Don't stop even for the right thing
Doesn't matter what I say
My whole world walked by that river.
Woo! Here we go. Welcome back. What a day. What a day. I think I've been on my computer
all freaking day and we are back. The chat is cooking. We got some people here.
The crew is live. Let's turn my screen off. There we go. The team's back. All right, here we go.
welcome back. We got True North episode 27. We've got a very dense agenda. We are going to hit this
hard. This is the investment grade Bitcoin podcast. We're talking about all things Bitcoin related
equities and diving into data and details, state of the market, what's going on with leverage,
what's going on at Twitter, what's going on in the news. And we're going to try to get through
a ton of information in a short amount of time. So the agenda today, we're going to talk about
BTC price discovery. Awesome. We're in price discovery. Obviously, MetaPlanet limit up. That
is the biggest topic of the day. It's the biggest topic of the week. It's taken over all of Twitter.
This seems like GME 2.0. I get the same little butterflies in my stomach watching all of this
stuff happen. So pretty crazy there. We'll spend some time. We'll dive into it. We'll work around
what we know, some of the data, and just kind of play with it a little bit.
We'll get into a market update. We'll talk about strategy, talk about leverage, how that looks,
what the price action, the poor price action today relative to the rest of the Bitcoin trading
equities. There's a lot of poor sentiment out there. And we'll talk about it. We'll steel man
it. And we'll try to work our way through it and see where we could be wrong. I think this is a
long-term hold but we'll get into it we'll dive we'll dive into the topics and the details then
we're going to talk about the btc treasury revolution there there's the finance is literally
being rewritten as we know it we're seeing it in real time we're seeing new metrics come to the
scene we're seeing everybody digest these new metrics trying to conceptualize them wrap their
heads around them um you know the you can get a master's in science of bitcoin uh just by
by listening to all of the content that's on X these days.
We'll talk about MSTR Q2 earnings and the S&P 500 scale,
what that looks like on the horizon.
Strike and Strife, we'll do a quick primer.
And then I've got some analysis
on strike versus real estate and fixed income.
And I think a lot of people that have fixed income portfolios,
these old boomers are,
apologies to the boomers that may be watching this.
they are reconsidering the dynamics of their portfolio, the relativity of, you know, all of the other things that they're holding and how they fit into a portfolio.
So again, as we've talked in episodes past, this is the evolution of a Bitcoin portfolio.
You can now effectively have a Bitcoin portfolio with risk-adjusted returns and different securities
that are Bitcoin correlated on all aspects of the risk spectrum, and they're only getting
bigger and more complex.
So with that, Bitcoin, let's see, where are we at?
share the screen. Bitcoin. Oh, we got an ad here. Bitcoin at 109,928. We are the fifth. This is the
fifth largest asset by market cap. I think this is a topic that just so many people are unaware of.
And this is my foray into orange billing people. As I mentioned that Bitcoin is the fifth largest
asset on the planet. It is a $2.18 trillion asset that is completely decentralized, right?
You look at the scale of some of these other assets like Microsoft, NVIDIA, and Apple,
they've got thousands and thousands of employees. And here at number five, you've got a decentralized
computer protocol that is the fifth largest asset on the planet, soon to be number one
uh in in short order so i'll start there i'll pass it over you guys how are you guys feeling
right there's a lot of a lot of things going on i've been at my computer all day i couldn't sleep
last night you know it's uh it's feeling a lot like uh somebody says i need a sip of bourbon
hold on real quick i've got my yamazaki shout out japan and uh that's what we're cooking with today
i couldn't feel better i see what you mean i like that i put in my two weeks notice in december
in january and february i was like should i check to see if my job has still been you know if i've
been replaced is my position still open like i might have to go back to work here so everything
everything's right with the world now i'm good to go good to go a lot of noise i mean anything that
anything bitcoin correlated is up today with the exception of microstrategy was pretty trash
uh yeah how do you guys feel about it what's what's cooking there i i don't think that means
anything necessarily negative um no this is something we've talked about right just because
strategies having a down day and other equity leverage bitcoin equities are up doesn't mean
that the trade is broken or the investment thesis is broken there's there's too much that goes into
the price activity that we're seeing um there could be a myriad of reasons as to why that is
um i think that bitcoin being up bodes very very well for our collective future and bodes well for
strategies future so i do think people need to take a moment to understand where we're at i mean
Bitcoin is what, 109, 110.
Strategy is over 400 bucks,
which in my mind tells me is over 4,000
because that's how I see it.
Because I've been in since before the 10 for one.
So I think we are in a tremendous place.
We're up over 100% since last year.
I think things are good.
We just have a lot of new narratives
that are the new shiny thing,
catching a lot of attention.
