Well now, don't you just have time to prepare or orbit.
If it hadn't opened further by the F 많+.
Wait, what happened to you?
Don't need to repeat this later.
Thank you.
please consult your own investment and tax advisors.
And now I'll hand it over to the True North team
for your regularly scheduled programming.
Woo! Welcome back.
True North, the investment-grade Bitcoin podcast, episode 59.
We've got a new platform, we've got a new stream,
but we've got the same crew.
So we are excited to be here today.
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.
Enormous week. $1.5 billion raised by strategy this last week. $22,000 Bitcoin acquired.
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.
We'll talk about trading volume. We'll talk about bank balance sheets. We'll get into bad bonds a little bit.
building on the preferred equity. How is this evolving? What can be made? What can be built
with these things? And then last week, we'll talk about efficiency of transactions and AI and how
this entire ecosystem is evolving. So I think we've got a great show for you tonight. Got a lot
to talk about and things are bubbling. So without further ado, I'll pass it over to Dan, Mike, and
Soleil. We'll just talk about what we're thinking about. I'm going to go over to you, Dan. We'll
start with you. What's on your mind? Yeah. Hey, this is super exciting. I mean,
I think we're seeing the stretch thesis play out in real time. We're getting a lot of traction,
a lot of engagement on our posts. We're seeing stretch perform incredibly well. We're seeing,
you know, a real bid on Bitcoin, a billion dollars of stretch last week, I think is a big,
big deal. I'm massively, massively excited for the implications and the products being built on top
of stretch. I think it has better product market fit than like Bitcoin for corporations, even though
I do believe Bitcoin for corporations is the end goal. Right now, stretch for corporations is the
current goal. And I'm super excited about working in the space and seeing what people bring to the
table. Beautiful. Mike, over to you. You're fired up on spaces. You're arguing with people.
You're telling people what's up. What's going on? It's everything. Look, in every cycle,
there's a product that you have to determine if it's really a game changer. And that we talk a
lot about STRC and MSTR. I've posted two huge articles this week, close to 100,000. It's over
400,000 views between both of them. Just wrote one today. Strategy Breaks Bitcoin. I did a space
on it. I had 3,000 people that came and went within an hour. Almost 600 people were in their
peak timeframes. I've been in lots of spaces trying to educate people about how STRC works,
what it's doing to MSTR, and the supply shock. And I'm ready to talk with you guys all pumped
up about this. Right on. Right on. Excellent. Over to you, Soleil. You're out last week. You're
back here you're all refreshed from vacation i'm sure you probably didn't take much time off on
thinking about this what's going on hell yeah i sent you guys that uh that message when i was
hiking bear canyon and said only bulls here and um i know people might get sick of me talking doing
tesla parallels but i think musk said something like prototypes are easy and production is hard
but the way that stretch is pumping like production is in full swing i mean it's just
like it's flying off the shelves and uh i couldn't be more excited about it yeah yeah i continue to
see this as a digital labor right every one of these pref instruments whether you hold it or
whether they're selling it it's it's labor labor is happening in the risk taking and converting
refining that crude commodity bitcoin into a low volatility instrument which is just totally
fascinating uh i've been a little quiet on x recently we've got a lot going on behind the
scenes. We're clearly building here with True North. We've got a new stream, new platform.
Hope you guys like it. It's exciting. We're taking it to the next level. We are going to have a
rebranded website out here within probably the next seven days as well. I look forward to pushing
that out to the ecosystem. I think you guys will like it. A lot of good content and continuous
research that's going to be funneling through there, which is fantastic. Obviously, we at
Strive, we've got a provincial preferred equity in the market as well, approaching par. We came
out to the market last week with a bunch of changes and updates to the instrument and guidance.
So excited about how that's kind of getting accepted within the market. And we're seeing
that dynamic play out. Obviously, Bitcoin's seen a pretty significant bid to the upside,
which is great. And I keep coming back to this concept of the plumbing of the market. The
architecture of the market is just so much different than it was in 2022 in the last bear
market. Right. I think I saw I saw somebody post, you know, like, oh, it looks exactly like exactly
the same as the 2022 bear market. But then I overlaid the Fed funds rate next to it. And it's
like the 2022 bear market. As soon as the Russia Ukraine war broke out, interest rates also went
from zero to five and they ripped higher within 12 months, just as the Fed came out and said
inflation was transitory. You know, don't worry about this. And then they came out and ripped
interest rates in front of everybody's faces at the fastest rate that they had since, I think,
1980. So completely unexpected and not a surprise that the risk market sold off significantly. And
then obviously there was the fallout with FTX, Celsius, BlockFi, and all those other bad actors.
But I mean, you think about where we're at today, regulations change, you've got the ETFs that's
change, you keep following the ETFs that they are constant buyers coming in on the ETFs. You'd think
with the price being down 40 or 50%, there would be some outflows. But I think the amount of Bitcoin
that BlackRock holds, I think is about constant, which is a bit surprising, right? That's signal.
And you think about where we're at in the cycle, we're approaching 2027, 2028. We're going to halving
on the horizon. We like to think they don't matter anymore, but they really do, right? They're going
of matter for marketing too. And anybody going out and selling the best performing ETF in history
is going to go front run the halving probably all of 2027. And, you know, think about that as well.
And that should coincide with the maturity of these prep instruments, right? I think
February was when they were launched in 2025. Stretch was launched in July of 2025.
As they mature, get into year two, year three, these and the dividends continue to get paid.
the interest in these instruments is going to grow, is likely to grow pretty significantly.
So let's, I'm going to jump over to, we haven't done this in a couple of weeks,
and I've got to jump into the balance sheet because we've got a hit on this. The balance
sheet looks significantly different than it has in the past. And we usually start every stream
with this. For those of you that are new here, we talk about Bitcoin, we talk about Bitcoin
securities, we talk about MSTR, we talk about preferred equity, we talk about capital structure.
Our goal is to cover everything in the complex financial ecosystem of Bitcoin.
So what you're looking at here on the screen, this is the strategy balance sheet.
So as of, oh, that's wrong.
As of 3, 18, 26, 761,000 Bitcoin held.
Bitcoin price prior to jumping on the stream was around 71,000.
MSTR price 140.
So strategy has about $54 billion in assets on the balance sheet.
USD reserve, $2.25 billion.
The debt, $8.2 billion.
$10 billion in preferred stock.
And why do I have two of these?
Let's hide one.
$10 billion in preferred stock.
So net capital.
If you're just to back out the assets held on the balance sheet minus the debt, right?
Like it's all convertible debt, but let's just assume it didn't convert.
If it didn't convert, they would still have $48 billion of net capital on the balance sheet.
against a $10 billion of preferred stock and a billion dollar annual preferred dividend payment.
So they can effectively, just with a capital held on the balance sheet, if they had to sell it,
which we don't anticipate they will, if they had to sell it to pay off the dividends into
perpetuity, they'd have 46 years of capital coverage just based on the Bitcoin on the
balance sheet, let alone the USD reserve to buffer in between. And so you look at the leverage ratio,
right? Like a lot of people still don't understand like the leverage ratio and the design of this
corporate balance sheet and strategies leverage ratios, incredibly small, 11%. You're looking at
the debt relative to the assets on the balance sheet. And then looking at total amplification
being the notional value of the preferred plus the debt on the balance sheet. That's a 32%
amplification ratio. You start to think about relativities, right? Like, Grain, you talk about
this a lot with homes, right? If you get it, if you put 20% down on a mortgage, you're actually,
you know, oh, you're, you're five to one levered. You're five to one levered. So the 500% leverage
ratio, right? The relativity of your asset relative to your liability. So, so thinking about
the design and scale is incredibly important. Now, why does this work? This works because you've got,
You've got a significant pool of liquidity that's sitting behind a very relatively small,
compared to the balance sheet, monthly dividend obligation.
So this billion dollar is an annual dividend obligation.
If you divide that by 12, the monthly dividend obligation is $90 million.
Well, they've got $54 billion.
So you've got significant liquidity that's sitting behind this.
You've got this enormous pool of liquidity that's sitting behind it.
Bitcoin itself is liquid. Dollars themselves are liquid. So you have these expressions of Bitcoin
that are fascinating, right? You've got amplified Bitcoin being the common stock,
and you've got digital credit being the low volatility instrument. And what they've done
is they've taken this raw commodity and split it into two pieces where you've got a high volatility
instrument and a low volatility instrument. Obviously, they've got several of the low
volatility instruments. But those attract different pools of capital for different reasons.
And that liquidity pool that's sitting behind the liabilities is what makes the other instruments
liquid. That's what makes the preferred equity liquid. That's what makes the common stock liquid.
And because the common stock is so liquid, they have the ability to access capital via the ATM
to pay the dividends using capital raised on the common stock, primarily because there are
computers that are using the common stock as an expression of the underlying Bitcoin,
which is moving pretty consistent. So I'm going to pause there. We haven't done this in a couple
weeks. You guys have anything else to add on capital structure? I think it was a good overview,
Jeff. I want to... I think... Go ahead. Yeah, go ahead, Grant. Go ahead. No, I want to hear what
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.
