces where you've got a high volatility

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instrument and a low volatility instrument. Obviously, they've got several of the low

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volatility instruments. But those attract different pools of capital for different reasons.

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And that liquidity pool that's sitting behind the liabilities is what makes the other instruments

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liquid. That's what makes the preferred equity liquid. That's what makes the common stock liquid.

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And because the common stock is so liquid, they have the ability to access capital via the ATM

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to pay the dividends using capital raised on the common stock, primarily because there are

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computers that are using the common stock as an expression of the underlying Bitcoin,

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which is moving pretty consistent. So I'm going to pause there. We haven't done this in a couple

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weeks. You guys have anything else to add on capital structure? I think it was a good overview,

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Jeff. I want to... I think... Go ahead. Yeah, go ahead, Grant. Go ahead. No, I want to hear what

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Yeah, sure. So I'm just going to tell you right now, while we talk about this nonstop, I've been on, I don't know, 20 hours of spaces over the past week and a half.

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When I say amplification, I keep on repeating the same thing over and over again until this sinks into people.

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What I mean by that is that with the PREFs, specifically STRC, those shares, they issue shares for the PREFs.

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but that is those prefs are really,

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it's debt in the form of an equity wrapper,

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which is called digital credit.

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So it's an equity wrapper.

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People think that it's just a dividend paying stock.

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So I had to educate people on how the pref works with the par value.

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Most people don't understand that part of it.

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The other thing is that the pref shares are not in ADSO.

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Can you pull that up real fast? The strategy website? Yeah.

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Yeah. Just go to the strategy website.

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And this way it'll give a good visual for what I'm talking about.

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So if you, and I want you to go to where it says shares on the top.

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So if you look here and scroll down and you scroll through the list, there's, strike is

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there because it's the convert.

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But if you notice stretch, STRD, they're not listed here.

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And when I say ADSO, that's assumed diluted shares outstanding.

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So it's not included in the basic shares outstanding, and it's not included in the ADSO, assumed diluted shares outstanding.

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So the preps amplify the Bitcoin per share because those shares are not, even though they're accretive, accretive dilution is what we'd like to say, that they buy more Bitcoin.

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But it does not add to the share count that calculates BPS, Bitcoin per share.

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So this metric on the bottom is Bitcoin per share.

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For GAAP accounting purposes,

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Bitcoin per share and GAAP accounting for EPS uses ADSO,

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but the prefs are not in this,

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except for the one strike because that can convert to shares.

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So when I say this to most people,

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this did not take me three hours.

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They're like, dude, you lost me already.

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And I don't know how I can go any slower

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because if you have Bitcoin on the top and shares on the bottom,

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If you buy more Bitcoin on the top, but there's not more shares because it's the press, that's the amplification.

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And once people are like, I'm doing second grade, people are like, oh, that's too complex.

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I'm like, I can't make this any simpler.

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We're not adding on the denominator, just on the numerator.

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Yeah, it's adding a senior preferred claim into the capital structure.

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And that's a seniority within the capital structure.

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but let me chime in on that point

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I want to address that

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I'm sorry to cut you off

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I want to address that point

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and then we go

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we delve into the morass

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well you know

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if Bitcoin fails

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or goes to 8,000 for four years

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and strategy has to refinance

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and they go

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they can't refinance

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so they go bankrupt

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you know

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Gray what do you say about that

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guys I'm just giving a heads up to everybody

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if Bitcoin drops to 8,000 bucks

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and stays there for a year

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you don't have to worry about hearing from me

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Okay. I'm just telling you right now, I'm out. If Bitcoin drops to eight grand and stays there for

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three months, I'm gone. You won't ever have to hear from me again. And so people are like, well,

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I want to know theoretically, if this happens in five years, what happens? Let's get the next 18

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months right. And I don't want to hear about, well, if strategy is insolvent, it's not a

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solvency problem. It's not a liquidity problem when you can raise $1.2 billion in one week.

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right? I don't, and people are like, well, I don't think people understand these words and

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I'm trying to be so nice. Yeah. I think people, they get caught up on this access to the capital

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markets thing, which is pretty fascinating, right? Like the, it's so funny when you, when you put it

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in relativity, like what happens if your access to the capital markets changes? Well, go look,

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you go look at the common stock and the common stock is one of the top 20 traded stocks in the

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entire market. And it has been since October of 2024. Like, why is that? It's that way because

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the stock is a function of the underlying Bitcoin. The price of the equity is a function of the

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underlying Bitcoin. So if Bitcoin just moves, there's liquidity on the stock, right? Like,

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that's the most fascinating thing, right? And like, people are holding it for that reason,

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because you could go in and out of it in size, right?

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Like strategy trades $3 billion a day,

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like two to $3 billion a day.

212
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That's not retail, right?

213
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Like retail isn't trading $3 billion a day.

214
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That's institutional capital

215
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that's using it as a liquidity pool

216
00:16:56,020 --> 00:16:58,340
going in and out for several different reasons,

217
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high frequency trading, whatever it is.

218
00:17:00,440 --> 00:17:02,620
And it's because it's relative to Bitcoin,

219
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which is also this incredibly large liquidity pool.

220
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So if the Bitcoin lights stay on,

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the stock is going to move and it's going to be liquid in both directions. There's going to be

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interest in both directions. There's going to be people buying calls, people buying puts.

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There's going to be interest as long as Bitcoin moves. And so because of that, that interest in

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both directions allows for the ATM, the access to the capital markets to continue to operate.

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They can always have that on to raise capital at different points in time.

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And that's the most fascinating thing.

227
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And then you look at Stretch.

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I mean, this instrument, it's insane.

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I've talked about this a little bit.

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The Stretch Preferred, last week, there was a day it traded, I think it was $700 million in volume.

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The JP Morgan preferred instrument trades 2 million in volume. I've got a Bank of America

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preferred up here right now. I think today the Bank of America preferred traded $1.2 million

233
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in volume. Last week, there was a day strategies preferred traded 700X the Bank of America preferred

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volume. Hey, Jeff, can you go back to that other, the PDF you were just showing?

235
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okay so stretch currently it's 1.975 billion left on the shelf offering correct yeah okay i knew

236
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you were going to bring this slide up we didn't talk about the slide previously did we no okay

237
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can i share my desktop uh sure okay let me make sure okay i'm ready let's see if i can do the new

238
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platform wish me luck let's see if it works um big money no window no way this is gonna work

239
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okay now let me click over here is is i think that's working right it works we're live okay so

240
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um if you see here i did a poll and and the poll what it's showing is the next atm shelf offering

241
00:19:13,420 --> 00:19:20,620
for strc will be 5 to 10 billion 10 to 21 21 to 30 30 billion plus so basically 50 of the people

242
00:19:20,620 --> 00:19:26,780
are saying it's going to be 21 billion plus and then the other uh 50 saying it's going to be below

243
00:19:29,420 --> 00:19:38,060
right is that is that sharing yeah that looks good so and and by the way there was 3 000

244
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Well, 294 votes.

245
00:19:41,140 --> 00:19:44,180
So at 3,000, you know, 3,900 views.

246
00:19:44,280 --> 00:19:45,960
I would have liked to have had more votes on it.

247
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What do you guys think the number is going to be?

248
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I think probably 21 billion.

249
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I don't know, 20 billion or 30 billion, 10x from whatever it is right now, just to the

250
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scale.

251
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Like, I mean, they could just double it too.

252
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I mean, it takes a day to file this thing.

253
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So I have a question.

254
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So Jeff, in light of your position, is there an advantage to them just saying, look, let's say they want to do $40 billion.

255
00:20:17,020 --> 00:20:23,060
Would it be better for them to just extend it by $10 billion every six months?

256
00:20:23,160 --> 00:20:24,760
Is there an advantage to doing that?

257
00:20:25,000 --> 00:20:28,800
Or is it better to do one big number and then grind it down?

258
00:20:28,800 --> 00:20:34,540
So there's some psychological analysis that's been done around this.

259
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like how the market responds to ATM filings.

260
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And so like size can scare and scare investors even if it like unfounded Right The reason is there are computers that are scraping filings Right So if there a scraping filing and it there just an enormous number and it an enormous number relative like to the market cap or the size of the

261
00:20:57,278 --> 00:20:59,618
instrument, it might just be like, Oh, my God, I don't know

262
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what this is, but I have to short it. In the case of stretch,

263
00:21:02,078 --> 00:21:05,218
that would be fascinating. Because you know, if you shorted

264
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stretch, you'd have to pay the dividends. So that that would be

265
00:21:07,318 --> 00:21:11,118
a that would be a crazy dynamic. So I think there is a little bit

266
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of gamesmanship there. Like if you look at Bitminer, the ETH,

267
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treasury company it was fascinating the the same day that they launched an atm they also launched

268
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a buyback and they did that like because of the psychology associated with it of like you know if

269
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they just came out with an atm the stock probably would have sold off but because they had a buyback

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00:21:28,838 --> 00:21:34,838
as well it was kind of like this net neutral uh from a from a you know ai scraping tool methodology

271
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so um there's probably some gamesmanship i mean for this instrument it's uh i don't think it

272
00:21:40,198 --> 00:21:46,838
matters probably that much i'm sure they're thinking about it um but i mean they raised 1.5

273
00:21:46,838 --> 00:21:51,478
billion or 1.1 billion last week and they've got 1.9 billion left on it so they probably need

274
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something where if they had a you know really juicy week they got capacity to do it so

275
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i wouldn't be surprised if we see an update on that uh in pretty short order yeah i agree and

276
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and to this to this point like this is kind of what my video was on this week

277
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Like there's never been a public market security that's let,

278
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and this is what I kind of figured out.

279
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It's like they've never let the market set the interest rate on these,

280
00:22:18,418 --> 00:22:21,678
on these stable yielding securities, right?

281
00:22:21,698 --> 00:22:22,658
So you've got money market funds.

282
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Those are set by the Fed essentially.

283
00:22:24,978 --> 00:22:27,838
I mean, you have the SOFR rate, you have the, you know,

284
00:22:27,898 --> 00:22:30,278
overnight repo rate in there and some money market funds,

285
00:22:30,338 --> 00:22:33,218
but generally short-term treasuries, those are set by the open market.

286
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So, okay, fine.

287
00:22:34,758 --> 00:22:41,818
But in terms of other funds, other preferred equities, usually they're benchmarked off the SOFR rate.

288
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So like, for example, there was a, I forget the exact example I used in my video, but it was benchmarked 200 basis points over the SOFR rate at all times.

289
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The attempt of this preferred equity, this preferred security, was to have a stable principle, assuming the credit quality of the company didn't change,

290
00:23:00,818 --> 00:23:05,978
And therefore, the credit spread above the SOFR rate would always be the same.

291
00:23:06,299 --> 00:23:07,539
And therefore, the security would be stable.

292
00:23:08,058 --> 00:23:13,358
When credit spreads widen or tighten or market sentiment gets kind of knocked out of whack,

293
00:23:13,658 --> 00:23:15,858
there's no shot that this thing stays stable.

294
00:23:15,918 --> 00:23:18,978
And that's what we've seen in 2025, this security DPEG, the one I'm referencing.

295
00:23:19,138 --> 00:23:19,518
I forget the name.

296
00:23:19,578 --> 00:23:19,958
I apologize.

297
00:23:20,738 --> 00:23:27,799
But stretch is unique in that it lets the market for stretch price the actual stretch

298
00:23:27,799 --> 00:23:28,378
dividend rate.

299
00:23:28,378 --> 00:23:39,278
Meaning you have this new, which is a completely new feature on any preferred equity ever, a pricing or a dividend change based on a VWAP over the last trailing 30 days.

300
00:23:39,438 --> 00:23:46,558
And then you have the ATM selling price mechanism to cap the price and then plus that variable dividend to stabilize the price.

301
00:23:46,558 --> 00:23:59,299
So again, the key unlock here is that historically, you've never been able, there's never been a security that is using the open market trading around the security to keep it at par.

302
00:23:59,658 --> 00:24:01,818
So I think that's why we're seeing this crazy volume.

303
00:24:02,398 --> 00:24:04,218
And that's the massive unlock here.

304
00:24:04,638 --> 00:24:05,698
This is very novel.

305
00:24:05,898 --> 00:24:07,738
I don't think people are grasping that yet.

306
00:24:07,998 --> 00:24:13,258
It's a new risk curve, a new return curve, a new risk-free rate, a new risk rate.

307
00:24:13,258 --> 00:24:20,278
the design of the instrument is so incredibly elegant, right? Like, you know, I was explaining

308
00:24:20,278 --> 00:24:24,378
to somebody at Strategy World and they're like, oh, that's pretty simple. And I said, it's not

309
00:24:24,378 --> 00:24:30,118
simple. It's elegant. It's well designed. And so what I pull up here on the screen, so I think you

310
00:24:30,118 --> 00:24:34,598
all can see this now. This is Bank of America. And we can kind of dive into this a little bit.

311
00:24:34,678 --> 00:24:40,578
And to your point, this hits on it, right? So this is Bank of America. You can see here,

312
00:24:40,578 --> 00:24:44,698
this table below presents a summary of perpetual preferred stock outstanding as of March 10th,

313
00:24:44,838 --> 00:24:51,158
2026. Okay. So last week. And the first thing that jumps out at me, I hate this website for

314
00:24:51,158 --> 00:24:58,778
so many reasons. One, look at all of the trash on here. Like these are all perpetual preferred

315
00:24:58,778 --> 00:25:03,078
securities. They're trading in the market. To Dan's point, you look at the top of them,

316
00:25:03,698 --> 00:25:09,878
you know, premium, this is the dividend rate seven greater of three months CME term SOFR plus 61

317
00:25:09,878 --> 00:25:15,438
bips or 4%. You can look at all of them. Some of them are pegged. They're flat. If they're pegged

318
00:25:15,438 --> 00:25:22,578
in flat, the price floats very similar to strife or stride or any of the other fixed ones. So it's

319
00:25:22,578 --> 00:25:26,518
pretty, pretty fascinating when you look at these, but there's a couple of things that jump out at me

320
00:25:26,518 --> 00:25:32,458
at this is one, I have no idea how much is outstanding. I have no idea where this sits in

321
00:25:32,458 --> 00:25:36,598
the risk. Like where does this sit in your corporate structure? How much debt do you have?

322
00:25:36,598 --> 00:25:41,718
Is this secure? How do I even think about risk on this thing? It says dividend type. Almost all of

323
00:25:41,718 --> 00:25:46,498
these are non-cumulative dividends. So if they just decided to turn them off, they could just

324
00:25:46,498 --> 00:25:51,618
turn them off. Some of them are callable. They've got dividend payment dates. Looks like almost all

325
00:25:51,618 --> 00:25:59,778
of them are quarterly. You look through the interest rates here, 7.25%, 6%. And it's hard

326
00:25:59,778 --> 00:26:08,718
to look at this and not see how strategy instruments absolutely obliterate every single

327
00:26:08,718 --> 00:26:15,338
one of these for multiple reasons. They're transparent. It pays monthly dividends, flat,

328
00:26:15,838 --> 00:26:21,818
high liquidity, cumulative dividends. And it's just very transparent, right? They don't have

329
00:26:21,818 --> 00:26:25,978
like an entire page with several of these different instruments, you know, all competing

330
00:26:25,978 --> 00:26:30,298
for the same capital. So it's just, it's really fascinating when you start to look at these. I

331
00:26:30,298 --> 00:26:34,718
mean, this is just Bank of America. And so I plugged this into AI and I was looking at apparently

332
00:26:34,718 --> 00:26:38,898
the sum of all of these, there's about $25 billion of this stuff outstanding,

333
00:26:39,158 --> 00:26:43,338
which is fascinating. And some of these were issued a long time ago, but they're still trading

334
00:26:43,338 --> 00:26:52,758
like 1997, 2006. And I just don't know who holds this stuff, right? Like there's $26 billion of

335
00:26:52,758 --> 00:27:00,738
this outstanding. Who holds this? Why do they hold it? Is there a pretty good risk profile on it? Do

336
00:27:00,738 --> 00:27:05,638
they understand what the risk profile is? Or is this thing just sitting there and they're holding

337
00:27:05,638 --> 00:27:15,718
it for the maturity? So yeah, I mean, it's an interesting place to be. And you start to look

338
00:27:15,718 --> 00:27:22,858
at the balance sheet, like, okay, what if, can they support this? And I pulled up the Bank of

339
00:27:22,858 --> 00:27:29,958
America balance sheet, total assets, 3.4 trillion, excuse me, sorry. And then total liabilities,

340
00:27:30,138 --> 00:27:35,758
3.1 trillion. And you look at the relativities, you're like, okay, maybe I can support this for

341
00:27:35,758 --> 00:27:40,478
quite a while, but I don't know what the debt structure looks like, what debt sits behind this,

342
00:27:40,478 --> 00:27:41,938
What's the actual capital structure?