When I say amplification, I keep on repeating the same thing over and over again until this sinks into people.
What I mean by that is that with the PREFs, specifically STRC, those shares, they issue shares for the PREFs.
but that is those prefs are really,
it's debt in the form of an equity wrapper,
which is called digital credit.
So it's an equity wrapper.
People think that it's just a dividend paying stock.
So I had to educate people on how the pref works with the par value.
Most people don't understand that part of it.
The other thing is that the pref shares are not in ADSO.
Can you pull that up real fast? The strategy website? Yeah.
Yeah. Just go to the strategy website.
And this way it'll give a good visual for what I'm talking about.
So if you, and I want you to go to where it says shares on the top.
So if you look here and scroll down and you scroll through the list, there's, strike is
there because it's the convert.
But if you notice stretch, STRD, they're not listed here.
And when I say ADSO, that's assumed diluted shares outstanding.
So it's not included in the basic shares outstanding, and it's not included in the ADSO, assumed diluted shares outstanding.
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.
But it does not add to the share count that calculates BPS, Bitcoin per share.
So this metric on the bottom is Bitcoin per share.
For GAAP accounting purposes,
Bitcoin per share and GAAP accounting for EPS uses ADSO,
but the prefs are not in this,
except for the one strike because that can convert to shares.
So when I say this to most people,
this did not take me three hours.
They're like, dude, you lost me already.
And I don't know how I can go any slower
because if you have Bitcoin on the top and shares on the bottom,
If you buy more Bitcoin on the top, but there's not more shares because it's the press, that's the amplification.
And once people are like, I'm doing second grade, people are like, oh, that's too complex.
I'm like, I can't make this any simpler.
We're not adding on the denominator, just on the numerator.
Yeah, it's adding a senior preferred claim into the capital structure.
And that's a seniority within the capital structure.
but let me chime in on that point
I want to address that
I'm sorry to cut you off
I want to address that point
and then we go
we delve into the morass
well you know
if Bitcoin fails
or goes to 8,000 for four years
and strategy has to refinance
and they go
they can't refinance
so they go bankrupt
you know
Gray what do you say about that
guys I'm just giving a heads up to everybody
if Bitcoin drops to 8,000 bucks
and stays there for a year
you don't have to worry about hearing from me
Okay. I'm just telling you right now, I'm out. If Bitcoin drops to eight grand and stays there for
three months, I'm gone. You won't ever have to hear from me again. And so people are like, well,
I want to know theoretically, if this happens in five years, what happens? Let's get the next 18
months right. And I don't want to hear about, well, if strategy is insolvent, it's not a
solvency problem. It's not a liquidity problem when you can raise $1.2 billion in one week.
right? I don't, and people are like, well, I don't think people understand these words and
I'm trying to be so nice. Yeah. I think people, they get caught up on this access to the capital
markets thing, which is pretty fascinating, right? Like the, it's so funny when you, when you put it
in relativity, like what happens if your access to the capital markets changes? Well, go look,
you go look at the common stock and the common stock is one of the top 20 traded stocks in the
entire market. And it has been since October of 2024. Like, why is that? It's that way because
the stock is a function of the underlying Bitcoin. The price of the equity is a function of the
underlying Bitcoin. So if Bitcoin just moves, there's liquidity on the stock, right? Like,
that's the most fascinating thing, right? And like, people are holding it for that reason,
because you could go in and out of it in size, right?
Like strategy trades $3 billion a day,
like two to $3 billion a day.
That's not retail, right?
Like retail isn't trading $3 billion a day.
That's institutional capital
that's using it as a liquidity pool
going in and out for several different reasons,
high frequency trading, whatever it is.
And it's because it's relative to Bitcoin,
which is also this incredibly large liquidity pool.
So if the Bitcoin lights stay on,
the stock is going to move and it's going to be liquid in both directions. There's going to be
interest in both directions. There's going to be people buying calls, people buying puts.
There's going to be interest as long as Bitcoin moves. And so because of that, that interest in
both directions allows for the ATM, the access to the capital markets to continue to operate.
They can always have that on to raise capital at different points in time.
And that's the most fascinating thing.
And then you look at Stretch.
I mean, this instrument, it's insane.
I've talked about this a little bit.
The Stretch Preferred, last week, there was a day it traded, I think it was $700 million in volume.
The JP Morgan preferred instrument trades 2 million in volume. I've got a Bank of America
preferred up here right now. I think today the Bank of America preferred traded $1.2 million
in volume. Last week, there was a day strategies preferred traded 700X the Bank of America preferred
volume. Hey, Jeff, can you go back to that other, the PDF you were just showing?
okay so stretch currently it's 1.975 billion left on the shelf offering correct yeah okay i knew
you were going to bring this slide up we didn't talk about the slide previously did we no okay
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
platform wish me luck let's see if it works um big money no window no way this is gonna work
okay now let me click over here is is i think that's working right it works we're live okay so
um if you see here i did a poll and and the poll what it's showing is the next atm shelf offering
for strc will be 5 to 10 billion 10 to 21 21 to 30 30 billion plus so basically 50 of the people
are saying it's going to be 21 billion plus and then the other uh 50 saying it's going to be below
right is that is that sharing yeah that looks good so and and by the way there was 3 000
Well, 294 votes.
So at 3,000, you know, 3,900 views.
I would have liked to have had more votes on it.
What do you guys think the number is going to be?
I think probably 21 billion.
I don't know, 20 billion or 30 billion, 10x from whatever it is right now, just to the
scale.
Like, I mean, they could just double it too.
I mean, it takes a day to file this thing.
So I have a question.
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.
Would it be better for them to just extend it by $10 billion every six months?
Is there an advantage to doing that?
Or is it better to do one big number and then grind it down?
So there's some psychological analysis that's been done around this.
like how the market responds to ATM filings.
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
instrument, it might just be like, Oh, my God, I don't know
what this is, but I have to short it. In the case of stretch,
that would be fascinating. Because you know, if you shorted
stretch, you'd have to pay the dividends. So that that would be
a that would be a crazy dynamic. So I think there is a little bit
of gamesmanship there. Like if you look at Bitminer, the ETH,
treasury company it was fascinating the the same day that they launched an atm they also launched
a buyback and they did that like because of the psychology associated with it of like you know if
they just came out with an atm the stock probably would have sold off but because they had a buyback
as well it was kind of like this net neutral uh from a from a you know ai scraping tool methodology
so um there's probably some gamesmanship i mean for this instrument it's uh i don't think it
matters probably that much i'm sure they're thinking about it um but i mean they raised 1.5
billion or 1.1 billion last week and they've got 1.9 billion left on it so they probably need
something where if they had a you know really juicy week they got capacity to do it so
i wouldn't be surprised if we see an update on that uh in pretty short order yeah i agree and
and to this to this point like this is kind of what my video was on this week
Like there's never been a public market security that's let,
and this is what I kind of figured out.
It's like they've never let the market set the interest rate on these,
on these stable yielding securities, right?
So you've got money market funds.
Those are set by the Fed essentially.
I mean, you have the SOFR rate, you have the, you know,
overnight repo rate in there and some money market funds,
but generally short-term treasuries, those are set by the open market.
So, okay, fine.
But in terms of other funds, other preferred equities, usually they're benchmarked off the SOFR rate.
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.
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,
And therefore, the credit spread above the SOFR rate would always be the same.
And therefore, the security would be stable.
When credit spreads widen or tighten or market sentiment gets kind of knocked out of whack,
there's no shot that this thing stays stable.
And that's what we've seen in 2025, this security DPEG, the one I'm referencing.
I forget the name.
I apologize.
But stretch is unique in that it lets the market for stretch price the actual stretch
dividend rate.
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.
And then you have the ATM selling price mechanism to cap the price and then plus that variable dividend to stabilize the price.
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.
So I think that's why we're seeing this crazy volume.
And that's the massive unlock here.
This is very novel.
I don't think people are grasping that yet.
It's a new risk curve, a new return curve, a new risk-free rate, a new risk rate.
the design of the instrument is so incredibly elegant, right? Like, you know, I was explaining
to somebody at Strategy World and they're like, oh, that's pretty simple. And I said, it's not
simple. It's elegant. It's well designed. And so what I pull up here on the screen, so I think you
all can see this now. This is Bank of America. And we can kind of dive into this a little bit.
And to your point, this hits on it, right? So this is Bank of America. You can see here,
this table below presents a summary of perpetual preferred stock outstanding as of March 10th,
2026. Okay. So last week. And the first thing that jumps out at me, I hate this website for
so many reasons. One, look at all of the trash on here. Like these are all perpetual preferred
securities. They're trading in the market. To Dan's point, you look at the top of them,
you know, premium, this is the dividend rate seven greater of three months CME term SOFR plus 61
bips or 4%. You can look at all of them. Some of them are pegged. They're flat. If they're pegged
in flat, the price floats very similar to strife or stride or any of the other fixed ones. So it's
pretty, pretty fascinating when you look at these, but there's a couple of things that jump out at me
at this is one, I have no idea how much is outstanding. I have no idea where this sits in
the risk. Like where does this sit in your corporate structure? How much debt do you have?
Is this secure? How do I even think about risk on this thing? It says dividend type. Almost all of
these are non-cumulative dividends. So if they just decided to turn them off, they could just
turn them off. Some of them are callable. They've got dividend payment dates. Looks like almost all
of them are quarterly. You look through the interest rates here, 7.25%, 6%. And it's hard
to look at this and not see how strategy instruments absolutely obliterate every single
one of these for multiple reasons. They're transparent. It pays monthly dividends, flat,
high liquidity, cumulative dividends. And it's just very transparent, right? They don't have
like an entire page with several of these different instruments, you know, all competing
for the same capital. So it's just, it's really fascinating when you start to look at these. I
mean, this is just Bank of America. And so I plugged this into AI and I was looking at apparently
the sum of all of these, there's about $25 billion of this stuff outstanding,
which is fascinating. And some of these were issued a long time ago, but they're still trading
like 1997, 2006. And I just don't know who holds this stuff, right? Like there's $26 billion of
this outstanding. Who holds this? Why do they hold it? Is there a pretty good risk profile on it? Do
they understand what the risk profile is? Or is this thing just sitting there and they're holding
it for the maturity? So yeah, I mean, it's an interesting place to be. And you start to look
at the balance sheet, like, okay, what if, can they support this? And I pulled up the Bank of
America balance sheet, total assets, 3.4 trillion, excuse me, sorry. And then total liabilities,
3.1 trillion. And you look at the relativities, you're like, okay, maybe I can support this for
quite a while, but I don't know what the debt structure looks like, what debt sits behind this,
What's the actual capital structure?
Really difficult to quantify.
And I wouldn't be surprised
if there was a point in stress where
these banks can just shut down
the the dividends on these instruments
and they're non cumulative, they can just turn them off.
Kudos to whoever
designed these structures,
because this was just free money.
This is like free money that was just given to the bank
and they can just take it and do with it what they want.
So kudos to whoever designed these.
Yeah, so let me, very easy explanation why this exists.
These are all designed to fit into what the rating agencies look for.
Once these instruments were designed 5, 10, 20, 15, 20, 30 years,
whatever it is, in order to get a rating, they follow the same formula.
And so as long as these are, does this show you any here what the ratings are?
No, and I don't think they're rated.
because they're perpetuals.
Oh, so they're unrated.
Yeah.
And some of these are so interesting.
Like you click into them.
This was some of the older ones.
The Series L convertible.
No.
Some of the older ones are like Merrill Lynch.
Series one.
Pre-financial crisis roll-up.
Pretty fascinating.
So they just like overtook the instruments.
I don't know.
It's really interesting.
I think the analysis is fun to do.
I think it's fun to compare to like the strategy website, right?
You look at the credit profile.
You're like, okay, here's the super transparent.
Here's the risk.
Here's the debt that sits on their balance sheet.
Here's the preferred stock that sits on their balance sheet.
Here's, you know, if you make an assumption on Bitcoin price and volatility, here's what
the risk profile and the credit rating looks like.
Oh, if you want more information, just pop over to each instrument.
like what is the implied volatility what is all of this data and it's updated every what 10 or 15
seconds throughout the day so you can calculate it whenever you want but and so that and along with
the other points that you brought up um dan is why it's liquid right like you can a computer is
interested in this like it can understand it it can communicate it can see like what the risk
profile is and the fact that they've got the vwop on the bottom end so you know if the interest
rate is going to go up relative to the volume weighted average price over the 30 day time period,
there's incentive to just always keep holding it. So even if it drops down, like if the price of
STRC drops, there's incentive to buy it and hold it back to par, knowing that there's going to be
future people that are coming in the door in the next 30 days to buy the instrument again,
because they want to be in for the interest rate for that month. So you know that capital is going
to come in the door. What's the worst case scenario? The worst case scenario is you get,
if you're an R trader and you design a computer infrastructure, the worst case scenario is you
hold an instrument for a longer horizon than you maybe initially thought and you get paid
11.5% annualized in that time horizon. It's like, with a very interesting credit profile,
a very interesting risk profile that's 4.4x over collateralized by the Bitcoin and the balance
sheet. That's cool. That's a cool instrument. Yeah, I want to ask the same questions that the
bears ask about strategy, right? So they say, okay, strategy is buying Bitcoin. And what if
Bitcoin goes down? Okay, well, what is Bank of America? How are they making money? They're not
buying Bitcoin. So what are they making money with to pay these damn things? And can that be
disrupted. So what if their source of income goes down? Then what? Right. What if they get
over levered? You have no transparency into their leverage ratio. And it's not like banks have ever
need a bailout before. You know what I mean? They're constantly rehypothecating and overextending
themselves. And, you know, we talked about this just being built on air, but it's like built on
less than air. It's like rehypothecated air. Yes. So this begs the question. Go ahead.
Yeah. It begs the question. It's like, okay, so what is the terminal outcome here? It's well,
like one, I think they're going to sell 10 billion in stretch in short order. Two,
there's going to be so much demand over a long period of time that like stretches
dividend rate will probably go down 10, 9, 8% while maintaining its par. So like,
how do you make money there?
Like,
I think it actually introduces a big opportunity for the other preferred
equities.
Because if you think if you're that bullish on stretch and it as a credit
worthy instrument compared to all these other preferred equities,
naturally,
if the yield on stretch starts to decline,
the,
the yield on strife will,
it will be an arbitrage opportunity.
And so the yield on strife will decline and the price will go higher.
Something to think about,
I think.
Yeah.
So Dan,
you posted about this the other day,
like why why isn't the price of stride moving and i thought that was an interesting question and i
think that the answer is the relative risk profile of stride stayed about the same uh because they
they just issued a billion dollars of stretch that's that senior to stride and uh like as they
issue more stretch and technically i mean it's sitting senior relative to it ultimately right i
agree with you i i think the understanding of the risk profile this is it's just going to take a long
time. I think we're all just so early. We're the ones that are hyper-focused and fixated on it.
I think it's just going to take a while. And then you think about the relative interest rate.
Why would Stride price higher at a lower interest rate than whatever stretch is?
And maybe that's the signal. Maybe if Stride starts pricing you lower on an interest rate
relativity, maybe that's the signal to lower the interest rate. I'm not 100% sure.
That's a really good point, actually. I like that kind of idea.
But that brings up so many questions.
And this is where I wanted to take this.
Right.
Over the last couple of weeks, tons of noise on stretch.
I think everybody's figuring it out.
You know, we've been talking about this for months.
And the next, and you hit a good point here, Dan.
What's next?
Like, all right, how does this infiltrate?
Like, if this is going, this is doing a billion dollars in a week during the record date.
Like, what does this look like down the road?
And I think in order to do that, you got to look at the rest of the market.
You got to look at the TAM, right?
What is the total addressable market and what does that look like?
I started thinking about this a little bit last week and I got a, not going to lie, I
got a bit of anxiety thinking about it because the second and third order effects of being
right about this and being right about digital credit and being right about the risk profile
these instruments is that there could be a massive re-rating of credit across the entire industry.
And we're talking like hundreds of trillions of dollars of credit. And it might go slow. It might
go fast. I have no idea. And I kind of have a thesis on how it happens. So I'm going to walk
you through it a little bit here because I think it's pretty fascinating. So I was looking at
I was looking at private credit, right? So what do we know? There's been a lot of noise about
cracks in the private credit market. And so the why, right? Why have there been cracks in the
private credit market? There've been cracks in the private credit market because AI is coming in
and disrupting some of these business models. Private credit's super opaque. It's grown a lot
in the last couple of years. And there are starting to be some concerns about the credit
quality of the private credit. Now, what do we know about that reasoning? That reasoning is,
you've got AI disruption and a lot of cash flows are at risk. Well, that same concept,
while it applies to private credit, also applies to public credit. So it applies to investment-grade
bonds. It applies to junk bonds. And I think the biggest focus, in my opinion, is the fringe.
like what are the bonds that are triple b now so triple b is investment grade if you drop below
triple b you're double b you technically go to junk who holds all the triple b bonds
and what happens if they get re-rated and and that's where i think the the biggest crux of like
re-rating and this entire kind of landscape kind of kind of fits i'm thinking about the big short
right? You see the Jenga tower and you like pull one and then the whole thing falls down.