343
00:27:41,938 --> 00:27:44,098
Really difficult to quantify.

344
00:27:44,098 --> 00:27:46,778
And I wouldn't be surprised

345
00:27:47,558 --> 00:27:50,098
if there was a point in stress where

346
00:27:50,938 --> 00:27:53,398
these banks can just shut down

347
00:27:53,398 --> 00:27:55,778
the the dividends on these instruments

348
00:27:55,778 --> 00:27:58,638
and they're non cumulative, they can just turn them off.

349
00:27:59,438 --> 00:28:02,278
Kudos to whoever

350
00:28:02,938 --> 00:28:05,018
designed these structures,

351
00:28:05,018 --> 00:28:06,278
because this was just free money.

352
00:28:06,278 --> 00:28:08,518
This is like free money that was just given to the bank

353
00:28:08,518 --> 00:28:11,138
and they can just take it and do with it what they want.

354
00:28:11,738 --> 00:28:13,158
So kudos to whoever designed these.

355
00:28:13,278 --> 00:28:16,758
Yeah, so let me, very easy explanation why this exists.

356
00:28:17,818 --> 00:28:21,618
These are all designed to fit into what the rating agencies look for.

357
00:28:22,098 --> 00:28:26,158
Once these instruments were designed 5, 10, 20, 15, 20, 30 years,

358
00:28:26,158 --> 00:28:30,078
whatever it is, in order to get a rating, they follow the same formula.

359
00:28:30,818 --> 00:28:34,398
And so as long as these are, does this show you any here what the ratings are?

360
00:28:35,898 --> 00:28:38,438
No, and I don't think they're rated.

361
00:28:38,518 --> 00:28:40,078
because they're perpetuals.

362
00:28:40,738 --> 00:28:41,858
Oh, so they're unrated.

363
00:28:43,158 --> 00:28:43,418
Yeah.

364
00:28:44,598 --> 00:28:46,658
And some of these are so interesting.

365
00:28:46,758 --> 00:28:47,638
Like you click into them.

366
00:28:48,258 --> 00:28:52,018
This was some of the older ones.

367
00:28:52,938 --> 00:28:54,198
The Series L convertible.

368
00:28:54,438 --> 00:28:54,539
No.

369
00:28:55,338 --> 00:28:59,278
Some of the older ones are like Merrill Lynch.

370
00:29:00,638 --> 00:29:01,558
Series one.

371
00:29:03,358 --> 00:29:05,118
Pre-financial crisis roll-up.

372
00:29:06,718 --> 00:29:07,678
Pretty fascinating.

373
00:29:07,678 --> 00:29:10,058
So they just like overtook the instruments.

374
00:29:11,158 --> 00:29:11,878
I don't know.

375
00:29:11,958 --> 00:29:13,118
It's really interesting.

376
00:29:13,358 --> 00:29:15,338
I think the analysis is fun to do.

377
00:29:15,458 --> 00:29:18,058
I think it's fun to compare to like the strategy website, right?

378
00:29:18,078 --> 00:29:19,758
You look at the credit profile.

379
00:29:20,078 --> 00:29:22,298
You're like, okay, here's the super transparent.

380
00:29:22,538 --> 00:29:23,538
Here's the risk.

381
00:29:23,898 --> 00:29:25,418
Here's the debt that sits on their balance sheet.

382
00:29:25,538 --> 00:29:27,278
Here's the preferred stock that sits on their balance sheet.

383
00:29:27,918 --> 00:29:31,278
Here's, you know, if you make an assumption on Bitcoin price and volatility, here's what

384
00:29:31,278 --> 00:29:33,078
the risk profile and the credit rating looks like.

385
00:29:34,218 --> 00:29:36,838
Oh, if you want more information, just pop over to each instrument.

386
00:29:36,838 --> 00:29:42,198
like what is the implied volatility what is all of this data and it's updated every what 10 or 15

387
00:29:42,198 --> 00:29:48,758
seconds throughout the day so you can calculate it whenever you want but and so that and along with

388
00:29:48,758 --> 00:29:56,598
the other points that you brought up um dan is why it's liquid right like you can a computer is

389
00:29:56,598 --> 00:30:02,758
interested in this like it can understand it it can communicate it can see like what the risk

390
00:30:02,758 --> 00:30:06,678
profile is and the fact that they've got the vwop on the bottom end so you know if the interest

391
00:30:06,678 --> 00:30:11,638
rate is going to go up relative to the volume weighted average price over the 30 day time period,

392
00:30:11,638 --> 00:30:17,238
there's incentive to just always keep holding it. So even if it drops down, like if the price of

393
00:30:17,238 --> 00:30:23,078
STRC drops, there's incentive to buy it and hold it back to par, knowing that there's going to be

394
00:30:23,078 --> 00:30:27,318
future people that are coming in the door in the next 30 days to buy the instrument again,

395
00:30:27,878 --> 00:30:33,878
because they want to be in for the interest rate for that month. So you know that capital is going

396
00:30:33,878 --> 00:30:38,358
to come in the door. What's the worst case scenario? The worst case scenario is you get,

397
00:30:38,358 --> 00:30:43,318
if you're an R trader and you design a computer infrastructure, the worst case scenario is you

398
00:30:43,318 --> 00:30:48,998
hold an instrument for a longer horizon than you maybe initially thought and you get paid

399
00:30:48,998 --> 00:30:58,278
11.5% annualized in that time horizon. It's like, with a very interesting credit profile,

400
00:30:58,278 --> 00:31:04,898
a very interesting risk profile that's 4.4x over collateralized by the Bitcoin and the balance

401
00:31:04,898 --> 00:31:10,978
sheet. That's cool. That's a cool instrument. Yeah, I want to ask the same questions that the

402
00:31:10,978 --> 00:31:14,918
bears ask about strategy, right? So they say, okay, strategy is buying Bitcoin. And what if

403
00:31:14,918 --> 00:31:20,718
Bitcoin goes down? Okay, well, what is Bank of America? How are they making money? They're not

404
00:31:20,718 --> 00:31:25,778
buying Bitcoin. So what are they making money with to pay these damn things? And can that be

405
00:31:25,778 --> 00:31:33,858
disrupted. So what if their source of income goes down? Then what? Right. What if they get

406
00:31:33,858 --> 00:31:39,018
over levered? You have no transparency into their leverage ratio. And it's not like banks have ever

407
00:31:39,018 --> 00:31:46,418
need a bailout before. You know what I mean? They're constantly rehypothecating and overextending

408
00:31:46,418 --> 00:31:51,218
themselves. And, you know, we talked about this just being built on air, but it's like built on

409
00:31:51,218 --> 00:31:57,778
less than air. It's like rehypothecated air. Yes. So this begs the question. Go ahead.

410
00:31:58,318 --> 00:32:02,178
Yeah. It begs the question. It's like, okay, so what is the terminal outcome here? It's well,

411
00:32:02,178 --> 00:32:07,258
like one, I think they're going to sell 10 billion in stretch in short order. Two,

412
00:32:08,158 --> 00:32:10,758
there's going to be so much demand over a long period of time that like stretches

413
00:32:10,758 --> 00:32:18,438
dividend rate will probably go down 10, 9, 8% while maintaining its par. So like,

414
00:32:18,438 --> 00:32:19,278
how do you make money there?

415
00:32:19,358 --> 00:32:19,478
Like,

416
00:32:19,538 --> 00:32:23,058
I think it actually introduces a big opportunity for the other preferred

417
00:32:23,058 --> 00:32:23,418
equities.

418
00:32:24,158 --> 00:32:28,478
Because if you think if you're that bullish on stretch and it as a credit

419
00:32:28,478 --> 00:32:30,538
worthy instrument compared to all these other preferred equities,

420
00:32:31,338 --> 00:32:31,818
naturally,

421
00:32:31,818 --> 00:32:34,878
if the yield on stretch starts to decline,

422
00:32:35,758 --> 00:32:35,938
the,

423
00:32:35,998 --> 00:32:37,838
the yield on strife will,

424
00:32:38,238 --> 00:32:39,818
it will be an arbitrage opportunity.

425
00:32:40,158 --> 00:32:43,418
And so the yield on strife will decline and the price will go higher.

426
00:32:44,198 --> 00:32:45,078
Something to think about,

427
00:32:45,158 --> 00:32:45,458
I think.

428
00:32:46,198 --> 00:32:46,598
Yeah.

429
00:32:46,718 --> 00:32:47,258
So Dan,

430
00:32:47,298 --> 00:32:48,378
you posted about this the other day,

431
00:32:48,438 --> 00:32:52,998
like why why isn't the price of stride moving and i thought that was an interesting question and i

432
00:32:52,998 --> 00:32:58,358
think that the answer is the relative risk profile of stride stayed about the same uh because they

433
00:32:58,358 --> 00:33:03,638
they just issued a billion dollars of stretch that's that senior to stride and uh like as they

434
00:33:03,638 --> 00:33:09,158
issue more stretch and technically i mean it's sitting senior relative to it ultimately right i

435
00:33:09,158 --> 00:33:13,718
agree with you i i think the understanding of the risk profile this is it's just going to take a long

436
00:33:13,718 --> 00:33:19,158
time. I think we're all just so early. We're the ones that are hyper-focused and fixated on it.

437
00:33:19,458 --> 00:33:22,738
I think it's just going to take a while. And then you think about the relative interest rate.

438
00:33:22,738 --> 00:33:33,038
Why would Stride price higher at a lower interest rate than whatever stretch is?

439
00:33:33,578 --> 00:33:37,298
And maybe that's the signal. Maybe if Stride starts pricing you lower on an interest rate

440
00:33:37,298 --> 00:33:41,558
relativity, maybe that's the signal to lower the interest rate. I'm not 100% sure.

441
00:33:41,678 --> 00:33:43,658
That's a really good point, actually. I like that kind of idea.

442
00:33:43,718 --> 00:33:46,858
But that brings up so many questions.

443
00:33:47,338 --> 00:33:48,778
And this is where I wanted to take this.

444
00:33:49,458 --> 00:33:49,558
Right.

445
00:33:49,918 --> 00:33:53,018
Over the last couple of weeks, tons of noise on stretch.

446
00:33:53,338 --> 00:33:54,718
I think everybody's figuring it out.

447
00:33:54,918 --> 00:33:56,258
You know, we've been talking about this for months.

448
00:33:57,138 --> 00:34:00,318
And the next, and you hit a good point here, Dan.

449
00:34:00,578 --> 00:34:01,358
What's next?

450
00:34:01,678 --> 00:34:04,018
Like, all right, how does this infiltrate?

451
00:34:04,138 --> 00:34:09,038
Like, if this is going, this is doing a billion dollars in a week during the record date.

452
00:34:09,038 --> 00:34:11,378
Like, what does this look like down the road?

453
00:34:11,378 --> 00:34:17,019
And I think in order to do that, you got to look at the rest of the market.

454
00:34:18,098 --> 00:34:19,439
You got to look at the TAM, right?

455
00:34:19,459 --> 00:34:22,118
What is the total addressable market and what does that look like?

456
00:34:22,698 --> 00:34:26,538
I started thinking about this a little bit last week and I got a, not going to lie, I

457
00:34:26,538 --> 00:34:33,098
got a bit of anxiety thinking about it because the second and third order effects of being

458
00:34:33,098 --> 00:34:37,178
right about this and being right about digital credit and being right about the risk profile

459
00:34:37,178 --> 00:34:45,178
these instruments is that there could be a massive re-rating of credit across the entire industry.

460
00:34:45,178 --> 00:34:49,798
And we're talking like hundreds of trillions of dollars of credit. And it might go slow. It might

461
00:34:49,798 --> 00:34:57,638
go fast. I have no idea. And I kind of have a thesis on how it happens. So I'm going to walk

462
00:34:57,638 --> 00:35:03,138
you through it a little bit here because I think it's pretty fascinating. So I was looking at

463
00:35:03,138 --> 00:35:09,758
I was looking at private credit, right? So what do we know? There's been a lot of noise about

464
00:35:09,758 --> 00:35:14,499
cracks in the private credit market. And so the why, right? Why have there been cracks in the

465
00:35:14,499 --> 00:35:18,218
private credit market? There've been cracks in the private credit market because AI is coming in

466
00:35:18,218 --> 00:35:22,439
and disrupting some of these business models. Private credit's super opaque. It's grown a lot

467
00:35:22,439 --> 00:35:27,298
in the last couple of years. And there are starting to be some concerns about the credit

468
00:35:27,298 --> 00:35:34,138
quality of the private credit. Now, what do we know about that reasoning? That reasoning is,

469
00:35:34,618 --> 00:35:39,459
you've got AI disruption and a lot of cash flows are at risk. Well, that same concept,

470
00:35:39,878 --> 00:35:45,758
while it applies to private credit, also applies to public credit. So it applies to investment-grade

471
00:35:45,758 --> 00:35:52,698
bonds. It applies to junk bonds. And I think the biggest focus, in my opinion, is the fringe.

472
00:35:52,698 --> 00:36:00,278
like what are the bonds that are triple b now so triple b is investment grade if you drop below

473
00:36:00,278 --> 00:36:05,959
triple b you're double b you technically go to junk who holds all the triple b bonds

474
00:36:05,959 --> 00:36:14,198
and what happens if they get re-rated and and that's where i think the the biggest crux of like

475
00:36:14,198 --> 00:36:19,258
re-rating and this entire kind of landscape kind of kind of fits i'm thinking about the big short

476
00:36:19,258 --> 00:36:22,818
right? You see the Jenga tower and you like pull one and then the whole thing falls down.

477
00:36:23,378 --> 00:36:29,499
And it's really the triple B investment grade corporate bonds. And so I was doing some analysis

478
00:36:29,499 --> 00:36:36,898
with, uh, with perplexity here. And I was looking at who owns the triple B bonds. I just want to

479
00:36:36,898 --> 00:36:42,038
know like who owns these things, uh, insurance companies, especially life insurers are the

480
00:36:42,038 --> 00:36:46,979
single largest, single largest institutional owner of us corporate bonds. In 2017, they held

481
00:36:46,979 --> 00:36:53,778
about 38% of corporate bonds. Okay. That's interesting. Then I started looking into,

482
00:36:54,138 --> 00:36:59,638
okay, what happens if there's a re-rating of corporate bonds that they go from triple B

483
00:36:59,638 --> 00:37:06,238
down to double B. Let's just say the S&P, if there's a crack in the private credit market,

484
00:37:06,298 --> 00:37:11,238
maybe something they had previously rated goes out of business. They're like, okay, that's,

485
00:37:11,459 --> 00:37:16,479
I got to change my rating methodology. Now, if you have something that's junk that goes out of

486
00:37:16,479 --> 00:37:21,058
business and you weren't anticipating it. You're like, okay, maybe I was expecting that. But as

487
00:37:21,058 --> 00:37:31,038
soon as you have one investment grade instrument default, that results in... You have to go rethink

488
00:37:31,038 --> 00:37:35,578
it. What do you mean I had an investment grade instrument that defaulted? What is the reason?