And it's really the triple B investment grade corporate bonds. And so I was doing some analysis
with, uh, with perplexity here. And I was looking at who owns the triple B bonds. I just want to
know like who owns these things, uh, insurance companies, especially life insurers are the
single largest, single largest institutional owner of us corporate bonds. In 2017, they held
about 38% of corporate bonds. Okay. That's interesting. Then I started looking into,
okay, what happens if there's a re-rating of corporate bonds that they go from triple B
down to double B. Let's just say the S&P, if there's a crack in the private credit market,
maybe something they had previously rated goes out of business. They're like, okay, that's,
I got to change my rating methodology. Now, if you have something that's junk that goes out of
business and you weren't anticipating it. You're like, okay, maybe I was expecting that. But as
soon as you have one investment grade instrument default, that results in... You have to go rethink
it. What do you mean I had an investment grade instrument that defaulted? What is the reason?
Is there additional instruments in the credit market that may default because of that same
concept. And so you think about the S&P, right? We clearly have seen that they're behind on capital
structure and how they've rated strategy and the capital that sits on their balance sheet.
They've given them zero credit for the capital that sits on their balance sheet. And so then you
think about they're probably behind their methodology. They probably are behind on
thinking about AI risk. And I think that is a risk to the system. So I wanted to look at
like what would happen right like if you have a big swath of instruments go from investment grade
to junk like overnight because of a change in rating what happens like from a from a capital
standpoint and um so i was doing some analysis here uh for insurance companies right insurance
companies have capital requirements so those capital requirements like for certain instruments
that you hold you have to hold additional capital so you can leverage against it on your balance
sheet. This is required from rating agencies and regulators. There's state regulators and there's
a rating agency kind of globally AMBEST that overlooks all this stuff. So if your portfolio,
which we identified as about 38% bonds, if it moves from triple B to double B,
it could easily double or quadruple the risk-based capital factor, increasing the required capital
per dollar of bond by that same multiple. Okay. That's big. All right. So that means effectively
the amount of business that they could write, it may drop by 10, 20, 30, 40% almost overnight or
instantly because they're technically would be over leveraged based on the bonds that they hold
in the balance sheet. So now you're faced with a couple options. You can offload those bonds,
You probably have some investment mandate that, hey, I can only hold investment grade bonds in my portfolio for risk.
So you've got to go sell off your investment grade bonds.
But who's the buyer on the other side?
Who's the liquidity that wants to buy your investment grade bond that was just downgraded from investment grade to junk?
And especially if there's an alternative that's liquid paying 11.5% monthly in this marketplace.
Right. So like in these bonds, to put this in perspective, are there like 7% bonds, 8% bonds?
And so I wanted to dive into it. Right. So I went even further.
And I looked at triple B bonds. So I looked at a ETF. I wanted to see there was an investment grade
ETF that holds triple B bonds. So I downloaded the holdings and I looked at what it was.
I was like, what are the instruments in here? And what's the maturity on them? Like how much
risk is in here? What's the weight of these things? Like just starting to wrap my head around, like
what's at risk and uh so this is the list of instruments and i sorted it by maturity
as you can see there's a lot of energy companies i think those energy companies are probably fine
thinking about like where i where ai is going and you know demand for electricity all of those things
but i started to notice that there were a few other companies in here that started to raise
some flags we've got a reinsurance group of america which is funny um and then i saw athene
holdings and Apollo. So these are fascinating. Like what is Athene? What is Apollo? And these
are, these are 20, these are bonds that, that expire, they mature in the year 2055.
So these are illiquid bonds that mature in 2055. Friendly reminder, it's 2026. So these are way
out in the tail. So then you look at Athene holdings and Apollo and some of these other
institutions Now what is a theme What is Apollo These are companies that are creating annuities that are capitalized on private credit
Pause for effect here. The companies that are issuing investment grade bonds that are rated triple B are capitalized on private credit.
boom right like like that seems like an issue that seems like an issue if we think that there
are cracks in the private credit market that like maybe maybe maybe that's overblown right like
maybe the cracks in the private credit market maybe it's just a couple but i think there's
going to be disruption here um and you could think about the capital structure like okay what's going
to get re-rated the things that are susceptible to ai risk and what's susceptible to ai risk it's
you know, these opaque instruments, software as a service, everything that's...
So Jeff, can I chime in real fast here?
Yeah, go ahead.
So this is one instrument has all of these different items in it.
Yeah, this is a triple B rated ETF. Not a ton of assets under management,
because this is an ETF. But the reason there's not a ton of assets under management is because
these illiquid instruments are held directly in custody by like insurance companies banks and
pension funds right so how many total instruments are inside this one wrapper i can tell you
about a thousand what was that a thousand about a thousand a thousand yeah i mean i mean think
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
point zero so there's a thousand this is designed not to move and so what they did is if if you put
enough crap in one basket as long as you could just pay whatever the the the yield is seven
percent whatever it is on this this overall instrument nobody cares what's in it this goes
back to the whole big short movie right it's the same thing and it has a triple b uh triple b one
rating? That's what it is? Column D? Yeah. These are all just triple B rated. Yeah. That's the
ticker of this instrument. Yeah. Triple B I is the ticker. Oh, that's a ticker. Sorry. So,
so, and this is not rated overall. I don't think so. No, each one of these individual
instruments is probably rated. I know each one of these instruments is rated triple B investment
great oh okay i just again again yes yes so can i get people excited about what i what i did because
i'm going to take a different i i think i think that dan and you and are not bullish enough and
i want to take this back to uh msdr sdrc hold on let me let me pause sure hold on hold on hold on
Let me pause right there for a second.
This is incredibly bullish, right?
All of these instruments, these pay like 6% or 7% investment grade.
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,
which in my mind if there's a capital flight away from credit that's what drives enormous
demand in these instruments and it may not be right away right like i might be forecasting this
like two or three years from now it could happen in six months i have no idea that the question is
when everybody leaves these instruments where like who buys the crap right the insurance companies
hold the crap right now? And the question is who buys it when they want to exit because they can't
hold it for their mandates and their business literally fails if I have to hold it? Who buys it?
And the answer is probably the US government, right? That's who buys the crap. If there's
financial stress, like in the credit markets, that's probably who buys the crap. And so if
they're buying the crap because this is like a large systemic problem, you know, also because of
rating agencies. Once again, if, if they, if the government's buying the crap, inflation goes to
the moon, asset prices rip, Bitcoin rips, credit quality of the digital credit instruments probably
goes significantly higher. Demand for liquidity in those instruments probably goes significantly
higher. And that's the bullish thesis here. This is it. The credit market, the risk in the credit
market getting mispriced is the bullish thesis for both sides of the trade, the asset and the
credit instrument. There should be demand on both. That's the bullish thesis. I'm bullish enough.
Trust me, when I figured this out, I had a hard time sleeping.
That's the bullish thesis.
A little scary, but bullish.
Okay, go ahead, Grain.
Make people more bullish.
Let's see what you got.
So let me share here.
So I'll share a window.
I'm amazed I got this working.
So let's go to MSTR analysis.
So, wow, that's actually phenomenally clear.
So what I did here is I looked at the ATMs that included STRC inside of it.
And there's two tables here.
The only difference is one is year to date, the bottom one starting on January 5th, and
the other one's from the start, but not including the IPO.
So it came out at $80, it had to break $100, and then it started.
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.
This is the percentage of MSTR versus STRC.
And what happened is it made this massive shift from 25%.
It was doing 70-30, and then it went from 25% to 75% MSTR to STRC.
and that's where it picked up $1.18 billion in doing it.
And the MSTR was a very small amount.
And so this is a fundamental shift.
Now, from a data perspective, if I go give you, for instance,
let me pick a good one here.
Got this one.
Yeah, so they had a good yield last week.
Yeah, like what was it?
A 3% yield this last week on the capital craze
because they were relatively light on the MSTR common ATM,
which like they were able to do that and maintain again the same leverage ratio because the underlying bitcoin was growing.
So like they've got this kind of amplification management, I think, strategy, in my opinion, going on.
Right. And so when I look at so these are rather small data sets.
I've worked with data sets, 50, 100 million cells.
So this is relatively incredibly simple to do.
This is the historical information.
And then what I did is I wrote an article on Monday and graphed it out into Q4 of 2027.
And people are like, well, what happens in 2030?
Don't care.
I want people to understand with a sense of urgency that if you get the next 18 months
right, what happens after that doesn't matter.
So if Bitcoin goes to three, four, $500,000 and somebody says to me, you know, hey, Mike,
my real name says, tell me about Bitcoin.
I'm like, and Bitcoin's $500,000.
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.
Because you're no longer early when Bitcoin gets to $500,000.
And so I put this data here, and you're like, well, it's a table.
It's boring.
How do people read this?
So when I wrote the article, let me go here.
I picked a very catchy title, Strategy Breaks Bitcoin.
and if you scroll, I'll scroll here.
Here's the same chart I just showed you
and then we have this one.
And now what you see here is that
what I wanted to show starting in Q1 of 2024,
strategies buys per quarter versus the mined Bitcoin.
Okay, and what happens is there's a number
that I put in here so people can read it.
So in the fourth quarter of 2024,
Bitcoin went from 60 to 95,000.
As the price of Bitcoin goes up,
strategy's ability to buy Bitcoin goes up. Completely counterintuitive. Everybody says,
oh, it's a lot of big numbers. It's a black hole. Right. They're completely, it's the data shows.