489
00:37:36,058 --> 00:37:40,818
Is there additional instruments in the credit market that may default because of that same

490
00:37:40,818 --> 00:37:48,479
concept. And so you think about the S&P, right? We clearly have seen that they're behind on capital

491
00:37:48,479 --> 00:37:54,419
structure and how they've rated strategy and the capital that sits on their balance sheet.

492
00:37:54,499 --> 00:37:57,959
They've given them zero credit for the capital that sits on their balance sheet. And so then you

493
00:37:57,959 --> 00:38:04,198
think about they're probably behind their methodology. They probably are behind on

494
00:38:04,198 --> 00:38:10,798
thinking about AI risk. And I think that is a risk to the system. So I wanted to look at

495
00:38:10,798 --> 00:38:15,519
like what would happen right like if you have a big swath of instruments go from investment grade

496
00:38:15,519 --> 00:38:20,959
to junk like overnight because of a change in rating what happens like from a from a capital

497
00:38:20,959 --> 00:38:27,278
standpoint and um so i was doing some analysis here uh for insurance companies right insurance

498
00:38:27,278 --> 00:38:32,238
companies have capital requirements so those capital requirements like for certain instruments

499
00:38:32,238 --> 00:38:36,718
that you hold you have to hold additional capital so you can leverage against it on your balance

500
00:38:36,718 --> 00:38:41,278
sheet. This is required from rating agencies and regulators. There's state regulators and there's

501
00:38:41,278 --> 00:38:47,598
a rating agency kind of globally AMBEST that overlooks all this stuff. So if your portfolio,

502
00:38:47,598 --> 00:38:53,919
which we identified as about 38% bonds, if it moves from triple B to double B,

503
00:38:54,638 --> 00:39:00,959
it could easily double or quadruple the risk-based capital factor, increasing the required capital

504
00:39:00,959 --> 00:39:08,398
per dollar of bond by that same multiple. Okay. That's big. All right. So that means effectively

505
00:39:08,398 --> 00:39:17,939
the amount of business that they could write, it may drop by 10, 20, 30, 40% almost overnight or

506
00:39:17,939 --> 00:39:22,118
instantly because they're technically would be over leveraged based on the bonds that they hold

507
00:39:22,118 --> 00:39:26,778
in the balance sheet. So now you're faced with a couple options. You can offload those bonds,

508
00:39:26,778 --> 00:39:32,778
You probably have some investment mandate that, hey, I can only hold investment grade bonds in my portfolio for risk.

509
00:39:33,979 --> 00:39:36,778
So you've got to go sell off your investment grade bonds.

510
00:39:37,638 --> 00:39:40,098
But who's the buyer on the other side?

511
00:39:41,419 --> 00:39:47,318
Who's the liquidity that wants to buy your investment grade bond that was just downgraded from investment grade to junk?

512
00:39:47,318 --> 00:39:59,258
And especially if there's an alternative that's liquid paying 11.5% monthly in this marketplace.

513
00:40:00,539 --> 00:40:10,858
Right. So like in these bonds, to put this in perspective, are there like 7% bonds, 8% bonds?

514
00:40:10,858 --> 00:40:14,059
And so I wanted to dive into it. Right. So I went even further.

515
00:40:15,499 --> 00:40:21,818
And I looked at triple B bonds. So I looked at a ETF. I wanted to see there was an investment grade

516
00:40:21,818 --> 00:40:27,539
ETF that holds triple B bonds. So I downloaded the holdings and I looked at what it was.

517
00:40:28,158 --> 00:40:33,658
I was like, what are the instruments in here? And what's the maturity on them? Like how much

518
00:40:33,658 --> 00:40:37,919
risk is in here? What's the weight of these things? Like just starting to wrap my head around, like

519
00:40:37,919 --> 00:40:43,959
what's at risk and uh so this is the list of instruments and i sorted it by maturity

520
00:40:43,959 --> 00:40:48,519
as you can see there's a lot of energy companies i think those energy companies are probably fine

521
00:40:48,519 --> 00:40:52,919
thinking about like where i where ai is going and you know demand for electricity all of those things

522
00:40:52,919 --> 00:40:59,378
but i started to notice that there were a few other companies in here that started to raise

523
00:40:59,378 --> 00:41:06,098
some flags we've got a reinsurance group of america which is funny um and then i saw athene

524
00:41:06,098 --> 00:41:12,658
holdings and Apollo. So these are fascinating. Like what is Athene? What is Apollo? And these

525
00:41:12,658 --> 00:41:18,578
are, these are 20, these are bonds that, that expire, they mature in the year 2055.

526
00:41:19,459 --> 00:41:26,758
So these are illiquid bonds that mature in 2055. Friendly reminder, it's 2026. So these are way

527
00:41:26,758 --> 00:41:32,838
out in the tail. So then you look at Athene holdings and Apollo and some of these other

528
00:41:32,838 --> 00:41:42,837
institutions Now what is a theme What is Apollo These are companies that are creating annuities that are capitalized on private credit

529
00:41:45,717 --> 00:41:59,357
Pause for effect here. The companies that are issuing investment grade bonds that are rated triple B are capitalized on private credit.

530
00:42:04,997 --> 00:42:10,197
boom right like like that seems like an issue that seems like an issue if we think that there

531
00:42:10,197 --> 00:42:15,157
are cracks in the private credit market that like maybe maybe maybe that's overblown right like

532
00:42:15,157 --> 00:42:18,997
maybe the cracks in the private credit market maybe it's just a couple but i think there's

533
00:42:18,997 --> 00:42:24,757
going to be disruption here um and you could think about the capital structure like okay what's going

534
00:42:24,757 --> 00:42:31,397
to get re-rated the things that are susceptible to ai risk and what's susceptible to ai risk it's

535
00:42:31,397 --> 00:42:34,917
you know, these opaque instruments, software as a service, everything that's...

536
00:42:35,557 --> 00:42:37,157
So Jeff, can I chime in real fast here?

537
00:42:37,157 --> 00:42:37,957
Yeah, go ahead.

538
00:42:37,957 --> 00:42:42,597
So this is one instrument has all of these different items in it.

539
00:42:43,237 --> 00:42:49,557
Yeah, this is a triple B rated ETF. Not a ton of assets under management,

540
00:42:50,517 --> 00:42:55,957
because this is an ETF. But the reason there's not a ton of assets under management is because

541
00:42:55,957 --> 00:43:01,897
these illiquid instruments are held directly in custody by like insurance companies banks and

542
00:43:01,897 --> 00:43:08,917
pension funds right so how many total instruments are inside this one wrapper i can tell you

543
00:43:09,517 --> 00:43:18,337
about a thousand what was that a thousand about a thousand a thousand yeah i mean i mean think

544
00:43:18,337 --> 00:43:24,197
about i i was like so i'm like looking at this it's like they're 0.1 and then they go down to

545
00:43:24,197 --> 00:43:31,077
point zero so there's a thousand this is designed not to move and so what they did is if if you put

546
00:43:31,077 --> 00:43:36,957
enough crap in one basket as long as you could just pay whatever the the the yield is seven

547
00:43:36,957 --> 00:43:42,017
percent whatever it is on this this overall instrument nobody cares what's in it this goes

548
00:43:42,017 --> 00:43:49,897
back to the whole big short movie right it's the same thing and it has a triple b uh triple b one

549
00:43:49,897 --> 00:43:57,257
rating? That's what it is? Column D? Yeah. These are all just triple B rated. Yeah. That's the

550
00:43:57,257 --> 00:44:02,257
ticker of this instrument. Yeah. Triple B I is the ticker. Oh, that's a ticker. Sorry. So,

551
00:44:02,257 --> 00:44:09,437
so, and this is not rated overall. I don't think so. No, each one of these individual

552
00:44:09,437 --> 00:44:14,517
instruments is probably rated. I know each one of these instruments is rated triple B investment

553
00:44:14,517 --> 00:44:27,197
great oh okay i just again again yes yes so can i get people excited about what i what i did because

554
00:44:27,197 --> 00:44:33,877
i'm going to take a different i i think i think that dan and you and are not bullish enough and

555
00:44:33,877 --> 00:44:41,877
i want to take this back to uh msdr sdrc hold on let me let me pause sure hold on hold on hold on

556
00:44:41,877 --> 00:44:43,077
Let me pause right there for a second.

557
00:44:44,137 --> 00:44:47,537
This is incredibly bullish, right?

558
00:44:47,657 --> 00:44:53,417
All of these instruments, these pay like 6% or 7% investment grade.

559
00:44:54,077 --> 00:45:03,697
And I'm talking about a re-rating of the entire investment grade bond portfolio, at least everything that's susceptible to AI and backed by private credit,

560
00:45:03,697 --> 00:45:12,557
which in my mind if there's a capital flight away from credit that's what drives enormous

561
00:45:12,557 --> 00:45:17,337
demand in these instruments and it may not be right away right like i might be forecasting this

562
00:45:17,337 --> 00:45:22,597
like two or three years from now it could happen in six months i have no idea that the question is

563
00:45:22,597 --> 00:45:31,457
when everybody leaves these instruments where like who buys the crap right the insurance companies

564
00:45:31,457 --> 00:45:37,337
hold the crap right now? And the question is who buys it when they want to exit because they can't

565
00:45:37,337 --> 00:45:42,977
hold it for their mandates and their business literally fails if I have to hold it? Who buys it?

566
00:45:44,077 --> 00:45:50,417
And the answer is probably the US government, right? That's who buys the crap. If there's

567
00:45:50,417 --> 00:45:56,397
financial stress, like in the credit markets, that's probably who buys the crap. And so if

568
00:45:56,397 --> 00:46:04,077
they're buying the crap because this is like a large systemic problem, you know, also because of

569
00:46:04,077 --> 00:46:10,337
rating agencies. Once again, if, if they, if the government's buying the crap, inflation goes to

570
00:46:10,337 --> 00:46:16,617
the moon, asset prices rip, Bitcoin rips, credit quality of the digital credit instruments probably

571
00:46:16,617 --> 00:46:22,337
goes significantly higher. Demand for liquidity in those instruments probably goes significantly

572
00:46:22,337 --> 00:46:30,917
higher. And that's the bullish thesis here. This is it. The credit market, the risk in the credit

573
00:46:30,917 --> 00:46:38,997
market getting mispriced is the bullish thesis for both sides of the trade, the asset and the

574
00:46:38,997 --> 00:46:47,277
credit instrument. There should be demand on both. That's the bullish thesis. I'm bullish enough.

575
00:46:47,277 --> 00:46:52,857
Trust me, when I figured this out, I had a hard time sleeping.

576
00:46:54,037 --> 00:46:55,097
That's the bullish thesis.

577
00:46:55,797 --> 00:46:57,337
A little scary, but bullish.

578
00:46:58,297 --> 00:46:59,117
Okay, go ahead, Grain.

579
00:46:59,677 --> 00:47:00,737
Make people more bullish.

580
00:47:00,777 --> 00:47:01,397
Let's see what you got.

581
00:47:01,717 --> 00:47:03,057
So let me share here.

582
00:47:03,357 --> 00:47:05,397
So I'll share a window.

583
00:47:08,277 --> 00:47:09,777
I'm amazed I got this working.

584
00:47:09,937 --> 00:47:12,617
So let's go to MSTR analysis.

585
00:47:13,717 --> 00:47:16,777
So, wow, that's actually phenomenally clear.

586
00:47:17,277 --> 00:47:24,457
So what I did here is I looked at the ATMs that included STRC inside of it.

587
00:47:25,037 --> 00:47:27,757
And there's two tables here.

588
00:47:28,037 --> 00:47:33,137
The only difference is one is year to date, the bottom one starting on January 5th, and

589
00:47:33,137 --> 00:47:36,057
the other one's from the start, but not including the IPO.

590
00:47:36,617 --> 00:47:41,117
So it came out at $80, it had to break $100, and then it started.

591
00:47:41,117 --> 00:47:49,717
So the interesting part that you see looking at this, and so the last row is the same on both of them, except for the first two in November.

592
00:47:51,417 --> 00:47:55,237
This is the percentage of MSTR versus STRC.

593
00:47:55,657 --> 00:48:00,337
And what happened is it made this massive shift from 25%.

594
00:48:00,337 --> 00:48:07,817
It was doing 70-30, and then it went from 25% to 75% MSTR to STRC.

595
00:48:07,817 --> 00:48:12,377
and that's where it picked up $1.18 billion in doing it.

596
00:48:12,457 --> 00:48:14,017
And the MSTR was a very small amount.

597
00:48:14,677 --> 00:48:16,037
And so this is a fundamental shift.

598
00:48:16,237 --> 00:48:20,417
Now, from a data perspective, if I go give you, for instance,

599
00:48:21,337 --> 00:48:23,857
let me pick a good one here.

600
00:48:24,757 --> 00:48:25,637
Got this one.

601
00:48:26,737 --> 00:48:28,137
Yeah, so they had a good yield last week.

602
00:48:28,257 --> 00:48:29,177
Yeah, like what was it?

603
00:48:29,177 --> 00:48:33,097
A 3% yield this last week on the capital craze

604
00:48:33,097 --> 00:48:36,217
because they were relatively light on the MSTR common ATM,

605
00:48:36,217 --> 00:48:42,457
which like they were able to do that and maintain again the same leverage ratio because the underlying bitcoin was growing.

606
00:48:42,697 --> 00:48:49,737
So like they've got this kind of amplification management, I think, strategy, in my opinion, going on.

607
00:48:50,757 --> 00:48:54,537
Right. And so when I look at so these are rather small data sets.

608
00:48:54,537 --> 00:48:57,097
I've worked with data sets, 50, 100 million cells.

609
00:48:57,337 --> 00:48:59,917
So this is relatively incredibly simple to do.

610
00:49:00,277 --> 00:49:01,737
This is the historical information.

611
00:49:01,737 --> 00:49:07,937
And then what I did is I wrote an article on Monday and graphed it out into Q4 of 2027.

612
00:49:08,197 --> 00:49:10,217
And people are like, well, what happens in 2030?

613
00:49:10,417 --> 00:49:10,897
Don't care.

614
00:49:11,877 --> 00:49:16,737
I want people to understand with a sense of urgency that if you get the next 18 months

615
00:49:16,737 --> 00:49:18,937
right, what happens after that doesn't matter.

616
00:49:19,897 --> 00:49:25,117
So if Bitcoin goes to three, four, $500,000 and somebody says to me, you know, hey, Mike,

617
00:49:25,237 --> 00:49:27,157
my real name says, tell me about Bitcoin.

618
00:49:27,277 --> 00:49:29,877
I'm like, and Bitcoin's $500,000.

619
00:49:29,877 --> 00:49:34,937
I'll be like, I think you should go buy some stretch, hold on to that for three, four months, and then come back to me.

620
00:49:35,377 --> 00:49:38,757
Because you're no longer early when Bitcoin gets to $500,000.

621
00:49:39,637 --> 00:49:45,337
And so I put this data here, and you're like, well, it's a table.

622
00:49:45,477 --> 00:49:46,097
It's boring.

623
00:49:46,537 --> 00:49:47,897
How do people read this?

624
00:49:48,057 --> 00:49:51,697
So when I wrote the article, let me go here.

625
00:49:52,477 --> 00:49:57,517
I picked a very catchy title, Strategy Breaks Bitcoin.

626
00:49:57,517 --> 00:50:00,457
and if you scroll, I'll scroll here.

627
00:50:00,577 --> 00:50:02,157
Here's the same chart I just showed you

628
00:50:02,157 --> 00:50:04,037
and then we have this one.

629
00:50:04,997 --> 00:50:07,177
And now what you see here is that

630
00:50:07,177 --> 00:50:11,157
what I wanted to show starting in Q1 of 2024,

631
00:50:12,417 --> 00:50:15,637
strategies buys per quarter versus the mined Bitcoin.

632
00:50:16,937 --> 00:50:19,217
Okay, and what happens is there's a number

633
00:50:19,217 --> 00:50:20,697
that I put in here so people can read it.

634
00:50:20,697 --> 00:50:22,577
So in the fourth quarter of 2024,

635
00:50:22,797 --> 00:50:24,877
Bitcoin went from 60 to 95,000.

636
00:50:25,057 --> 00:50:26,957
As the price of Bitcoin goes up,

637
00:50:26,957 --> 00:50:32,237
strategy's ability to buy Bitcoin goes up. Completely counterintuitive. Everybody says,

638
00:50:32,377 --> 00:50:38,097
oh, it's a lot of big numbers. It's a black hole. Right. They're completely, it's the data shows.

639
00:50:39,197 --> 00:50:47,137
Right. So to Q1 2026, this is all historical information. So they were able to 5.1 X the

640
00:50:47,137 --> 00:50:53,657
mine supply that happened. So what does that mean? It means that 4X the mine supply, this was

641
00:50:53,657 --> 00:51:01,077
200,000, it was 195,000 Bitcoins that they bought in one quarter. That was equal to what they did

642
00:51:01,077 --> 00:51:08,877
in the first three years. They bought it in one quarter. So now what happens is the only reason

643
00:51:08,877 --> 00:51:15,757
why this is lower in the fourth quarter of 2025 is because Strategy acquired $2.25 billion in cash.

644
00:51:16,177 --> 00:51:22,337
And that's the only reason why the orange line is not above the blue line. But if you continue at

645
00:51:22,337 --> 00:51:29,257
the historical rate of 16%, that's the average of adding Bitcoin quarter over quarter, this is the

646
00:51:29,257 --> 00:51:37,557
historical average here. It says the conservative at 16%, they get to 2.15 million Bitcoin. They will

647
00:51:37,557 --> 00:51:44,977
acquire in this one quarter, when it gets up to 2 million, they will acquire more than 300,000

648
00:51:44,977 --> 00:51:53,157
Bitcoin in one quarter. And that will be 7.7x times the amount of mined Bitcoin. Now, let's

649
00:51:53,157 --> 00:51:59,377
be very clear. That's assuming that all the miners sell every single quarter 100% of the mined

650
00:51:59,377 --> 00:52:06,017
Bitcoin, which is not true. And I want people to realize, let's assume strategy in one week,

651
00:52:06,557 --> 00:52:13,557
right? Because we've seen this before. They buy 20,000 Bitcoins, right? What's the chance that

652
00:52:13,557 --> 00:52:19,957
20,000 multimillionaires will wake up on a Monday and be like, oh, I'm going to buy a Bitcoin this

653
00:52:19,957 --> 00:52:26,577
week. One Bitcoin. One Bitcoin for 20,000 multimillionaires in one week. How often do

654
00:52:26,577 --> 00:52:31,657
you think that 20,000 people wake up on a Monday and go, I'm just going to go buy this? Zero.

655
00:52:32,277 --> 00:52:37,817
They don't. Around the world, if somebody says to me, 20,000 millionaires decide to buy one,

656
00:52:38,237 --> 00:52:42,957
and then if somebody says, well, it did happen, I go, does it happen the week after? No.

657
00:52:42,957 --> 00:52:45,137
No, it doesn't.

658
00:52:45,537 --> 00:52:50,797
So when you look at these numbers now, what I'm trying to say is that this is before the

659
00:52:50,797 --> 00:52:51,217
halving.

660
00:52:52,257 --> 00:53:02,397
And so in my article that I did, and if you scroll down here, I go, this is the reflexive,

661
00:53:02,457 --> 00:53:02,877
24%.

662
00:53:03,417 --> 00:53:06,277
And again, there's this thing called stretch.

663
00:53:06,357 --> 00:53:07,537
I don't know if you guys heard about it.

664
00:53:07,537 --> 00:53:14,617
and instead of when i did my article on monday like in the olden days because today's wednesday

665
00:53:14,617 --> 00:53:21,197
i said you know what it's kind of i don't want to model like a 2m nav but assume that because

666
00:53:21,197 --> 00:53:28,077
they're buying amplification instead of it being 16 what happens if it goes up by another 50

667
00:53:28,077 --> 00:53:36,117
so now the acquisition rate is 24 they're acquiring 24 more bitcoin every week or is that

668
00:53:36,117 --> 00:53:37,157
Every quarter.

669
00:53:37,497 --> 00:53:37,997
Every quarter.

670
00:53:37,997 --> 00:53:40,777
Because right now, the historical is 16%.

671
00:53:40,777 --> 00:53:41,697
Yeah.

672
00:53:42,377 --> 00:53:43,917
Over five years.

673
00:53:44,077 --> 00:53:44,817
It's already been done.

674
00:53:44,917 --> 00:53:47,797
The historical has already been done.

675
00:53:47,897 --> 00:53:48,717
That's not in dispute.

676
00:53:49,257 --> 00:53:50,357
So the question is-

677
00:53:50,357 --> 00:53:51,337
It's probably diminishing though.

678
00:53:51,917 --> 00:53:57,437
It's probably a diminishing relativity as the price goes higher.

679
00:53:58,597 --> 00:54:00,617
So Jeff, thank you for saying that.

680
00:54:01,297 --> 00:54:03,477
What I wanted, this is a test.

681
00:54:04,057 --> 00:54:05,157
I sandbagged it.

682
00:54:05,157 --> 00:54:08,197
what I did was I intentionally left the prices low.

683
00:54:08,737 --> 00:54:11,417
And what happens is that's the hockey stick.

684
00:54:12,237 --> 00:54:13,457
Strategy will have a very,

685
00:54:13,797 --> 00:54:17,577
we'll have a harder time because when strategy goes to an OTC desk and says,

686
00:54:17,917 --> 00:54:18,097
Hey,

687
00:54:18,137 --> 00:54:21,517
I need to source 20,000 Bitcoins and there are 150,000 each.

688
00:54:21,737 --> 00:54:22,297
They're like,

689
00:54:22,397 --> 00:54:22,517
dude,

690
00:54:22,557 --> 00:54:24,177
you need $3 billion worth of Bitcoin.

691
00:54:24,657 --> 00:54:25,417
And it'll be like,

692
00:54:25,617 --> 00:54:25,777
yeah,

693
00:54:25,817 --> 00:54:26,017
bro,

694
00:54:26,037 --> 00:54:26,897
I just raised it.

695
00:54:26,937 --> 00:54:27,217
And they're like,

696
00:54:27,257 --> 00:54:27,457
you know,

697
00:54:27,497 --> 00:54:28,517
we don't have 3 billion.

698
00:54:28,817 --> 00:54:30,097
We got 2 billion.

699
00:54:30,477 --> 00:54:32,697
And why don't you put a billion dollars and leave it in cash?

700
00:54:33,037 --> 00:54:34,217
At some point,

701
00:54:34,217 --> 00:54:42,737
the price is going to hockey stick goes higher because they cannot source the block of 30,000

702
00:54:42,737 --> 00:54:50,357
Bitcoins in one week. And you're like, right? I mean, just think about it. Right? They want 30,000.

703
00:54:50,357 --> 00:54:59,257
Yeah. I mean, look, the trading desks on these things are pretty crazy. You reach out to them

704
00:54:59,257 --> 00:55:01,337
and you say, I want to buy Bitcoin.

705
00:55:02,157 --> 00:55:04,157
And they're in the market buying Bitcoin.

706
00:55:04,417 --> 00:55:07,677
You tell them the pace and it comes out the other side

707
00:55:07,677 --> 00:55:10,617
and you move it to custody and you're like, oh my God, there it is.

708
00:55:11,537 --> 00:55:12,677
It's like, I think you're right.

709
00:55:12,757 --> 00:55:13,977
I mean, 20,000 Bitcoin.

710
00:55:14,557 --> 00:55:16,877
I need to go buy a billion dollars of this stuff.

711
00:55:16,957 --> 00:55:18,797
I mean, the thing is, it's pretty liquid, right?

712
00:55:19,097 --> 00:55:25,437
It's trading, I don't know, 30 to 60 to $100 billion a day.

713
00:55:25,437 --> 00:55:26,517
So like it's moving.

714
00:55:27,037 --> 00:55:28,197
It's clearly moving.

715
00:55:28,197 --> 00:55:31,997
And there's a point. I personally think the bottom's in.

716
00:55:32,477 --> 00:55:33,777
I think the bottom's in.

717
00:55:34,017 --> 00:55:35,277
This instrument...

718
00:55:35,277 --> 00:55:36,257
Bottom's in.

719
00:55:36,717 --> 00:55:37,537
The bottom's in.

720
00:55:37,817 --> 00:55:38,837
Bottom's in.

721
00:55:41,277 --> 00:55:43,337
It's got product market fit, right?

722
00:55:43,637 --> 00:55:45,197
The interest in this instrument...

723
00:55:46,537 --> 00:55:49,897
I mean, look, we put $50 million a stretch on our balance sheet

724
00:55:49,897 --> 00:55:53,417
because we see it as a moderate duration capital instrument.

725
00:55:53,417 --> 00:56:02,737
I mean, it completely changes how you can think about duration liability on a balance sheet.

726
00:56:03,297 --> 00:56:03,437
Yeah.

727
00:56:03,557 --> 00:56:06,717
So Jeff, let me just wrap up on this and I'll be done with my section.

728
00:56:06,797 --> 00:56:07,377
Modern capital.

729
00:56:07,857 --> 00:56:08,077
Yeah.

730
00:56:08,217 --> 00:56:09,257
I'll wrap up on this.

731
00:56:09,477 --> 00:56:12,757
So once you have the data, then you can resort it.

732
00:56:13,497 --> 00:56:16,117
So I want people to realize something.

733
00:56:16,597 --> 00:56:21,097
We got this question that's been coming around for the past five years or since 2022.

734
00:56:21,097 --> 00:56:26,277
to what happens to strategy in a bear market. I'm going to give everybody a heads up. We're

735
00:56:26,277 --> 00:56:33,437
currently in a bear market. My definition of a bear market in any asset is when it's down 50%

736
00:56:33,437 --> 00:56:39,897
from its all time high on the index. You're in a bear market when it's down 20%. But Bitcoin world,

737
00:56:39,897 --> 00:56:45,917
if it's down 50%, you're in a bear market. What I did was I sorted the data. This is in linear.

738
00:56:45,917 --> 00:56:47,737
You got to love how it goes off the charts.

739
00:56:49,057 --> 00:56:51,997
It's a little tweak I do there when I create these charts.

740
00:56:51,997 --> 00:57:02,617
But the number two quarter for acquiring Bitcoin, and it's not over yet, is Q1 2026 at 88,568 Bitcoins.

741
00:57:03,417 --> 00:57:13,697
So the number two quarter for them buying Bitcoin is not when Bitcoin was high in Q1 of 2025 or Q3 of 2025, right?

742
00:57:13,697 --> 00:57:22,157
That's when Bitcoin was, sorry, in Q3 of 2024, they only acquired $25,900, right?

743
00:57:22,557 --> 00:57:28,857
So what I'm trying to say is that in the middle of a bear market, Bitcoin is down 45%, 50% from its all-time high.

744
00:57:29,217 --> 00:57:32,417
They have the second best quarter ever for acquiring Bitcoin.

745
00:57:33,277 --> 00:57:36,177
And in the bull market, the record is double that number.

746
00:57:36,477 --> 00:57:40,217
So they're the buyer of last resort, and they're the buyer at the top.

747
00:57:40,217 --> 00:57:52,597
I want to quote, you know, Saylor, you know, and Laura Shin said, you know, at some point people want to sell this asset in order to, you know, you know, or she said something to the effect, you know, you're going to keep on buying.

748
00:57:52,717 --> 00:57:55,677
And Saylor goes, yeah, Laura, I'm going to keep on buying the top forever.

749
00:57:56,637 --> 00:58:05,057
This just shows him his strategy's ability to buy is when the price goes up because that's when the MNAV goes positive, completely counterintuitive.

750
00:58:05,057 --> 00:58:24,717
And so if anybody comes to me and says, you know, grain, I don't like what you're saying. I'm going to say to you, you know what? I get it. Do you have any math or any historical data or anything to back up your opinion? And if they say, no, no, I don't. I'm like, that's cool. Because you know what? Maybe I'm just going to.

751
00:58:24,717 --> 00:58:42,317
I think you're right, Gray. And I think this chart is massively important because that Q126 number is huge. I think for a couple of reasons. One, we're seeing positive MNAVs right now with strategy at the bottom of a bear market, which I think is remarkable.

752
00:58:42,317 --> 00:58:58,497
Jeff, we could talk about this in a second, I think. But, you know, Strategy was trading at a discount during the last bear market aggressively because of the capital structure that was implemented, right? There were secure notes on the balance sheet that ultimately, you know, one of their lenders or, yeah, one of their, we'll talk about it in a second.

753
00:58:58,497 --> 00:59:27,917
But there's secure notes in the balance sheet. There was convertible notes in the balance sheet, all hindering the credit quality of the equity. During 25, what strategy got right, what they built during the entire year was, okay, let's create instruments that insulate us from the credit risk of a Bitcoin drawdown. Okay, now their equity is trading materially better than it did last bear market. And that's enabled them to acquire such a significant portion of their Bitcoin stack during a Bitcoin drawdown, right? Because there aren't actually systemic risks strategy.

754
00:59:27,917 --> 00:59:30,137
like there were in 2020.

755
00:59:30,277 --> 00:59:32,357
Not that there were massively systemic risks,

756
00:59:32,537 --> 00:59:34,777
but it was a lot riskier than it is now.

757
00:59:34,897 --> 00:59:37,197
So I think that's really the interesting point here.

758
00:59:38,457 --> 00:59:40,157
And Mike, I thought I was bullish enough,

759
00:59:40,237 --> 00:59:41,037
but you might be right.

760
00:59:41,737 --> 00:59:43,157
And are you basically saying,

761
00:59:43,217 --> 00:59:44,857
because we used to do the catalysts, right?

762
00:59:44,917 --> 00:59:47,097
We had the whole list of catalysts

763
00:59:47,097 --> 00:59:49,017
and the only one that we didn't get was S&P 500,

764
00:59:49,017 --> 00:59:52,377
but it looks like we're able to start stacking catalysts again.

765
00:59:53,017 --> 00:59:55,557
And you're basically saying you've got this short window of time

766
00:59:55,557 --> 00:59:57,337
to get in before the hockey stick.

767
00:59:57,777 --> 00:59:58,457
Is that what I'm hearing?

768
00:59:58,837 --> 00:59:59,037
Yeah.

769
00:59:59,177 --> 01:00:01,997
And my view is I think this time is different.