Right. So to Q1 2026, this is all historical information. So they were able to 5.1 X the
mine supply that happened. So what does that mean? It means that 4X the mine supply, this was
200,000, it was 195,000 Bitcoins that they bought in one quarter. That was equal to what they did
in the first three years. They bought it in one quarter. So now what happens is the only reason
why this is lower in the fourth quarter of 2025 is because Strategy acquired $2.25 billion in cash.
And that's the only reason why the orange line is not above the blue line. But if you continue at
the historical rate of 16%, that's the average of adding Bitcoin quarter over quarter, this is the
historical average here. It says the conservative at 16%, they get to 2.15 million Bitcoin. They will
acquire in this one quarter, when it gets up to 2 million, they will acquire more than 300,000
Bitcoin in one quarter. And that will be 7.7x times the amount of mined Bitcoin. Now, let's
be very clear. That's assuming that all the miners sell every single quarter 100% of the mined
Bitcoin, which is not true. And I want people to realize, let's assume strategy in one week,
right? Because we've seen this before. They buy 20,000 Bitcoins, right? What's the chance that
20,000 multimillionaires will wake up on a Monday and be like, oh, I'm going to buy a Bitcoin this
week. One Bitcoin. One Bitcoin for 20,000 multimillionaires in one week. How often do
you think that 20,000 people wake up on a Monday and go, I'm just going to go buy this? Zero.
They don't. Around the world, if somebody says to me, 20,000 millionaires decide to buy one,
and then if somebody says, well, it did happen, I go, does it happen the week after? No.
No, it doesn't.
So when you look at these numbers now, what I'm trying to say is that this is before the
halving.
And so in my article that I did, and if you scroll down here, I go, this is the reflexive,
24%.
And again, there's this thing called stretch.
I don't know if you guys heard about it.
and instead of when i did my article on monday like in the olden days because today's wednesday
i said you know what it's kind of i don't want to model like a 2m nav but assume that because
they're buying amplification instead of it being 16 what happens if it goes up by another 50
so now the acquisition rate is 24 they're acquiring 24 more bitcoin every week or is that
Every quarter.
Because right now, the historical is 16%.
Yeah.
Over five years.
It's already been done.
The historical has already been done.
That's not in dispute.
So the question is-
It's probably diminishing though.
It's probably a diminishing relativity as the price goes higher.
So Jeff, thank you for saying that.
What I wanted, this is a test.
I sandbagged it.
what I did was I intentionally left the prices low.
And what happens is that's the hockey stick.
Strategy will have a very,
we'll have a harder time because when strategy goes to an OTC desk and says,
Hey,
I need to source 20,000 Bitcoins and there are 150,000 each.
They're like,
dude,
you need $3 billion worth of Bitcoin.
And it'll be like,
yeah,
bro,
I just raised it.
And they're like,
you know,
we don't have 3 billion.
We got 2 billion.
And why don't you put a billion dollars and leave it in cash?
At some point,
the price is going to hockey stick goes higher because they cannot source the block of 30,000
Bitcoins in one week. And you're like, right? I mean, just think about it. Right? They want 30,000.
Yeah. I mean, look, the trading desks on these things are pretty crazy. You reach out to them
and you say, I want to buy Bitcoin.
And they're in the market buying Bitcoin.
You tell them the pace and it comes out the other side
and you move it to custody and you're like, oh my God, there it is.
It's like, I think you're right.
I mean, 20,000 Bitcoin.
I need to go buy a billion dollars of this stuff.
I mean, the thing is, it's pretty liquid, right?
It's trading, I don't know, 30 to 60 to $100 billion a day.
So like it's moving.
It's clearly moving.
And there's a point. I personally think the bottom's in.
I think the bottom's in.
This instrument...
Bottom's in.
The bottom's in.
Bottom's in.
It's got product market fit, right?
The interest in this instrument...
I mean, look, we put $50 million a stretch on our balance sheet
because we see it as a moderate duration capital instrument.
I mean, it completely changes how you can think about duration liability on a balance sheet.
Yeah.
So Jeff, let me just wrap up on this and I'll be done with my section.
Modern capital.
Yeah.
I'll wrap up on this.
So once you have the data, then you can resort it.
So I want people to realize something.
We got this question that's been coming around for the past five years or since 2022.
to what happens to strategy in a bear market. I'm going to give everybody a heads up. We're
currently in a bear market. My definition of a bear market in any asset is when it's down 50%
from its all time high on the index. You're in a bear market when it's down 20%. But Bitcoin world,
if it's down 50%, you're in a bear market. What I did was I sorted the data. This is in linear.
You got to love how it goes off the charts.
It's a little tweak I do there when I create these charts.
But the number two quarter for acquiring Bitcoin, and it's not over yet, is Q1 2026 at 88,568 Bitcoins.
So the number two quarter for them buying Bitcoin is not when Bitcoin was high in Q1 of 2025 or Q3 of 2025, right?
That's when Bitcoin was, sorry, in Q3 of 2024, they only acquired $25,900, right?
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.
They have the second best quarter ever for acquiring Bitcoin.
And in the bull market, the record is double that number.
So they're the buyer of last resort, and they're the buyer at the top.
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.
And Saylor goes, yeah, Laura, I'm going to keep on buying the top forever.
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.
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.
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.
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.
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.
like there were in 2020.
Not that there were massively systemic risks,
but it was a lot riskier than it is now.
So I think that's really the interesting point here.
And Mike, I thought I was bullish enough,
but you might be right.
And are you basically saying,
because we used to do the catalysts, right?
We had the whole list of catalysts
and the only one that we didn't get was S&P 500,
but it looks like we're able to start stacking catalysts again.
And you're basically saying you've got this short window of time
to get in before the hockey stick.
Is that what I'm hearing?
Yeah.
And my view is I think this time is different.
And they're like, well, do you have the data to back it up?
I'm like, yeah, I have lots of data to back.
And I make these great charts, you know, the Sharpe ratio, again, off the charts here,
right?
You know, strategy Sharpe ratio of 5.37, right?
And these are the other ones, the Bank of America, the KKR, the four, and the other ones
are down here.
and it's like okay well i i don't see how we can have all these positive indicators i'm trying to
find the one that showed oh this one this is the one would cause me to change my mind in this one
you see the mind bitcoin um and then you know and percent of supply this was the first slide that i
this i did this like in the old days this was done on which day yesterday yesterday march 17th yeah
I was yesterday.
Okay.
Right.
So I made this chart and I'm looking at it and I'm thinking, huh, this one's cool because
it has a halving and from start to finish.
And here's the 2022 bear market right here in the bottom.
And strategy could barely do any of these ATMs.
But now when you look at it, given that we're in a bear market, I mean, I guess I should
roll, I should overlay the price of Bitcoin over this, but I just took off the old stuff.
It's not that I didn't do the calculation.
I did do it.
And now, and then I added, because they did percentages, and I think better people, better with multiples than percentages.
So then I looked at it right now.
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.
Otherwise, strategy is sopping up way more than the mined Bitcoin.
And we know that 100% of the mined Bitcoin is not being market sold or OTC sold every quarter.
If it is, somebody can correct me.
And so when I look at this, I think the inflection point hits basically in the next two quarters.
And the biggest catalyst is a narrative that strategy acquires a million Bitcoins.
And there's going to be countdown parties.
I'm going to predict the future.
There's going to be a website or three websites with a countdown to one million Bitcoins.
It'll start at 800,000 and everybody will be, what's the date?
It's like we have the date of the halving.
Now we're going to have the date when strategy hits a million Bitcoins.
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
there's no reason why Stretch can't break $10 to $12 billion in total by the end of this year.
Pull a solid triple. They'll buy some MSTR. They'll raise more than $25 billion this year.
They raised $23 billion last year. That's the conservative case. And if they hit the million
bitcoins the positive narrative kicks in we get some good geopolitical stuff i think we're going
to hockey stick up and people are going to be like what what was the warning that this was going to
happen i'm like well i had to make the spreadsheet and my advantage with ai it's not that i'm super
smart my advantage is this is that i am capable of putting the rows and columns into a data set
like this. And then when I interact with AI, it's bounded because it knows exactly how I think.
When you talk to an AI, it's LLM. It learns you. It learns you. Now, if you don't use the words
convexity, liquidity, reflexivity correctly to an LLM, it infers it. But when I make the Excel
spreadsheet, there's no inference. It's automatically able to interpret what I did
and determine if it's mathematically correct.
So my output becomes, how do I make the cool looking chart?
It's no longer, so that's why my output with AI is better.
It's not because I'm smarter.
It's because I make the spreadsheet first.
It's structured data.
Go ahead, Jeff.
Garbage in, garbage out.
And that's why I think, Jeff, you and Dan,
when you make these spreadsheets and put it in,
the output you guys get is like, oh my God, I can't sleep at night.
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.
right you might not think it is you might think that everybody else is thinking about
the same thinking about things the same way you are but really it's novel and i think that's why
we're seeing this kind of explosion of articles written by ai which i'm kind of here for honestly
there's been a lot of people saying ai slop and yeah there's a lot of ai slop out there but
the these advanced models are so unique like you can you can write a piece of material that's the
result of your thinking and your brain and it's it's made better with ai it's made more readable
with ai but like it's still novel like you decided to put it somewhere and i think people are just
kind of like blown away at almost how easy it is right i'm blown away by how easy it is every single
day. So totally. But Grain, back to the, if I were to summarize your entire analysis,
they have multiple instruments now. In the past, they'd be raising capital.
Right.
In the past, they were raising capital when the price is going up. But when the price went down,
it was tough to raise capital. Like raising capital in the common stock when the price
went down is difficult. But now they've got an instrument that they can raise capital that's a
function of the credit quality. It's a function of how much money that they have on the balance sheet.
That's completely different. Jeff, I got a great idea. Hey, Dan, I got a great idea.
You should pitch strategy that they should invent a pref that has a built-in conversion option to
the number of shares when it does a 10x. When that pref exists, let me know because I think
that people are going to love that one. And that way they have like three scenarios, like MSTR.
Yeah. And that would be strike. And I think that's where we get to, you know, it, it, it's kind of
like the three little bears, you know, mama, you know, dad, mama, and baby, you know,
well, the fascinating, and Dan, you probably, you probably really like strike right now. And
I kind of do as well. I think it's interesting. Like you think about again, capital construction,
like strike is less liquid than stretch there's less interest in it right now than stretch
but it's still more liquid than a lot of other things so like there's still some liquidity there
and it's still a very interesting product so when you think about like again capital construction
you want you want your least liquid instruments like closest to your liabilities and you want to
go further out the risk curve like for your longer data liabilities again this is like capital
construction theory. And so if you've got like moderate duration liabilities, you may want to
hold, I don't know, stretch because it's the most liquid and it's a high yield. But as you go further
out the risk curve, obviously you've got Bitcoin at the very end. It's like never sell my Bitcoin.
It's so deep into my capital structure. I hope I never have to touch it. Like that's the concept,
right? But I could put things in front of it to protect it. So I never have to touch it.
This is, again, insurance companies think this way. But so then you start to think about all
the press, right? Like, you know, our instruments a little bit further out on the yield curve
relative to stretch. So you could think about those next to each other. And then you could
think about strike and stride and then go a little bit further out the yield curve for additional
alpha as a function of whatever your liability profile is in the future. And that's like,
that's a modern, that's a modern balance sheet. I think the future of constructing a corporate
balance sheet that's what it looks like you have digital credit instruments on your balance sheet
under your balance sheet because they're relative relatively more liquid than other moderate
duration instruments that you can have on your balance sheet like you think about a company
most companies when they meet when they when they need money they need money within 12 to 18 months
most companies insurance companies i think are an anomaly right most like a lot of them have longer
tail. But most companies need money for between, you know, one to 18 months. If you need capital
between one to 18 months, like there's just not a great instrument aside from T-bills where you
can hold like moderate duration capital. And like these things start to, you know, your brain starts
to think a little bit differently about holding it for moderate duration capital. Just think back to
when I was trying to build some capital to buy a house. I had like a savings account
that I was like, oh man, I don't really want to put it in the S&P 500 because if there's
volatility there, I want to be able to know I can afford a certain type of house and put
20% down.
I was desperate for a vehicle that gave me higher yield than putting it in a savings
account.
And I just couldn't find it.
And here we are today.
And I think these products offer a really good, very interesting alternative.
it. So that's, that's pretty much all I've got, I guess, building on the press. Let's talk about
that. Right. And so that's, that's one, that's one topic maybe over to you. So I,
yeah, so I was, I finally got around to reading Jeff Booth's price of tomorrow and he was quoting
Jeff Bezos and Bezos said that people always ask him what changes are coming in the next 10 years.
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.
And I was like, holy crap, I immediately just, you know, OK, that's Bitcoin.
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.
So, you know, it's the it's what makes diamond handsing even possible in the first place.
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.
totally i know i think you're right i think you're right the durability of businesses is
coming into question and i don't still don't understand why the s&p isn't down 50 here
but you know we're seeing with sas stocks and uncertain cash flows and i i think um moving
forward that's that's going to be a bigger and bigger theme and i think strategy will
be the clear winner winner there well yeah and even like um go ahead with um
another comparison would be like to Amazon. And so I know people say that stretch is the iPhone
moment, but, um, you know, Booth also mentioned in that book that Sears had the original,
you know, basically like mail order catalog, but they invested in their brick and mortar stores.
And then when Amazon digitalized the mail order, they basically put Sears out of business.
And so like, you know, Amazon sells its products direct to customers with the push of a button
and Sailor is selling stretch direct to customers in the market
instead of hiring investment bankers and head funds to arb the damn things.
And they can just push the button and sell the fixed income anytime they want.
And to your point earlier, Dan, about being able to adjust it with the dividend rate,
it's like they know that they will never pay more than a quarter of a percent
over the like the the bare minimum right they all they have to do is say okay how do we price this
product okay well the market is going to tell me i just raise it a quarter of a percent and it's at
par like there's you're not going to be like overpaying from distributors and how much is it
going to cost to uh get materials for my widget it's it's like dematerialized access to capital
It's kind of insane.
Unlocked. Yeah, you're totally right.
Yeah, the ATM is a fascinating evolution of this instrument.
Like it's scalable. They don't need any other people, right?
Like the same capital activity can scale with no additional, like people added to the capital team, which is mind blowing, right?
Right. Like you think about, I mean, strategy's got what, I don't know, 1500 employees, their
capital teams, what, 20 maybe. And really the people making decisions that there's like,
there's like four of them, right? There's like four or five people that are actually,
you know, doing the day to day stuff. And that team's been like, I think, relatively the same
for the last four years and relatively unchanged. So yeah, it's, it's pretty mind blowing. It can
scale drastically without that much change in people.
And one last analogy for Amazon, right?
So Amazon's pretty good with their return policy, but you can actually use stretch for
as long as you want and return it for a full refund.
If it's trading at par, you get exactly what you paid for it back.
They'll just take it back off your hands and you can hold it how much dividends you want
and get it and get a full and get a full refund oh that's fast use merchandise to get full full
refund yeah you hot you harness the thing that you wanted which is the income
you can return it for a full refund yeah i i mean obviously there's volatility in
in that but like what we were talking about earlier there's arbitrage opportunities for the
for the price when it goes down because you know that there's you know pressure
at any given point at different points in time during the month to push it back higher
yeah it'll be fascinating to see like how um how lumpy this stuff is too like the what's
what's stretch finish the day at what like 99 75 or something like that
99.57 okay so it's down it's down 40 43 cents yeah people were kind of freaking out about the
price dropping a little bit which is interesting because like theoretically it should drop by the
dividend rate on the ex-dividend date and it didn't so like clearly there's a more buyers
and sellers still in the market even after the ex-dividend date so hopefully that i mean lets
people sleep easy at night. Yeah, I was thinking about that too, because I was expecting that to
happen. But then when I really started thinking about it, there's no reason for stretch's price
to drop after the ex-dividend date, because usually when you're investing in a dividend stock,
they're paying that dividend from the underlying, from that company itself.
But they're paying the dividend, not from stretch, but they're paying the dividend from strategy. So
would almost make more sense for strategy to dip on the ex-dividend date because they're the ones
that are losing the money. There's no reason for stretch to dip at all in my mind. So I think
this, you know, even the expectation of a dip may go away over some period of time.
Let me, the computer, think about the computer, right? The computer comes in, no human, got no
brain. You tell it, Hey, buy it at a hundred. If you can, if you can hold it on the ex-dividend
date or if you could get out of it after you qualify for the dividend for less than the dividend,
do it. It's like, yes. It's like, that's the simple trigger. Buy it. If you can get out of it for
less than the Delta, you can have a non-brain computer run that calculation.
Yeah. So theoretically people should be, because there's a time cost of money. I think you're
you're right, Soleil, and I agree with what you're saying, but there's also a time value of money.
So theoretically, I still think people are going to be selling on the ex-divided.
Yeah, that makes sense. And I know people personally that are dividend hopping. They're
collecting that one and then are rotating even into Seda and back and forth and kind of double
dip in there. Yeah, the trading dynamics are really fascinating, but the inverse is also true,
right like you you can think as you approach the record date there's also pressure coming in you
know so again if you're thinking about being a capital manager and like how do i how do i want to
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
i probably need to focus on the week of the record date when there's going to be the most demand as
people and computers are coming in to get the interest rate to get out at par as well.