770
01:00:02,237 --> 01:00:04,897
And they're like, well, do you have the data to back it up?

771
01:00:04,917 --> 01:00:07,997
I'm like, yeah, I have lots of data to back.

772
01:00:07,997 --> 01:00:13,057
And I make these great charts, you know, the Sharpe ratio, again, off the charts here,

773
01:00:13,617 --> 01:00:13,837
right?

774
01:00:14,037 --> 01:00:17,317
You know, strategy Sharpe ratio of 5.37, right?

775
01:00:17,517 --> 01:00:22,217
And these are the other ones, the Bank of America, the KKR, the four, and the other ones

776
01:00:22,217 --> 01:00:22,977
are down here.

777
01:00:22,977 --> 01:00:29,337
and it's like okay well i i don't see how we can have all these positive indicators i'm trying to

778
01:00:29,337 --> 01:00:35,417
find the one that showed oh this one this is the one would cause me to change my mind in this one

779
01:00:35,417 --> 01:00:42,897
you see the mind bitcoin um and then you know and percent of supply this was the first slide that i

780
01:00:42,897 --> 01:00:50,217
this i did this like in the old days this was done on which day yesterday yesterday march 17th yeah

781
01:00:50,217 --> 01:00:50,817
I was yesterday.

782
01:00:50,957 --> 01:00:51,097
Okay.

783
01:00:51,677 --> 01:00:51,917
Right.

784
01:00:51,977 --> 01:00:56,057
So I made this chart and I'm looking at it and I'm thinking, huh, this one's cool because

785
01:00:56,057 --> 01:00:58,097
it has a halving and from start to finish.

786
01:00:58,217 --> 01:01:03,017
And here's the 2022 bear market right here in the bottom.

787
01:01:03,197 --> 01:01:08,357
And strategy could barely do any of these ATMs.

788
01:01:09,057 --> 01:01:13,757
But now when you look at it, given that we're in a bear market, I mean, I guess I should

789
01:01:13,757 --> 01:01:17,997
roll, I should overlay the price of Bitcoin over this, but I just took off the old stuff.

790
01:01:18,077 --> 01:01:19,297
It's not that I didn't do the calculation.

791
01:01:19,417 --> 01:01:20,077
I did do it.

792
01:01:20,217 --> 01:01:26,197
And now, and then I added, because they did percentages, and I think better people, better with multiples than percentages.

793
01:01:26,997 --> 01:01:29,897
So then I looked at it right now.

794
01:01:29,997 --> 01:01:36,977
And again, the only reason why this orange line here is lower than the blue line is because they acquired $2.25 billion in cash.

795
01:01:37,597 --> 01:01:41,537
Otherwise, strategy is sopping up way more than the mined Bitcoin.

796
01:01:41,897 --> 01:01:47,717
And we know that 100% of the mined Bitcoin is not being market sold or OTC sold every quarter.

797
01:01:47,717 --> 01:01:49,677
If it is, somebody can correct me.

798
01:01:50,217 --> 01:01:54,937
And so when I look at this, I think the inflection point hits basically in the next two quarters.

799
01:01:55,157 --> 01:02:00,257
And the biggest catalyst is a narrative that strategy acquires a million Bitcoins.

800
01:02:00,497 --> 01:02:02,277
And there's going to be countdown parties.

801
01:02:02,577 --> 01:02:03,797
I'm going to predict the future.

802
01:02:04,177 --> 01:02:08,957
There's going to be a website or three websites with a countdown to one million Bitcoins.

803
01:02:09,217 --> 01:02:13,957
It'll start at 800,000 and everybody will be, what's the date?

804
01:02:14,037 --> 01:02:16,017
It's like we have the date of the halving.

805
01:02:16,257 --> 01:02:19,337
Now we're going to have the date when strategy hits a million Bitcoins.

806
01:02:19,337 --> 01:02:37,375
And what I think is going to happen everything that you said Jeff about your thesis about the ratings that all correct What I think is going to happen is Stretch is going to get to 10 15 billion right It probably get to Stretch If it goes about right

807
01:02:37,455 --> 01:02:42,475
there's no reason why Stretch can't break $10 to $12 billion in total by the end of this year.

808
01:02:42,875 --> 01:02:47,915
Pull a solid triple. They'll buy some MSTR. They'll raise more than $25 billion this year.

809
01:02:48,215 --> 01:02:53,575
They raised $23 billion last year. That's the conservative case. And if they hit the million

810
01:02:53,575 --> 01:02:59,535
bitcoins the positive narrative kicks in we get some good geopolitical stuff i think we're going

811
01:02:59,535 --> 01:03:03,575
to hockey stick up and people are going to be like what what was the warning that this was going to

812
01:03:03,575 --> 01:03:11,855
happen i'm like well i had to make the spreadsheet and my advantage with ai it's not that i'm super

813
01:03:11,855 --> 01:03:20,475
smart my advantage is this is that i am capable of putting the rows and columns into a data set

814
01:03:20,475 --> 01:03:27,195
like this. And then when I interact with AI, it's bounded because it knows exactly how I think.

815
01:03:27,695 --> 01:03:35,115
When you talk to an AI, it's LLM. It learns you. It learns you. Now, if you don't use the words

816
01:03:35,115 --> 01:03:42,435
convexity, liquidity, reflexivity correctly to an LLM, it infers it. But when I make the Excel

817
01:03:42,435 --> 01:03:48,095
spreadsheet, there's no inference. It's automatically able to interpret what I did

818
01:03:48,095 --> 01:03:50,675
and determine if it's mathematically correct.

819
01:03:51,075 --> 01:03:54,735
So my output becomes, how do I make the cool looking chart?

820
01:03:55,555 --> 01:03:59,855
It's no longer, so that's why my output with AI is better.

821
01:04:00,015 --> 01:04:01,155
It's not because I'm smarter.

822
01:04:01,375 --> 01:04:03,115
It's because I make the spreadsheet first.

823
01:04:03,275 --> 01:04:04,575
It's structured data.

824
01:04:04,935 --> 01:04:05,315
Go ahead, Jeff.

825
01:04:05,855 --> 01:04:06,975
Garbage in, garbage out.

826
01:04:07,215 --> 01:04:08,255
Garbage in, garbage out.

827
01:04:08,255 --> 01:04:12,575
And that's why I think, Jeff, you and Dan,

828
01:04:13,035 --> 01:04:15,095
when you make these spreadsheets and put it in,

829
01:04:15,275 --> 01:04:18,055
the output you guys get is like, oh my God, I can't sleep at night.

830
01:04:18,095 --> 01:04:42,355
Yeah, it's the the the the AI tools feel like a cheat code. Like, I feel like I'm playing a video game and it's not fair. It it's pretty incredible the how powerful these are. But I think you hit on a good point there. It's like the novelty. Every everybody interacting with every AI LLM. That conversation is novel.

831
01:04:42,355 --> 01:04:46,375
right you might not think it is you might think that everybody else is thinking about

832
01:04:46,375 --> 01:04:53,875
the same thinking about things the same way you are but really it's novel and i think that's why

833
01:04:53,875 --> 01:04:59,115
we're seeing this kind of explosion of articles written by ai which i'm kind of here for honestly

834
01:04:59,115 --> 01:05:03,415
there's been a lot of people saying ai slop and yeah there's a lot of ai slop out there but

835
01:05:03,415 --> 01:05:11,435
the these advanced models are so unique like you can you can write a piece of material that's the

836
01:05:11,435 --> 01:05:18,415
result of your thinking and your brain and it's it's made better with ai it's made more readable

837
01:05:18,415 --> 01:05:24,415
with ai but like it's still novel like you decided to put it somewhere and i think people are just

838
01:05:24,415 --> 01:05:31,015
kind of like blown away at almost how easy it is right i'm blown away by how easy it is every single

839
01:05:31,015 --> 01:05:39,475
day. So totally. But Grain, back to the, if I were to summarize your entire analysis,

840
01:05:40,995 --> 01:05:47,015
they have multiple instruments now. In the past, they'd be raising capital.

841
01:05:47,855 --> 01:05:48,215
Right.

842
01:05:48,215 --> 01:05:54,635
In the past, they were raising capital when the price is going up. But when the price went down,

843
01:05:54,875 --> 01:05:58,015
it was tough to raise capital. Like raising capital in the common stock when the price

844
01:05:58,015 --> 01:06:02,675
went down is difficult. But now they've got an instrument that they can raise capital that's a

845
01:06:02,675 --> 01:06:05,715
function of the credit quality. It's a function of how much money that they have on the balance sheet.

846
01:06:06,375 --> 01:06:10,995
That's completely different. Jeff, I got a great idea. Hey, Dan, I got a great idea.

847
01:06:11,755 --> 01:06:18,155
You should pitch strategy that they should invent a pref that has a built-in conversion option to

848
01:06:18,155 --> 01:06:24,115
the number of shares when it does a 10x. When that pref exists, let me know because I think

849
01:06:24,115 --> 01:06:28,795
that people are going to love that one. And that way they have like three scenarios, like MSTR.

850
01:06:29,795 --> 01:06:36,055
Yeah. And that would be strike. And I think that's where we get to, you know, it, it, it's kind of

851
01:06:36,055 --> 01:06:40,475
like the three little bears, you know, mama, you know, dad, mama, and baby, you know,

852
01:06:40,475 --> 01:06:46,955
well, the fascinating, and Dan, you probably, you probably really like strike right now. And

853
01:06:46,955 --> 01:06:51,215
I kind of do as well. I think it's interesting. Like you think about again, capital construction,

854
01:06:51,215 --> 01:06:58,235
like strike is less liquid than stretch there's less interest in it right now than stretch

855
01:06:58,235 --> 01:07:03,015
but it's still more liquid than a lot of other things so like there's still some liquidity there

856
01:07:03,015 --> 01:07:08,775
and it's still a very interesting product so when you think about like again capital construction

857
01:07:08,775 --> 01:07:14,755
you want you want your least liquid instruments like closest to your liabilities and you want to

858
01:07:14,755 --> 01:07:20,195
go further out the risk curve like for your longer data liabilities again this is like capital

859
01:07:20,195 --> 01:07:25,455
construction theory. And so if you've got like moderate duration liabilities, you may want to

860
01:07:25,455 --> 01:07:30,935
hold, I don't know, stretch because it's the most liquid and it's a high yield. But as you go further

861
01:07:30,935 --> 01:07:34,155
out the risk curve, obviously you've got Bitcoin at the very end. It's like never sell my Bitcoin.

862
01:07:34,495 --> 01:07:39,975
It's so deep into my capital structure. I hope I never have to touch it. Like that's the concept,

863
01:07:40,095 --> 01:07:44,155
right? But I could put things in front of it to protect it. So I never have to touch it.

864
01:07:45,095 --> 01:07:49,715
This is, again, insurance companies think this way. But so then you start to think about all

865
01:07:49,715 --> 01:07:54,035
the press, right? Like, you know, our instruments a little bit further out on the yield curve

866
01:07:54,035 --> 01:07:58,515
relative to stretch. So you could think about those next to each other. And then you could

867
01:07:58,515 --> 01:08:02,515
think about strike and stride and then go a little bit further out the yield curve for additional

868
01:08:02,515 --> 01:08:07,275
alpha as a function of whatever your liability profile is in the future. And that's like,

869
01:08:07,275 --> 01:08:15,835
that's a modern, that's a modern balance sheet. I think the future of constructing a corporate

870
01:08:15,835 --> 01:08:21,675
balance sheet that's what it looks like you have digital credit instruments on your balance sheet

871
01:08:21,675 --> 01:08:28,315
under your balance sheet because they're relative relatively more liquid than other moderate

872
01:08:28,315 --> 01:08:31,355
duration instruments that you can have on your balance sheet like you think about a company

873
01:08:31,355 --> 01:08:38,475
most companies when they meet when they when they need money they need money within 12 to 18 months

874
01:08:38,475 --> 01:08:43,835
most companies insurance companies i think are an anomaly right most like a lot of them have longer

875
01:08:43,835 --> 01:08:51,715
tail. But most companies need money for between, you know, one to 18 months. If you need capital

876
01:08:51,715 --> 01:08:56,175
between one to 18 months, like there's just not a great instrument aside from T-bills where you

877
01:08:56,175 --> 01:09:02,215
can hold like moderate duration capital. And like these things start to, you know, your brain starts

878
01:09:02,215 --> 01:09:07,175
to think a little bit differently about holding it for moderate duration capital. Just think back to

879
01:09:07,175 --> 01:09:13,635
when I was trying to build some capital to buy a house. I had like a savings account

880
01:09:13,635 --> 01:09:18,635
that I was like, oh man, I don't really want to put it in the S&P 500 because if there's

881
01:09:18,635 --> 01:09:24,195
volatility there, I want to be able to know I can afford a certain type of house and put

882
01:09:24,195 --> 01:09:25,095
20% down.

883
01:09:26,095 --> 01:09:32,115
I was desperate for a vehicle that gave me higher yield than putting it in a savings

884
01:09:32,115 --> 01:09:32,435
account.

885
01:09:33,255 --> 01:09:34,635
And I just couldn't find it.

886
01:09:35,655 --> 01:09:36,815
And here we are today.

887
01:09:37,015 --> 01:09:40,215
And I think these products offer a really good, very interesting alternative.

888
01:09:40,215 --> 01:09:49,115
it. So that's, that's pretty much all I've got, I guess, building on the press. Let's talk about

889
01:09:49,115 --> 01:09:54,975
that. Right. And so that's, that's one, that's one topic maybe over to you. So I,

890
01:09:56,055 --> 01:10:00,515
yeah, so I was, I finally got around to reading Jeff Booth's price of tomorrow and he was quoting

891
01:10:00,515 --> 01:10:06,435
Jeff Bezos and Bezos said that people always ask him what changes are coming in the next 10 years.

892
01:10:06,435 --> 01:10:15,115
And he said, the more important question is what's not going to change because you can build a business strategy around things that are stable in time.

893
01:10:15,415 --> 01:10:18,595
And I was like, holy crap, I immediately just, you know, OK, that's Bitcoin.

894
01:10:19,095 --> 01:10:25,435
And, you know, not when you think about its volatility in price necessarily, but its permanence, like it'll be here long after I'm dead.

895
01:10:25,935 --> 01:10:30,775
So, you know, it's the it's what makes diamond handsing even possible in the first place.

896
01:10:30,775 --> 01:10:48,475
So, you know, timing is very important. And if you're too early or too late with a business, it's pretty much lethal. But when you've stacked sats, you can just wait for the bull market. Like it's something that you can build upon and an entire network can grow from it.

897
01:10:48,475 --> 01:10:56,655
totally i know i think you're right i think you're right the durability of businesses is

898
01:10:56,655 --> 01:11:01,435
coming into question and i don't still don't understand why the s&p isn't down 50 here

899
01:11:01,435 --> 01:11:08,155
but you know we're seeing with sas stocks and uncertain cash flows and i i think um moving

900
01:11:08,155 --> 01:11:11,435
forward that's that's going to be a bigger and bigger theme and i think strategy will

901
01:11:11,435 --> 01:11:17,775
be the clear winner winner there well yeah and even like um go ahead with um

902
01:11:17,775 --> 01:11:23,815
another comparison would be like to Amazon. And so I know people say that stretch is the iPhone

903
01:11:23,815 --> 01:11:29,475
moment, but, um, you know, Booth also mentioned in that book that Sears had the original,

904
01:11:29,475 --> 01:11:34,095
you know, basically like mail order catalog, but they invested in their brick and mortar stores.