There's probably a one-month window that you got to think, I may not get the dividend this
week because I may have to hold it and wait for par right at the record date in order to get my
primary capital back out. So yeah, I think the methodology and the gamesmanship around it,
the game theory is evolving, right? What is this? Not even nine months old?
not even nine months old but i agree with you i think the concept of thinking about
the price of strategy going down relative to the dividend but like again jacking 90 million dollars
on a 50 billion dollar stock like when bitcoin's moving as well that's probably yeah and even
tying back in into what you were saying earlier mike about the um the incoming hockey stick
so the next having is 2028 yes right and stretch will be three years seasoned in 2028 as well
that's an interesting coincidence i think we might have to put those catalysts on our list
you see i think that three years i've seasoned look i've been in this for eight and a half years
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.
Let's say you're 30 years old.
You're going to hold it for 30 years.
I'm not even 60 yet.
And I'm old.
Right.
And so we're trying to tell you to hold something for 30 years to wait to cash out.
Look, if you don't have much, I totally get it.
And you're only 30 years old.
Totally get it.
That's a great idea.
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.
let's say it gets to 150 and strategy breaks a million uh bitcoin and they're at 1.2 million
bitcoin and you're going into a positive 2027 year then people are like oh is it gonna and and
and then bitcoin runs up to 300 000 over the course of three months and they say oh when's
it gonna when's it gonna dip back down again you know what about the have no you're gonna be closer
to the halving, not farther away, right? We're two years out from the halving. And so what's
going to happen is in one more year from now, I'm trying to impart to people this, a sense of urgency.
Again, if somebody comes to me and Bitcoin's three to $500,000 and they're like, oh, tell me about
Bitcoin. Should I buy it now? And it's $500,000 and strategy has 3 million Bitcoins or two and a
half million Bitcoins and it's been around for 18 or 19 years, what am I going to say? I'm not
going to say you're early. That's why I'm trying to say this right now. When somebody asks me about
Bitcoin, is there anything I can say to change your mind about Bitcoin? No. And I'm like, okay,
cool. Let's go talk about cars or motorcycles or dinner or whatever. It's not going to be about
Bitcoin. So I want that sense of urgency. And I've been saying that to people on spaces is,
hey, we're early because we haven't hit the inflection point. After the inflection point,
there's no longer, well, it's at a million. It's going to go to 10 million. When's that going to
happen? I don't know. Let's get the next 18 months right. And that's why my projections only go out
to Q4 2027 because with the prefs, and Jeff, you know this, and same thing with Dan, when you model
things, we don't have enough data points on any of the prefs, right, to say consistently what's
going to happen. I've got a total of nine prep STRC ATMs. Now, when they reset and they say,
hey, we're going to do $21 billion worth of STRC, I have an idea what the runway is going to be.
But I can tell you over the next whatever, the next two, three months or by the end of it,
By June, after the first two full quarters, I will have a really good idea what happens.
But by then, we could be at 900,000 Bitcoins.
And think about it.
If we're at 760,000 Bitcoins right now, let's assume he acquires another 11,000, hits 100,000 for the quarter, right?
And then he acquires another 10%.
it's going to put him at 860,000 Bitcoins.
He's line of sight at 860,
one quarter away from a million Bitcoins through the summer.
And that ends in September.
People are going to be like, oh, we're still early.
Well, this dude acquired him, started five and a half years ago
and got a million Bitcoins.
I want people to realize right now,
if it's September and strategy has a million Bitcoins,
The next, we're going to have a countdown.
I'm telling you right now, I know I'll predict the future.
We're going to have a countdown clock, just like we did for Triple Q inclusion, S&P 500.
We're going to have a countdown.
What day does strategy hit a million Bitcoins?
Dan, if you like to make that.
That's a good question.
November?
And so everybody's going to be guessing.
There's probably going to be a lobby market, you know, things on this.
and there'll be countdown timers for when the strategy that's the narrative
The narrative is not S&P 500 inclusion.
I mean, it will be there, right?
If it's...
That will come.
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.
Like, if they accumulate a million Bitcoin at $250,000, that's $250 billion of capital.
and that's assuming a one m nav yeah i'm just talking capital i'm not even talking market right
you're just talking i'm not even talking capital i'm talking capital like what uh liquid capital
yeah yeah right okay who's got the largest liquid treasury in the planet it's berkshire they've got
300 billion dollars in cash like you're pushing up against berkshire berkshire is a what a trillion
dollar company 900 billion dollar company right now at the moment right they've got 300 billion
of that is in cash. So it's like a third of their valuation is the cash that they hold on the
balance sheet. So Jeff, how long did it take Berkshire to get to that number? How many years?
I don't know. 40, 60, 60, 50, 40, 50, 60 years. And strategy will have done it in, in, in, in six.
It'll be six years this August. So I think, wait, if Saylor's watching this,
hey, Michael Saylor, I'm going to give you an idea.
I think that you should,
I did not get invited to your $100,000 Bitcoin party
a year and a half ago.
I would appreciate if you would have
strategy accumulates a million Bitcoins
and wherever you have it,
I would like to get invited to that.
That's my idea.
I would like to go to that party
with a bunch of other strategy folks.
And I think it's a great idea for you to have a party
and tell me what you want me to bring
and I'll bring it with me.
True North Party.
True North Party at the strategy.
Million Bitcoin Party.
What event is coming up in September
where we could have a party for the million Bitcoins?
Is there something in September?
I don't know.
We're pretty focused on like all of these TradFi conferences.
So we're going down the list of like,
okay, what are all these TradFi conferences?
So I'm lost on like non-TradFi conferences.
yeah let me give you a crazy crazy idea you know strategy could be at one and a half million
bitcoins by the next strategy world i can tell you can they bring the million million bitcoin
to the party i'm going to take selfies with it go ahead jeff sorry i'm just going to take the under
on a million and a half by next strategy world oh let me i'll pull up my chart and tell you what day
when they hit when they hit a million and a half on the uh price price has to go vertical
yeah i think price of bitcoin has to give yeah it will price of under on a million and a half you
said it's i i have it goes to one and a half million in q2 2027 see guys i i see how we
changed the shifted here that's the hockey stick that's when the price goes right look i'm i want
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
buying $50 billion of Bitcoin and like, it's just. Right. I would rather that the price goes
vertical than he gets 3 million Bitcoin. Now, Saylor might have a different idea, but my view is,
I think that you guys are right, that this hockey stick is going to happen. And I would prefer the
price to go vertical. And I think it's going to come somewhere around, I don't know, 1.1,
one and a quarter million Bitcoin. If we have, if the election isn't crazy, if we don't bomb
another country. Don't fire off a nuke. Don't have a worldwide pandemic. Don't get the evergreen
caught sideways in the Suez Canal. Don't have the straighter Hormuz closed off. Don't have oil
over $100 a barrel. I don't think we're going to get a reduced interest rate. But anyway,
people can wish for that. But I'm just trying to say, as long as no real disasters happen,
This inflection point is going to happen.
And the only question is when, not if.
And I would like to be at Strategy World next year.
And the stock price is north of $1,000.
You guys can quote me on that.
It's hard not to be bullish here.
I'm all bulled up.
I feel like the bottom's in.
I mean, obviously, a lot of geopolitical tension.
We got to work our way through here.
But yeah, it's a fascinating, fascinating moment in time.
Like we're going to look back at this, right?
Like we're at the birth of digital credit.
Like 30 years from now, we're going to look back at this and be like, holy crap, we were there.
You know, like this is this fundamentally changed like how society like gathered around a different form of capital.
I agree with that.
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
you guys are gonna be like hey what happened to that old guy grain back then you're like oh he's
still alive he just drives around in cars but he gave up motorcycles and you're like really yeah
does he show up anymore? Nah, we just kind of call him on the phone whenever. And he tells us
to call him immediately because he wants to run some idea past me. And then he hangs up on you.
Right. And I think that's how this plays out. This is going to be a club. It's going to be
just like Berkshire Hathaway. British HODL said this. Some guys don't like them. You know what?
And Fred Kruger said this. Sayers got 5 million followers. That is the whole universe right now
of people that are interested in Bitcoin.
There's only 5 million people in the whole world
that maybe give a crap about it,
that have an understanding of it.
And somebody tells me, no, there's more.
No, there isn't.
It's a small subset of people.
Man, I would say probably a quarter of those might be bots.
I don't know, maybe 10%.
Right, it's like how many lost Bitcoins are there?
And then another quarter probably hate him,
but they follow him because he's on all the podcasts.
and then the people that um you know then there's probably a quarter that are like oh we're hardcore
bitcoiners but you got to follow what michael saylor does all right so then you've got maybe 25
that are like interested in mstr and of the 25 that are interested in mstr how many understand
the prep model it's probably a fraction of that and then you go even further like it's uh yeah it's
it's rare air up here yeah so i want to tell everybody that's listening how many people are
it right now. Oh, I have no idea. We got this new stream. I can't tell.
Yeah. Let's go take a look at the new stream. And so I want to say we have
12,000, 13,000 views. I want to tell everybody that's watched this. You're in the most exclusive
club in the whole world, right? And you could say maybe there's the Nvidia club or the Amazon club
or people that buy those stocks. This one's the most exclusive club in the world. It's the smallest
number. It's the most volatile stock, MSTR, based on Bitcoin. There's this thing called stretch.