905
01:11:34,635 --> 01:11:39,375
And then when Amazon digitalized the mail order, they basically put Sears out of business.

906
01:11:39,715 --> 01:11:43,975
And so like, you know, Amazon sells its products direct to customers with the push of a button

907
01:11:43,975 --> 01:11:47,775
and Sailor is selling stretch direct to customers in the market

908
01:11:47,775 --> 01:11:51,915
instead of hiring investment bankers and head funds to arb the damn things.

909
01:11:52,455 --> 01:11:55,935
And they can just push the button and sell the fixed income anytime they want.

910
01:11:58,455 --> 01:12:06,815
And to your point earlier, Dan, about being able to adjust it with the dividend rate,

911
01:12:07,375 --> 01:12:12,955
it's like they know that they will never pay more than a quarter of a percent

912
01:12:12,955 --> 01:12:20,235
over the like the the bare minimum right they all they have to do is say okay how do we price this

913
01:12:20,235 --> 01:12:25,135
product okay well the market is going to tell me i just raise it a quarter of a percent and it's at

914
01:12:25,135 --> 01:12:30,395
par like there's you're not going to be like overpaying from distributors and how much is it

915
01:12:30,395 --> 01:12:38,755
going to cost to uh get materials for my widget it's it's like dematerialized access to capital

916
01:12:38,755 --> 01:12:40,755
It's kind of insane.

917
01:12:40,755 --> 01:12:42,755
Unlocked. Yeah, you're totally right.

918
01:12:42,755 --> 01:12:48,755
Yeah, the ATM is a fascinating evolution of this instrument.

919
01:12:48,755 --> 01:12:52,755
Like it's scalable. They don't need any other people, right?

920
01:12:52,755 --> 01:13:06,755
Like the same capital activity can scale with no additional, like people added to the capital team, which is mind blowing, right?

921
01:13:06,755 --> 01:13:11,555
Right. Like you think about, I mean, strategy's got what, I don't know, 1500 employees, their

922
01:13:11,555 --> 01:13:17,635
capital teams, what, 20 maybe. And really the people making decisions that there's like,

923
01:13:17,635 --> 01:13:20,595
there's like four of them, right? There's like four or five people that are actually,

924
01:13:20,595 --> 01:13:27,315
you know, doing the day to day stuff. And that team's been like, I think, relatively the same

925
01:13:28,435 --> 01:13:35,635
for the last four years and relatively unchanged. So yeah, it's, it's pretty mind blowing. It can

926
01:13:35,635 --> 01:13:38,855
scale drastically without that much change in people.

927
01:13:39,935 --> 01:13:42,295
And one last analogy for Amazon, right?

928
01:13:42,475 --> 01:13:48,595
So Amazon's pretty good with their return policy, but you can actually use stretch for

929
01:13:48,595 --> 01:13:51,955
as long as you want and return it for a full refund.

930
01:13:52,515 --> 01:13:58,535
If it's trading at par, you get exactly what you paid for it back.

931
01:13:58,975 --> 01:14:03,115
They'll just take it back off your hands and you can hold it how much dividends you want

932
01:14:03,115 --> 01:14:07,995
and get it and get a full and get a full refund oh that's fast use merchandise to get full full

933
01:14:07,995 --> 01:14:14,415
refund yeah you hot you harness the thing that you wanted which is the income

934
01:14:14,415 --> 01:14:21,915
you can return it for a full refund yeah i i mean obviously there's volatility in

935
01:14:21,915 --> 01:14:28,175
in that but like what we were talking about earlier there's arbitrage opportunities for the

936
01:14:28,175 --> 01:14:31,735
for the price when it goes down because you know that there's you know pressure

937
01:14:31,735 --> 01:14:35,935
at any given point at different points in time during the month to push it back higher

938
01:14:35,935 --> 01:14:47,535
yeah it'll be fascinating to see like how um how lumpy this stuff is too like the what's

939
01:14:47,535 --> 01:14:53,775
what's stretch finish the day at what like 99 75 or something like that

940
01:14:53,775 --> 01:15:06,795
99.57 okay so it's down it's down 40 43 cents yeah people were kind of freaking out about the

941
01:15:06,795 --> 01:15:10,415
price dropping a little bit which is interesting because like theoretically it should drop by the

942
01:15:10,415 --> 01:15:15,815
dividend rate on the ex-dividend date and it didn't so like clearly there's a more buyers

943
01:15:15,815 --> 01:15:21,035
and sellers still in the market even after the ex-dividend date so hopefully that i mean lets

944
01:15:21,035 --> 01:15:26,715
people sleep easy at night. Yeah, I was thinking about that too, because I was expecting that to

945
01:15:26,715 --> 01:15:31,235
happen. But then when I really started thinking about it, there's no reason for stretch's price

946
01:15:31,235 --> 01:15:38,375
to drop after the ex-dividend date, because usually when you're investing in a dividend stock,

947
01:15:38,675 --> 01:15:43,015
they're paying that dividend from the underlying, from that company itself.

948
01:15:43,735 --> 01:15:48,875
But they're paying the dividend, not from stretch, but they're paying the dividend from strategy. So

949
01:15:48,875 --> 01:15:53,355
would almost make more sense for strategy to dip on the ex-dividend date because they're the ones

950
01:15:53,355 --> 01:15:58,815
that are losing the money. There's no reason for stretch to dip at all in my mind. So I think

951
01:15:58,815 --> 01:16:04,895
this, you know, even the expectation of a dip may go away over some period of time.

952
01:16:05,455 --> 01:16:10,855
Let me, the computer, think about the computer, right? The computer comes in, no human, got no

953
01:16:10,855 --> 01:16:15,635
brain. You tell it, Hey, buy it at a hundred. If you can, if you can hold it on the ex-dividend

954
01:16:15,635 --> 01:16:22,195
date or if you could get out of it after you qualify for the dividend for less than the dividend,

955
01:16:22,755 --> 01:16:28,995
do it. It's like, yes. It's like, that's the simple trigger. Buy it. If you can get out of it for

956
01:16:31,315 --> 01:16:37,155
less than the Delta, you can have a non-brain computer run that calculation.

957
01:16:40,355 --> 01:16:45,395
Yeah. So theoretically people should be, because there's a time cost of money. I think you're

958
01:16:45,395 --> 01:16:48,795
you're right, Soleil, and I agree with what you're saying, but there's also a time value of money.

959
01:16:49,715 --> 01:16:52,855
So theoretically, I still think people are going to be selling on the ex-divided.

960
01:16:54,875 --> 01:17:00,415
Yeah, that makes sense. And I know people personally that are dividend hopping. They're

961
01:17:00,415 --> 01:17:07,075
collecting that one and then are rotating even into Seda and back and forth and kind of double

962
01:17:07,075 --> 01:17:14,115
dip in there. Yeah, the trading dynamics are really fascinating, but the inverse is also true,

963
01:17:14,115 --> 01:17:21,555
right like you you can think as you approach the record date there's also pressure coming in you

964
01:17:21,555 --> 01:17:27,555
know so again if you're thinking about being a capital manager and like how do i how do i want to

965
01:17:27,555 --> 01:17:34,035
if i if i bought it at par at what like should i sell it in order to sell it at par in the future

966
01:17:34,995 --> 01:17:40,915
i probably need to focus on the week of the record date when there's going to be the most demand as

967
01:17:40,915 --> 01:17:46,035
people and computers are coming in to get the interest rate to get out at par as well.

968
01:17:46,615 --> 01:17:51,995
There's probably a one-month window that you got to think, I may not get the dividend this

969
01:17:51,995 --> 01:17:58,095
week because I may have to hold it and wait for par right at the record date in order to get my

970
01:17:58,095 --> 01:18:04,715
primary capital back out. So yeah, I think the methodology and the gamesmanship around it,

971
01:18:04,715 --> 01:18:10,795
the game theory is evolving, right? What is this? Not even nine months old?

972
01:18:10,915 --> 01:18:15,775
not even nine months old but i agree with you i think the concept of thinking about

973
01:18:15,775 --> 01:18:22,695
the price of strategy going down relative to the dividend but like again jacking 90 million dollars

974
01:18:22,695 --> 01:18:30,515
on a 50 billion dollar stock like when bitcoin's moving as well that's probably yeah and even

975
01:18:30,515 --> 01:18:36,095
tying back in into what you were saying earlier mike about the um the incoming hockey stick

976
01:18:36,095 --> 01:18:46,015
so the next having is 2028 yes right and stretch will be three years seasoned in 2028 as well

977
01:18:46,015 --> 01:18:50,435
that's an interesting coincidence i think we might have to put those catalysts on our list

978
01:18:50,435 --> 01:18:59,675
you see i think that three years i've seasoned look i've been in this for eight and a half years

979
01:18:59,675 --> 01:19:07,235
So what I'm saying is when eventually you're going to pick a term, people are like, oh, I'm going to hold Bitcoin.

980
01:19:08,315 --> 01:19:09,615
Let's say you're 30 years old.

981
01:19:09,695 --> 01:19:11,795
You're going to hold it for 30 years.

982
01:19:12,355 --> 01:19:14,055
I'm not even 60 yet.

983
01:19:14,595 --> 01:19:15,535
And I'm old.

984
01:19:15,835 --> 01:19:16,235
Right.

985
01:19:16,315 --> 01:19:19,715
And so we're trying to tell you to hold something for 30 years to wait to cash out.

986
01:19:20,095 --> 01:19:22,215
Look, if you don't have much, I totally get it.

987
01:19:22,235 --> 01:19:23,495
And you're only 30 years old.

988
01:19:23,935 --> 01:19:24,855
Totally get it.

989
01:19:25,155 --> 01:19:26,315
That's a great idea.

990
01:19:26,315 --> 01:19:42,815
But my time horizon is, again, if we hit this hockey stick and somebody is going to say, you know, strategy, let's say my projection is correct and there is a hockey stick and Bitcoin re-rates over the course of three weeks, sorry, three weeks, three months, and it doubles.

991
01:19:42,815 --> 01:19:51,675
let's say it gets to 150 and strategy breaks a million uh bitcoin and they're at 1.2 million

992
01:19:51,675 --> 01:20:00,515
bitcoin and you're going into a positive 2027 year then people are like oh is it gonna and and

993
01:20:00,515 --> 01:20:05,875
and then bitcoin runs up to 300 000 over the course of three months and they say oh when's

994
01:20:05,875 --> 01:20:12,055
it gonna when's it gonna dip back down again you know what about the have no you're gonna be closer

995
01:20:12,055 --> 01:20:17,635
to the halving, not farther away, right? We're two years out from the halving. And so what's

996
01:20:17,635 --> 01:20:22,555
going to happen is in one more year from now, I'm trying to impart to people this, a sense of urgency.

997
01:20:23,475 --> 01:20:29,195
Again, if somebody comes to me and Bitcoin's three to $500,000 and they're like, oh, tell me about

998
01:20:29,195 --> 01:20:35,515
Bitcoin. Should I buy it now? And it's $500,000 and strategy has 3 million Bitcoins or two and a

999
01:20:35,515 --> 01:20:44,095
half million Bitcoins and it's been around for 18 or 19 years, what am I going to say? I'm not

1000
01:20:44,095 --> 01:20:47,955
going to say you're early. That's why I'm trying to say this right now. When somebody asks me about

1001
01:20:47,955 --> 01:20:52,975
Bitcoin, is there anything I can say to change your mind about Bitcoin? No. And I'm like, okay,

1002
01:20:52,975 --> 01:20:58,495
cool. Let's go talk about cars or motorcycles or dinner or whatever. It's not going to be about

1003
01:20:58,495 --> 01:21:04,075
Bitcoin. So I want that sense of urgency. And I've been saying that to people on spaces is,

1004
01:21:04,075 --> 01:21:09,015
hey, we're early because we haven't hit the inflection point. After the inflection point,

1005
01:21:09,215 --> 01:21:13,795
there's no longer, well, it's at a million. It's going to go to 10 million. When's that going to

1006
01:21:13,795 --> 01:21:19,775
happen? I don't know. Let's get the next 18 months right. And that's why my projections only go out

1007
01:21:19,775 --> 01:21:26,915
to Q4 2027 because with the prefs, and Jeff, you know this, and same thing with Dan, when you model

1008
01:21:26,915 --> 01:21:34,615
things, we don't have enough data points on any of the prefs, right, to say consistently what's

1009
01:21:34,615 --> 01:21:42,435
going to happen. I've got a total of nine prep STRC ATMs. Now, when they reset and they say,

1010
01:21:42,535 --> 01:21:47,475
hey, we're going to do $21 billion worth of STRC, I have an idea what the runway is going to be.

1011
01:21:47,955 --> 01:21:54,255
But I can tell you over the next whatever, the next two, three months or by the end of it,

1012
01:21:54,255 --> 01:22:00,795
By June, after the first two full quarters, I will have a really good idea what happens.

1013
01:22:00,935 --> 01:22:03,995
But by then, we could be at 900,000 Bitcoins.

1014
01:22:05,335 --> 01:22:07,995
And think about it.

1015
01:22:08,335 --> 01:22:17,355
If we're at 760,000 Bitcoins right now, let's assume he acquires another 11,000, hits 100,000 for the quarter, right?

1016
01:22:17,355 --> 01:22:19,955
And then he acquires another 10%.

1017
01:22:19,955 --> 01:22:24,475
it's going to put him at 860,000 Bitcoins.

1018
01:22:25,435 --> 01:22:28,515
He's line of sight at 860,

1019
01:22:29,095 --> 01:22:32,095
one quarter away from a million Bitcoins through the summer.

1020
01:22:33,275 --> 01:22:35,035
And that ends in September.

1021
01:22:35,235 --> 01:22:36,935
People are going to be like, oh, we're still early.

1022
01:22:37,035 --> 01:22:39,875
Well, this dude acquired him, started five and a half years ago

1023
01:22:39,875 --> 01:22:41,475
and got a million Bitcoins.

1024
01:22:41,475 --> 01:22:43,635
I want people to realize right now,

1025
01:22:43,735 --> 01:22:48,435
if it's September and strategy has a million Bitcoins,

1026
01:22:49,155 --> 01:22:51,255
The next, we're going to have a countdown.

1027
01:22:51,395 --> 01:22:53,695
I'm telling you right now, I know I'll predict the future.

1028
01:22:54,295 --> 01:22:59,375
We're going to have a countdown clock, just like we did for Triple Q inclusion, S&P 500.

1029
01:22:59,555 --> 01:23:00,415
We're going to have a countdown.

1030
01:23:00,995 --> 01:23:03,955
What day does strategy hit a million Bitcoins?

1031
01:23:05,715 --> 01:23:06,775
Dan, if you like to make that.

1032
01:23:06,775 --> 01:23:07,095
That's a good question.

1033
01:23:07,355 --> 01:23:08,035
That's a good question.

1034
01:23:08,715 --> 01:23:09,115
November?

1035
01:23:10,475 --> 01:23:12,535
And so everybody's going to be guessing.

1036
01:23:12,795 --> 01:23:15,855
There's probably going to be a lobby market, you know, things on this.

1037
01:23:15,855 --> 01:23:19,935
and there'll be countdown timers for when the strategy that's the narrative

1038
01:23:19,993 --> 01:23:22,293
The narrative is not S&P 500 inclusion.

1039
01:23:23,193 --> 01:23:24,873
I mean, it will be there, right?

1040
01:23:25,033 --> 01:23:25,633
If it's...

1041
01:23:25,633 --> 01:23:26,233
That will come.

1042
01:23:26,713 --> 01:23:27,173
That will come.

1043
01:23:27,173 --> 01:23:38,633
If they're accumulating a ton of Bitcoin down here and it just goes back above, what, I don't know, 94,000, you're talking about enormous gains on the balance sheet that have never been seen before.

1044
01:23:38,973 --> 01:23:48,553
Like, if they accumulate a million Bitcoin at $250,000, that's $250 billion of capital.

1045
01:23:48,553 --> 01:23:54,693
and that's assuming a one m nav yeah i'm just talking capital i'm not even talking market right

1046
01:23:54,693 --> 01:24:01,133
you're just talking i'm not even talking capital i'm talking capital like what uh liquid capital

1047
01:24:01,133 --> 01:24:07,093
yeah yeah right okay who's got the largest liquid treasury in the planet it's berkshire they've got

1048
01:24:07,093 --> 01:24:11,593
300 billion dollars in cash like you're pushing up against berkshire berkshire is a what a trillion

1049
01:24:11,593 --> 01:24:17,013
dollar company 900 billion dollar company right now at the moment right they've got 300 billion

1050
01:24:17,013 --> 01:24:21,213
of that is in cash. So it's like a third of their valuation is the cash that they hold on the

1051
01:24:21,213 --> 01:24:25,693
balance sheet. So Jeff, how long did it take Berkshire to get to that number? How many years?

1052
01:24:25,693 --> 01:24:34,993
I don't know. 40, 60, 60, 50, 40, 50, 60 years. And strategy will have done it in, in, in, in six.

1053
01:24:35,333 --> 01:24:41,633
It'll be six years this August. So I think, wait, if Saylor's watching this,

1054
01:24:41,633 --> 01:24:44,793
hey, Michael Saylor, I'm going to give you an idea.

1055
01:24:45,453 --> 01:24:46,453
I think that you should,

1056
01:24:46,533 --> 01:24:50,153
I did not get invited to your $100,000 Bitcoin party

1057
01:24:50,153 --> 01:24:51,913
a year and a half ago.

1058
01:24:52,433 --> 01:24:54,893
I would appreciate if you would have

1059
01:24:54,893 --> 01:24:57,713
strategy accumulates a million Bitcoins

1060
01:24:57,713 --> 01:24:58,753
and wherever you have it,

1061
01:24:58,813 --> 01:25:00,413
I would like to get invited to that.

1062
01:25:01,113 --> 01:25:02,153
That's my idea.

1063
01:25:02,533 --> 01:25:04,033
I would like to go to that party

1064
01:25:04,033 --> 01:25:06,793
with a bunch of other strategy folks.

1065
01:25:07,373 --> 01:25:10,753
And I think it's a great idea for you to have a party

1066
01:25:10,753 --> 01:25:12,973
and tell me what you want me to bring

1067
01:25:12,973 --> 01:25:14,093
and I'll bring it with me.

1068
01:25:14,533 --> 01:25:15,413
True North Party.

1069
01:25:15,693 --> 01:25:17,633
True North Party at the strategy.

1070
01:25:17,953 --> 01:25:18,933
Million Bitcoin Party.

1071
01:25:19,633 --> 01:25:21,653
What event is coming up in September

1072
01:25:21,653 --> 01:25:24,493
where we could have a party for the million Bitcoins?

1073
01:25:25,293 --> 01:25:26,473
Is there something in September?

1074
01:25:27,153 --> 01:25:27,533
I don't know.

1075
01:25:27,553 --> 01:25:27,893
I don't know.

1076
01:25:28,293 --> 01:25:32,493
We're pretty focused on like all of these TradFi conferences.

1077
01:25:32,673 --> 01:25:34,793
So we're going down the list of like,

1078
01:25:34,853 --> 01:25:36,533
okay, what are all these TradFi conferences?

1079
01:25:36,693 --> 01:25:40,073
So I'm lost on like non-TradFi conferences.

1080
01:25:40,753 --> 01:25:45,493
yeah let me give you a crazy crazy idea you know strategy could be at one and a half million

1081
01:25:45,493 --> 01:25:51,553
bitcoins by the next strategy world i can tell you can they bring the million million bitcoin

1082
01:25:51,553 --> 01:25:57,553
to the party i'm going to take selfies with it go ahead jeff sorry i'm just going to take the under

1083
01:25:57,553 --> 01:26:02,213
on a million and a half by next strategy world oh let me i'll pull up my chart and tell you what day

1084
01:26:02,213 --> 01:26:08,033
when they hit when they hit a million and a half on the uh price price has to go vertical

1085
01:26:08,033 --> 01:26:15,373
yeah i think price of bitcoin has to give yeah it will price of under on a million and a half you

1086
01:26:15,373 --> 01:26:22,693
said it's i i have it goes to one and a half million in q2 2027 see guys i i see how we

1087
01:26:22,693 --> 01:26:28,173
changed the shifted here that's the hockey stick that's when the price goes right look i'm i want

1088
01:26:28,173 --> 01:26:32,793
to tell you guys you're like math isn't math like i can't you can't you can't be buying you can't be

1089
01:26:32,793 --> 01:26:40,533
buying $50 billion of Bitcoin and like, it's just. Right. I would rather that the price goes

1090
01:26:40,533 --> 01:26:45,793
vertical than he gets 3 million Bitcoin. Now, Saylor might have a different idea, but my view is,

1091
01:26:45,873 --> 01:26:50,613
I think that you guys are right, that this hockey stick is going to happen. And I would prefer the

1092
01:26:50,613 --> 01:26:55,913
price to go vertical. And I think it's going to come somewhere around, I don't know, 1.1,

1093
01:26:55,973 --> 01:27:00,433
one and a quarter million Bitcoin. If we have, if the election isn't crazy, if we don't bomb

1094
01:27:00,433 --> 01:27:10,153
another country. Don't fire off a nuke. Don't have a worldwide pandemic. Don't get the evergreen

1095
01:27:10,153 --> 01:27:16,873
caught sideways in the Suez Canal. Don't have the straighter Hormuz closed off. Don't have oil

1096
01:27:16,873 --> 01:27:21,893
over $100 a barrel. I don't think we're going to get a reduced interest rate. But anyway,

1097
01:27:22,013 --> 01:27:26,813
people can wish for that. But I'm just trying to say, as long as no real disasters happen,

1098
01:27:27,533 --> 01:27:29,033
This inflection point is going to happen.

1099
01:27:29,193 --> 01:27:31,433
And the only question is when, not if.

1100
01:27:33,253 --> 01:27:35,933
And I would like to be at Strategy World next year.

1101
01:27:36,253 --> 01:27:38,753
And the stock price is north of $1,000.

1102
01:27:39,473 --> 01:27:41,013
You guys can quote me on that.

1103
01:27:41,273 --> 01:27:43,173
It's hard not to be bullish here.

1104
01:27:45,273 --> 01:27:46,353
I'm all bulled up.

1105
01:27:46,573 --> 01:27:48,393
I feel like the bottom's in.

1106
01:27:50,073 --> 01:27:52,553
I mean, obviously, a lot of geopolitical tension.

1107
01:27:52,753 --> 01:27:54,373
We got to work our way through here.

1108
01:27:54,373 --> 01:27:58,573
But yeah, it's a fascinating, fascinating moment in time.

1109
01:27:58,833 --> 01:28:00,053
Like we're going to look back at this, right?

1110
01:28:00,133 --> 01:28:03,053
Like we're at the birth of digital credit.

1111
01:28:03,933 --> 01:28:07,893
Like 30 years from now, we're going to look back at this and be like, holy crap, we were there.

1112
01:28:08,453 --> 01:28:16,633
You know, like this is this fundamentally changed like how society like gathered around a different form of capital.

1113
01:28:17,253 --> 01:28:18,233
I agree with that.

1114
01:28:18,233 --> 01:28:40,928
Like let get lost in this like tiny time period But the reality is like capital moves on on like uh geological time right so 20 years from now dan hillary will not even be 50 you gonna barely be 50 right no you right yeah yeah and

1115
01:28:40,928 --> 01:28:44,268
you guys are gonna be like hey what happened to that old guy grain back then you're like oh he's

1116
01:28:44,268 --> 01:28:49,688
still alive he just drives around in cars but he gave up motorcycles and you're like really yeah

1117
01:28:49,688 --> 01:28:55,088
does he show up anymore? Nah, we just kind of call him on the phone whenever. And he tells us

1118
01:28:55,088 --> 01:29:00,508
to call him immediately because he wants to run some idea past me. And then he hangs up on you.

1119
01:29:00,908 --> 01:29:05,208
Right. And I think that's how this plays out. This is going to be a club. It's going to be

1120
01:29:05,208 --> 01:29:10,968
just like Berkshire Hathaway. British HODL said this. Some guys don't like them. You know what?

1121
01:29:11,208 --> 01:29:18,128
And Fred Kruger said this. Sayers got 5 million followers. That is the whole universe right now

1122
01:29:18,128 --> 01:29:19,748
of people that are interested in Bitcoin.

1123
01:29:20,568 --> 01:29:22,268
There's only 5 million people in the whole world

1124
01:29:22,268 --> 01:29:24,448
that maybe give a crap about it,

1125
01:29:24,568 --> 01:29:26,628
that have an understanding of it.

1126
01:29:26,668 --> 01:29:28,528
And somebody tells me, no, there's more.

1127
01:29:28,688 --> 01:29:29,508
No, there isn't.

1128
01:29:30,228 --> 01:29:32,288
It's a small subset of people.

1129
01:29:32,288 --> 01:29:36,008
Man, I would say probably a quarter of those might be bots.

1130
01:29:36,448 --> 01:29:37,768
I don't know, maybe 10%.

1131
01:29:37,768 --> 01:29:39,768
Right, it's like how many lost Bitcoins are there?

1132
01:29:39,888 --> 01:29:42,988
And then another quarter probably hate him,

1133
01:29:43,088 --> 01:29:46,048
but they follow him because he's on all the podcasts.

1134
01:29:46,048 --> 01:29:53,448
and then the people that um you know then there's probably a quarter that are like oh we're hardcore

1135
01:29:53,448 --> 01:29:57,168
bitcoiners but you got to follow what michael saylor does all right so then you've got maybe 25

1136
01:29:57,168 --> 01:30:03,328
that are like interested in mstr and of the 25 that are interested in mstr how many understand

1137
01:30:03,328 --> 01:30:09,388
the prep model it's probably a fraction of that and then you go even further like it's uh yeah it's

1138
01:30:09,388 --> 01:30:13,648
it's rare air up here yeah so i want to tell everybody that's listening how many people are

1139
01:30:13,648 --> 01:30:17,388
it right now. Oh, I have no idea. We got this new stream. I can't tell.

1140
01:30:17,568 --> 01:30:21,168
Yeah. Let's go take a look at the new stream. And so I want to say we have

1141
01:30:21,168 --> 01:30:27,388
12,000, 13,000 views. I want to tell everybody that's watched this. You're in the most exclusive

1142
01:30:27,388 --> 01:30:34,148
club in the whole world, right? And you could say maybe there's the Nvidia club or the Amazon club

1143
01:30:34,148 --> 01:30:39,668
or people that buy those stocks. This one's the most exclusive club in the world. It's the smallest

1144
01:30:39,668 --> 01:30:46,608
number. It's the most volatile stock, MSTR, based on Bitcoin. There's this thing called stretch.

1145
01:30:46,928 --> 01:30:51,988
You're in that group. If you go talk to your friends, family, whatever, they're going to think

1146
01:30:51,988 --> 01:30:59,068
you're nuts. And just say, look, we watch these guys. They do calculations. They figure this stuff

1147
01:30:59,068 --> 01:31:04,908
out. We don't know if they're right. But if they are right, and they seem to have been pretty right

1148
01:31:04,908 --> 01:31:11,328
so far, you know, this, this club is going to just be the club you want to be in. And,

1149
01:31:11,448 --> 01:31:17,068
and I just want to say that, you know, everybody listening, it's it, unless all the math is wrong.

1150
01:31:17,908 --> 01:31:22,268
And I was talking about this, somebody else this morning, I said, is it possible we're delusional?

1151
01:31:22,788 --> 01:31:31,328
And he's like, unlikely. The only question is time. Is it, is it six, one year, 18 months?

1152
01:31:31,328 --> 01:31:53,788
Yeah. And I don't think this is, and I'll tell you right now, and people are like, well, what happens if Bitcoin's $25,000? I was on a space. Well, what happens if Bitcoin's $25,000 in Q4 of 2027 and my projection's wrong? I said, I'm not going to be on the space anymore. I know I've already said it once in this call, but if Bitcoin's at $25,000 in Q4 of 2027, you don't have to listen to my scratchy voice.

1153
01:31:53,788 --> 01:32:02,048
Yeah, the hard thing is, is like the math, the math is hard to, you know, refute. Like it's all

1154
01:32:02,048 --> 01:32:06,608
backed by math. Bitcoin's backed by math. Like it's bound in physics. And then you've got, okay,

1155
01:32:06,608 --> 01:32:11,628
now I've got a credit instrument that's bound in physics. And now you've also got the SEC coming out

1156
01:32:11,628 --> 01:32:15,548
and saying, oh yeah, you know how that quarterly reporting that you rely on, we're actually

1157
01:32:15,548 --> 01:32:19,308
thinking about removing the quarterly reporting required. And we're actually going to go less,

1158
01:32:19,308 --> 01:32:23,068
Like you need to report less, maybe twice a year.

1159
01:32:23,808 --> 01:32:28,548
And meanwhile, you have this other, you've got strategy and our company, we're filing

1160
01:32:28,548 --> 01:32:31,908
information all the time.

1161
01:32:32,168 --> 01:32:34,088
And I mean, strategy is doing it every single week.

1162
01:32:34,208 --> 01:32:35,708
So you have up to date information.

1163
01:32:35,888 --> 01:32:37,948
It's like you wanted to know what it is.

1164
01:32:38,228 --> 01:32:38,888
Here you go.

1165
01:32:39,468 --> 01:32:44,308
Like that breeds the liquidity, right?

1166
01:32:44,328 --> 01:32:46,948
You are able to calculate information.

1167
01:32:46,948 --> 01:32:51,728
you're able to absorb information in very short order.

1168
01:32:52,928 --> 01:32:57,568
And that's like, if you, if you remove like some reporting requirements,

1169
01:32:57,568 --> 01:33:00,828
like these illiquid instruments are just going to get even more illiquid.

1170
01:33:00,908 --> 01:33:04,308
You just have no idea what's happening and you have no idea yet.

1171
01:33:04,368 --> 01:33:06,548
You may have to like reprice your entire portfolio.

1172
01:33:06,548 --> 01:33:08,208
Like twice a year.

1173
01:33:08,308 --> 01:33:13,548
You're like, I can't even wrap my head around like the uncertainty element in

1174
01:33:13,548 --> 01:33:19,928
in another three months of like a world that's changing every single week.

1175
01:33:19,928 --> 01:33:20,928
Right?

1176
01:33:20,928 --> 01:33:23,548
Green, you said earlier today, it's like, oh, that those are the old days.

1177
01:33:23,548 --> 01:33:24,548
That was a Monday.

1178
01:33:24,548 --> 01:33:44,203
I keep on saying to Pete you know look I don I know if if if strategy or pretty much any Bitcoin treasury company will have positive EPS on any given quarter Why do I know that Because I know the ending price of Bitcoin in the last quarter which I believe was that started this quarter

1179
01:33:44,203 --> 01:33:49,283
So if the price of Bitcoin is above $87,000, then strategy is going to have positive EPS.

1180
01:33:49,523 --> 01:33:52,923
And you just multiply out the difference by the number of Bitcoin that they hold.

1181
01:33:53,123 --> 01:33:54,243
So we already know this.