You're in that group. If you go talk to your friends, family, whatever, they're going to think
you're nuts. And just say, look, we watch these guys. They do calculations. They figure this stuff
out. We don't know if they're right. But if they are right, and they seem to have been pretty right
so far, you know, this, this club is going to just be the club you want to be in. And,
and I just want to say that, you know, everybody listening, it's it, unless all the math is wrong.
And I was talking about this, somebody else this morning, I said, is it possible we're delusional?
And he's like, unlikely. The only question is time. Is it, is it six, one year, 18 months?
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.
Yeah, the hard thing is, is like the math, the math is hard to, you know, refute. Like it's all
backed by math. Bitcoin's backed by math. Like it's bound in physics. And then you've got, okay,
now I've got a credit instrument that's bound in physics. And now you've also got the SEC coming out
and saying, oh yeah, you know how that quarterly reporting that you rely on, we're actually
thinking about removing the quarterly reporting required. And we're actually going to go less,
Like you need to report less, maybe twice a year.
And meanwhile, you have this other, you've got strategy and our company, we're filing
information all the time.
And I mean, strategy is doing it every single week.
So you have up to date information.
It's like you wanted to know what it is.
Here you go.
Like that breeds the liquidity, right?
You are able to calculate information.
you're able to absorb information in very short order.
And that's like, if you, if you remove like some reporting requirements,
like these illiquid instruments are just going to get even more illiquid.
You just have no idea what's happening and you have no idea yet.
You may have to like reprice your entire portfolio.
Like twice a year.
You're like, I can't even wrap my head around like the uncertainty element in
in another three months of like a world that's changing every single week.
Right?
Green, you said earlier today, it's like, oh, that those are the old days.
That was a Monday.
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
So if the price of Bitcoin is above $87,000, then strategy is going to have positive EPS.
And you just multiply out the difference by the number of Bitcoin that they hold.
So we already know this.
And so strategy is able to report their earnings right within like a week after every quarter ends.
The closing the books for them has become incredibly easy.
So those are the updates.
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?
That it's taken this long to do this.
And a whole bunch of securities were labeled to be a commodity.
Now, I will put a dig on this.
How XRP could be labeled a commodity is beyond me.
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.
And so that was a big event.
And it had a whole listing of all these other cryptos that were labeled commodities.
So that was a big deal.
I think that got lost in the news.
And the other thing was STRC now has two agents that can process the ATMs or more than two agents.
So I think that the market makers right now on STRC are going full bore.
And I think that, you know, and I've said this on a bunch of stuff.
They have somebody that can go after hours and pre-market hours, which is just like, that's a lot of trading.
And you can be on the bid after hours, pre-market.
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.
And now that I think about it, he has to have multiple large buyers that are buying STRC.
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.
It's no, their institutions are buying this to put this into these large pools of capital.
So I can't get any more bullish.
I'm going to wrap up now.
You guys could stay on, but I just wanted to say, look,
I appreciate everything that we've done.
Everybody that's listening.
I'm going to keep on posting and talking about this.
Reach out with any questions and, and a part of this group, you know,
congratulations guys, Jeff,
the new platform is great to the team that put this together.
Congratulations.
Yeah.
We've got,
we've got a lot of energy put into the behind the scenes in order to get
this to where it is today.
Yeah.
It's not, it's not easy.
We've got a whole production crew and we've been working pretty hard on it.
So a lot to come.
I appreciate that.
Take care, guys.
Have a good night.
Yep.
Night, Mike.
Later, Green.
I will go.
Yeah, I guess final thoughts.
And maybe I will start with my last piece of math because Green brought the earnings up, which I think is fascinating.
Let's just say the quarter ended here today, March 18th.
It's obviously we got 12 days left.
And the price of Bitcoin is $71,000.
If Bitcoin goes back up to all-time highs, $126,000 in Q2.
Let's just say it closes Q2 at $126,000.
Complete speculation.
That delta, that'd be $54,000 difference in the price of Bitcoin,
multiplied by 761,000 Bitcoin,
which is how many Bitcoin that strategy holds right now.
That'd be a $41 billion quarter positive earnings.
That hits headlines, right?
Like obviously they've had some loss, but it's just like, it is volatility.
Like the earnings reports, even if you have losses and gains,
like that is volatility in and of itself as well.
So it'll just be fascinating to see how this continues to evolve.
I mean, credit quality, it looks really good here.
Balance sheet looks healthy.
I'm pulled up.
I've been selling a billion dollars a week when the market's on, on STRC.
That's fascinating.
Now I'll pass it over to you, Soleil.
Final thoughts.
What are you thinking about?
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?
Shovel. Absolutely.
That's your final answer.
okay wrong it's a trick question you're born butt-ass naked right all you have is your bare
hands if you want a shovel you have to go and make one with your bare hands which means you've
got to go and fashion a stick you got to learn blacksmithing to make the end of the shovel
you got to connect them together by then i've already made like 200 holes in the ground with
my bare hands right so the reason i'm bringing this up is because of that question that was asked
of Sailor at the Q&A and it was like,
what about the stuff that you're doing
that has negative BPS, right?
Negative Bitcoin per share.
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
And you're going to catch up and surpass the person that's digging with their hands.
And that was basically his answer.
It was like, look, we're going to take some actions that will have negative BPS consequences
in the short term.
But in the long term, it's going to improve the credit quality for Stretch and the other
preferreds and we're going to be able to buy more Bitcoin later. So I think that kind of explains it
pretty well. And hopefully the negative BPS questions can make me stop with that nonsense.
It's all about the credit quality. Like what is the value of MSTR? The value of MSTR is a function
of the interest in the credit product, right? Like to your point, like the credit quality is the
is the shovel. Like you build the credit quality in the, uh, you build the credit quality in the
balance sheet and the more, the more you can dig, right? Like if the credit quality is improved,
the more you can dig. And I think that's also why we see them kind of like scale the balance sheet
when they are selling the instrument as well, is that they can, the credit quality improves.
Uh, they're getting the capital in the door on SDRC. They're going to buy Bitcoin with it. They're
scaling, uh, they're selling, they have the ability to sell MSDR on the ATM as well.
and they are putting that capital on the balance sheet. That improves, that keeps the
amplification relatively similar. And that allows them to kind of continue to scale that. That
improves the liquidity. The more shares that are outstanding on STRC improves the liquidity profile
of those. Honestly, both. It improves the liquidity profile of both MSTR and STRC. So
they're very symbiotic. They work together and they kind of need each other. But
Yeah, you got to remember that the cost of doing business includes creating the tools to do your job.
And I learned that in Saifedean.
He's got a YouTube series, Principles of Economics.
So check that out.
It's never too late to learn a little something.
I like that.
Yeah, you got to create the tools.
And the tool in this instance is credit.
Right?
The tool is credit quality.
Exactly.
Got to create the tool.
Dan, over to you. Final thoughts.
Yeah, I think there's a big buyer on the other side of stretch that we're not seeing.
And I think ultimately it's going to be a real unlock for people looking for short-term money
and excited about taking on leverage. And the interesting thing about leverage,
and I keep talking about this, is what is M2 money supply or just paper money? It is,
in fact leverage, right? Because we live in a fractional reserve banking system. So all paper
money is essentially created off reserves that don't back one-to-one the paper assets that are
issued in the form of numbers in a bank account. So I think the ultimate fate of Stretch is this
crazy carry trade where borrowed money is invested into STRC in kind of a bottomless fashion via
institutions, banks, hedge funds with access to institutional capital, et cetera, et cetera.
That just, water runs downhill and ultimately low yield will meet high yield, especially when that
low yield is given out for free in the form of US dollars. So I think it's a big idea.
Yeah. We're on the verge of the biggest idea in all of finance, right? The world is changing very
fast. Kind of leads me to my final thought. And my final thought is the US debt just passed $39
trillion. I think five years ago, it was $25 trillion. That just continues to expand very
rapidly. Debt to GDP continues to rise. Nothing stops the strain. I think the world is changing
very quickly. We're seeing it with AI. There is disruption on the horizon, not just in the private
credit market, but I would also keep an eye on the public credit market. The rating agency aspect
and the fragility of the bonds in the public domain that are right on the fringe, I think,
is where a lot of the crux of a credit problem in the market will happen. So I'd keep an eye on
just investment grade corporate credit that's triple B rated and subject to AI disruption.
I think that may result in significant capital reconstruction within the entire market. And
I think that capital is going to be looking for a home in the future. So there's a lot there.
It's a little bit spine tingly when you start to piece it all together, but
let's keep an eye on it. Cool. All right. Well, thank you everybody for joining episode 59 of
True North and we will see you next week. Big shout out to the entire Strive team,
everybody that's working on behind the scenes. We've got some edits to do
and we'll get back to the grind. We'll see you next week.
Yeah, they did a great job. Good night, everybody.