1182
01:33:54,243 --> 01:34:01,543
And so strategy is able to report their earnings right within like a week after every quarter ends.

1183
01:34:01,723 --> 01:34:04,863
The closing the books for them has become incredibly easy.

1184
01:34:05,243 --> 01:34:05,963
So those are the updates.

1185
01:34:06,083 --> 01:34:17,863
The other positive news happened was that Bitcoin by the CFTC and the SEC did a joint announcement that they decided to work together, which is pretty ridiculous, right?

1186
01:34:17,923 --> 01:34:19,543
That it's taken this long to do this.

1187
01:34:19,683 --> 01:34:22,323
And a whole bunch of securities were labeled to be a commodity.

1188
01:34:22,963 --> 01:34:25,203
Now, I will put a dig on this.

1189
01:34:25,323 --> 01:34:29,503
How XRP could be labeled a commodity is beyond me.

1190
01:34:29,503 --> 01:34:38,623
But the fact that Bitcoin is a commodity and that's both jointly said by the CFTC and the SEC, for me, that's good enough.

1191
01:34:39,123 --> 01:34:40,443
And so that was a big event.

1192
01:34:40,523 --> 01:34:44,823
And it had a whole listing of all these other cryptos that were labeled commodities.

1193
01:34:45,103 --> 01:34:46,043
So that was a big deal.

1194
01:34:46,123 --> 01:34:47,363
I think that got lost in the news.

1195
01:34:47,363 --> 01:34:56,303
And the other thing was STRC now has two agents that can process the ATMs or more than two agents.

1196
01:34:56,563 --> 01:35:01,103
So I think that the market makers right now on STRC are going full bore.

1197
01:35:01,763 --> 01:35:05,663
And I think that, you know, and I've said this on a bunch of stuff.

1198
01:35:05,663 --> 01:35:11,543
They have somebody that can go after hours and pre-market hours, which is just like, that's a lot of trading.

1199
01:35:11,543 --> 01:35:17,023
And you can be on the bid after hours, pre-market.

1200
01:35:17,363 --> 01:35:23,223
And I think we said this last week, but I keep on rethinking about what Saylor said when we saw him down in Las Vegas.

1201
01:35:23,963 --> 01:35:30,883
And now that I think about it, he has to have multiple large buyers that are buying STRC.

1202
01:35:30,883 --> 01:35:40,003
Again, it's not all of a sudden a bunch of millionaires wake up and like, oh, I'm going to go buy a million dollars worth of STRC or $100,000 worth of STRC today.

1203
01:35:40,523 --> 01:35:44,083
It's no, their institutions are buying this to put this into these large pools of capital.

1204
01:35:44,463 --> 01:35:46,283
So I can't get any more bullish.

1205
01:35:46,283 --> 01:35:47,683
I'm going to wrap up now.

1206
01:35:47,823 --> 01:35:50,303
You guys could stay on, but I just wanted to say, look,

1207
01:35:50,343 --> 01:35:51,623
I appreciate everything that we've done.

1208
01:35:51,703 --> 01:35:52,583
Everybody that's listening.

1209
01:35:53,143 --> 01:35:55,303
I'm going to keep on posting and talking about this.

1210
01:35:55,383 --> 01:35:59,463
Reach out with any questions and, and a part of this group, you know,

1211
01:35:59,503 --> 01:36:01,203
congratulations guys, Jeff,

1212
01:36:01,263 --> 01:36:03,843
the new platform is great to the team that put this together.

1213
01:36:04,403 --> 01:36:04,763
Congratulations.

1214
01:36:05,503 --> 01:36:05,903
Yeah.

1215
01:36:06,063 --> 01:36:06,603
We've got,

1216
01:36:06,703 --> 01:36:10,643
we've got a lot of energy put into the behind the scenes in order to get

1217
01:36:10,643 --> 01:36:11,823
this to where it is today.

1218
01:36:11,923 --> 01:36:12,063
Yeah.

1219
01:36:12,063 --> 01:36:13,263
It's not, it's not easy.

1220
01:36:13,263 --> 01:36:16,563
We've got a whole production crew and we've been working pretty hard on it.

1221
01:36:16,683 --> 01:36:17,803
So a lot to come.

1222
01:36:18,303 --> 01:36:19,023
I appreciate that.

1223
01:36:19,203 --> 01:36:19,903
Take care, guys.

1224
01:36:19,963 --> 01:36:20,383
Have a good night.

1225
01:36:21,243 --> 01:36:21,403
Yep.

1226
01:36:21,603 --> 01:36:21,903
Night, Mike.

1227
01:36:22,143 --> 01:36:22,523
Later, Green.

1228
01:36:23,603 --> 01:36:24,003
I will go.

1229
01:36:24,483 --> 01:36:25,743
Yeah, I guess final thoughts.

1230
01:36:26,023 --> 01:36:31,803
And maybe I will start with my last piece of math because Green brought the earnings up, which I think is fascinating.

1231
01:36:34,143 --> 01:36:37,463
Let's just say the quarter ended here today, March 18th.

1232
01:36:37,583 --> 01:36:39,103
It's obviously we got 12 days left.

1233
01:36:39,543 --> 01:36:41,283
And the price of Bitcoin is $71,000.

1234
01:36:41,283 --> 01:36:45,723
If Bitcoin goes back up to all-time highs, $126,000 in Q2.

1235
01:36:46,163 --> 01:36:48,603
Let's just say it closes Q2 at $126,000.

1236
01:36:48,943 --> 01:36:49,803
Complete speculation.

1237
01:36:52,223 --> 01:36:57,083
That delta, that'd be $54,000 difference in the price of Bitcoin,

1238
01:36:57,643 --> 01:37:00,303
multiplied by 761,000 Bitcoin,

1239
01:37:00,443 --> 01:37:02,743
which is how many Bitcoin that strategy holds right now.

1240
01:37:03,163 --> 01:37:06,923
That'd be a $41 billion quarter positive earnings.

1241
01:37:08,443 --> 01:37:10,883
That hits headlines, right?

1242
01:37:10,883 --> 01:37:15,503
Like obviously they've had some loss, but it's just like, it is volatility.

1243
01:37:15,503 --> 01:37:18,683
Like the earnings reports, even if you have losses and gains,

1244
01:37:18,683 --> 01:37:20,883
like that is volatility in and of itself as well.

1245
01:37:21,283 --> 01:37:24,823
So it'll just be fascinating to see how this continues to evolve.

1246
01:37:24,923 --> 01:37:27,223
I mean, credit quality, it looks really good here.

1247
01:37:27,523 --> 01:37:28,663
Balance sheet looks healthy.

1248
01:37:29,743 --> 01:37:30,503
I'm pulled up.

1249
01:37:30,823 --> 01:37:36,323
I've been selling a billion dollars a week when the market's on, on STRC.

1250
01:37:36,403 --> 01:37:36,983
That's fascinating.

1251
01:37:38,563 --> 01:37:39,483
Now I'll pass it over to you, Soleil.

1252
01:37:39,483 --> 01:37:39,923
Final thoughts.

1253
01:37:39,943 --> 01:37:40,463
What are you thinking about?

1254
01:37:40,883 --> 01:37:59,183
Yeah, so before I do my final thought, I'll ask a question real quick. So I'll ask you, Jeff, I feel like you probably sat in the front row in math class. So let me ask you this. If you wanted to dig a hole in the yard to plant flowers, is it faster to do that with your bare hands or with a shovel?

1255
01:38:00,283 --> 01:38:01,523
Shovel. Absolutely.

1256
01:38:01,943 --> 01:38:02,783
That's your final answer.

1257
01:38:02,783 --> 01:38:08,803
okay wrong it's a trick question you're born butt-ass naked right all you have is your bare

1258
01:38:08,803 --> 01:38:13,203
hands if you want a shovel you have to go and make one with your bare hands which means you've

1259
01:38:13,203 --> 01:38:17,443
got to go and fashion a stick you got to learn blacksmithing to make the end of the shovel

1260
01:38:17,443 --> 01:38:22,803
you got to connect them together by then i've already made like 200 holes in the ground with

1261
01:38:22,803 --> 01:38:28,883
my bare hands right so the reason i'm bringing this up is because of that question that was asked

1262
01:38:28,883 --> 01:38:31,343
of Sailor at the Q&A and it was like,

1263
01:38:31,343 --> 01:38:32,683
what about the stuff that you're doing

1264
01:38:32,683 --> 01:38:34,503
that has negative BPS, right?

1265
01:38:34,503 --> 01:38:35,883
Negative Bitcoin per share.

1266
01:38:38,183 --> 01:38:46,858
And so that kind of the answer right The creating the shovel is BPS But once you have the shovel you going to be digging more quickly right

1267
01:38:46,858 --> 01:38:50,798
And you're going to catch up and surpass the person that's digging with their hands.

1268
01:38:51,437 --> 01:38:53,238
And that was basically his answer.

1269
01:38:53,398 --> 01:38:57,958
It was like, look, we're going to take some actions that will have negative BPS consequences

1270
01:38:57,958 --> 01:38:58,798
in the short term.

1271
01:38:58,997 --> 01:39:04,658
But in the long term, it's going to improve the credit quality for Stretch and the other

1272
01:39:04,658 --> 01:39:12,497
preferreds and we're going to be able to buy more Bitcoin later. So I think that kind of explains it

1273
01:39:12,497 --> 01:39:19,158
pretty well. And hopefully the negative BPS questions can make me stop with that nonsense.

1274
01:39:19,778 --> 01:39:26,738
It's all about the credit quality. Like what is the value of MSTR? The value of MSTR is a function

1275
01:39:26,738 --> 01:39:34,018
of the interest in the credit product, right? Like to your point, like the credit quality is the

1276
01:39:34,018 --> 01:39:39,458
is the shovel. Like you build the credit quality in the, uh, you build the credit quality in the

1277
01:39:39,458 --> 01:39:45,458
balance sheet and the more, the more you can dig, right? Like if the credit quality is improved,

1278
01:39:45,458 --> 01:39:49,377
the more you can dig. And I think that's also why we see them kind of like scale the balance sheet

1279
01:39:49,377 --> 01:39:54,178
when they are selling the instrument as well, is that they can, the credit quality improves.

1280
01:39:55,138 --> 01:39:58,978
Uh, they're getting the capital in the door on SDRC. They're going to buy Bitcoin with it. They're

1281
01:39:58,978 --> 01:40:02,898
scaling, uh, they're selling, they have the ability to sell MSDR on the ATM as well.

1282
01:40:02,898 --> 01:40:06,737
and they are putting that capital on the balance sheet. That improves, that keeps the

1283
01:40:06,737 --> 01:40:12,898
amplification relatively similar. And that allows them to kind of continue to scale that. That

1284
01:40:12,898 --> 01:40:16,898
improves the liquidity. The more shares that are outstanding on STRC improves the liquidity profile

1285
01:40:16,898 --> 01:40:23,818
of those. Honestly, both. It improves the liquidity profile of both MSTR and STRC. So

1286
01:40:23,818 --> 01:40:29,017
they're very symbiotic. They work together and they kind of need each other. But

1287
01:40:29,017 --> 01:40:34,558
Yeah, you got to remember that the cost of doing business includes creating the tools to do your job.

1288
01:40:34,918 --> 01:40:36,837
And I learned that in Saifedean.

1289
01:40:37,737 --> 01:40:40,757
He's got a YouTube series, Principles of Economics.

1290
01:40:41,017 --> 01:40:42,318
So check that out.

1291
01:40:42,397 --> 01:40:44,277
It's never too late to learn a little something.

1292
01:40:45,658 --> 01:40:46,198
I like that.

1293
01:40:46,377 --> 01:40:47,298
Yeah, you got to create the tools.

1294
01:40:48,077 --> 01:40:50,897
And the tool in this instance is credit.

1295
01:40:52,837 --> 01:40:53,277
Right?

1296
01:40:53,397 --> 01:40:54,558
The tool is credit quality.

1297
01:40:55,517 --> 01:40:55,857
Exactly.

1298
01:40:56,038 --> 01:40:56,678
Got to create the tool.

1299
01:40:56,678 --> 01:41:01,017
Dan, over to you. Final thoughts.

1300
01:41:02,277 --> 01:41:06,158
Yeah, I think there's a big buyer on the other side of stretch that we're not seeing.

1301
01:41:07,237 --> 01:41:12,637
And I think ultimately it's going to be a real unlock for people looking for short-term money

1302
01:41:12,637 --> 01:41:17,077
and excited about taking on leverage. And the interesting thing about leverage,

1303
01:41:17,077 --> 01:41:22,577
and I keep talking about this, is what is M2 money supply or just paper money? It is,

1304
01:41:22,577 --> 01:41:26,497
in fact leverage, right? Because we live in a fractional reserve banking system. So all paper

1305
01:41:26,497 --> 01:41:32,257
money is essentially created off reserves that don't back one-to-one the paper assets that are

1306
01:41:32,257 --> 01:41:39,718
issued in the form of numbers in a bank account. So I think the ultimate fate of Stretch is this

1307
01:41:39,718 --> 01:41:48,517
crazy carry trade where borrowed money is invested into STRC in kind of a bottomless fashion via

1308
01:41:48,517 --> 01:41:53,158
institutions, banks, hedge funds with access to institutional capital, et cetera, et cetera.

1309
01:41:54,117 --> 01:42:00,918
That just, water runs downhill and ultimately low yield will meet high yield, especially when that

1310
01:42:00,918 --> 01:42:05,477
low yield is given out for free in the form of US dollars. So I think it's a big idea.

1311
01:42:07,477 --> 01:42:12,918
Yeah. We're on the verge of the biggest idea in all of finance, right? The world is changing very

1312
01:42:12,918 --> 01:42:19,938
fast. Kind of leads me to my final thought. And my final thought is the US debt just passed $39

1313
01:42:19,938 --> 01:42:27,577
trillion. I think five years ago, it was $25 trillion. That just continues to expand very

1314
01:42:27,577 --> 01:42:34,218
rapidly. Debt to GDP continues to rise. Nothing stops the strain. I think the world is changing

1315
01:42:34,218 --> 01:42:39,097
very quickly. We're seeing it with AI. There is disruption on the horizon, not just in the private

1316
01:42:39,097 --> 01:42:44,538
credit market, but I would also keep an eye on the public credit market. The rating agency aspect

1317
01:42:44,538 --> 01:42:52,718
and the fragility of the bonds in the public domain that are right on the fringe, I think,

1318
01:42:52,837 --> 01:43:02,357
is where a lot of the crux of a credit problem in the market will happen. So I'd keep an eye on

1319
01:43:02,357 --> 01:43:09,038
just investment grade corporate credit that's triple B rated and subject to AI disruption.

1320
01:43:09,038 --> 01:43:14,997
I think that may result in significant capital reconstruction within the entire market. And

1321
01:43:14,997 --> 01:43:20,117
I think that capital is going to be looking for a home in the future. So there's a lot there.

1322
01:43:21,918 --> 01:43:26,357
It's a little bit spine tingly when you start to piece it all together, but

1323
01:43:26,357 --> 01:43:34,438
let's keep an eye on it. Cool. All right. Well, thank you everybody for joining episode 59 of

1324
01:43:34,438 --> 01:43:39,218
True North and we will see you next week. Big shout out to the entire Strive team,

1325
01:43:39,698 --> 01:43:43,117
everybody that's working on behind the scenes. We've got some edits to do

1326
01:43:43,117 --> 01:43:45,777
and we'll get back to the grind. We'll see you next week.

1327
01:43:46,577 --> 01:43:48,298
Yeah, they did a great job. Good night, everybody.