And I think people may be getting to,
they're getting dragged along in that narrative,
which is fine.
but you know and that 400 price that you mentioned i mean strategy blew up a little early right so
november hit a little bit before bitcoin's first all-time high of like that i think it was more
like december 13th december 17th something like around those that area and the strategy was
trading at 400 then so i think that blow off top was a little bit misleading and i think gives people
that really unjustified expectation
that every single Bitcoin pump
should be a blow off top.
I don't think that's reasonable.
It isn't.
And also we had a lot of dynamics
that were working as significant tailwinds
that were working to our favor, right?
Liquidity was high at the end of Q4.
We had high sentiments.
We had a lot of excitement around in the market.
I think that blow off top, to your point,
made people have a lot of unrealistic expectations.
but I think right now you have a mixture of people where expectations are getting tempered
but at the same time you have people where expectations are being dashed and what we're
seeing in the market right now is that individuals whose expectations are being dashed are perhaps
having some of the loudest voices while individuals that have tempered expectations or more realistic
expectations are fine. They're just not being as vocal about it. So you know the loudest
the loudest commentary often gets the most traction.
The most negative commentary often gets the most traction.
And I think a lot of that is, you know,
prevailing the sentiment that we see on online and in the markets right now.
Yeah. And there's a lot of one of the people of FOMOing into the 10 eighties
in November too, like implied vol was,
was jacked through the roof because, you know,
there was so much euphoria and the options,
everybody's just rolling up and up and up. And you know, that's gonna,
that's gonna play havoc with the, with the price being stoked by the,
the options market as well. I think that's a really interesting point. I mean, implied vol is at
almost the zero percentile. So it's quite low in MSTR. What do you mean by zero percentile?
Just to explain that to everybody. Yeah. Yeah. Zero percentile means of all the trading days
in MSTR's history, or since they've adopted a Bitcoin strategy, typically the window is the
past year. So I think for the sake of zero percentile that I'm using, it's the past year.
So of all those trading days, what is the implied volatility or the future expected volatility of MSTR priced into a 30 day option?
The call and put should be about the same at the money.
So forward looking.
And yeah, it's lower than it's ever been.
So people are expecting very low volatility or people aren't willing to pay for the volatility.
And what that means is people are expecting the stock to kind of trade within a range or they aren't.
the future expectations of volatility are very low.
Future expectations, yes.
So when IV is high, there's a lot of energy in the call or put side of the trade that are expecting the stock to move quickly in any one direction.
And that could be a function of, you know, traders pushing energy into one side of the trade.
And now that there's opportunity cost of capital for some of these really fast moving Bitcoin treasury companies, that opportunity cost of capital goes from tail options in MSTR and shifts over to where that volatility is.
These are vol junkies that are moving in any direction to the place where they can capture that volatility.
Yeah. And I think it's a new beast for a lot of people considering in the fall, we saw 25%
leverage to equity ratio via converts. Now we're looking, was it higher? 30%?
Oh, no, no. Keep going. Keep going.
Oh, sorry. Sorry. Whereas now we're seeing that leverage coming in the form of preferreds,
right? The majority of the leverage right now, or it's about one third of the leverage is preferred
stock as opposed to converts. And the entirety of the leverage is about 16% of the equity as
opposed to in the fall when it was closer to 25%, 30%. And so that's dampening volatility. And I
think people don't know what to make of the preferred debt. And I'm still trying to make
up my mind whether or not it's going to lead to the same sort of volatility that convertible debt
has led to in the past. Right. We're going to take a time out here real quick. Hold on.
Ladies and gentlemen, what you're about to hear may be amazing, but it is not financial advice.
It's for informational and educational purposes only.
Jeff, back to you.
Thanks, Tim.
All right.
We've got Tim, not financial advice.
That's out of the way.
We're cleared.
We're good to go.
I'm learning how to use all of this new tech.
I'm this old washed up reinsurance broker that's figuring out how to do media stuff.
So we are back.
It was the best cameo ever.
It's a good cameo.
He's all tied up.
He's in his office.
Yes.
People are constantly asking me, you know, when IV, like when IV go up, that's, that's
all the, what the options junkies want to know.
And I think it's pretty simple.
Like, um, the, the IV is determined by what people are willing to pay for the calls.
Right.
So there's, it's either that people are not willing to pay that much for the calls right
now or the sellers are not requiring that much because they're not really afraid of
god candles and getting wrecked and i think it's just a direct result of the you know we're at the
low end of the the leverage range that you know if we were levered up with debt more i think that
the the call buyers would be like oh okay if we're levered then this is a more levered play
like an MSTU or an MSTX.
So I'll pay more for those calls.
And I think as soon as we get some convertible bonds,
as soon as the preferreds market starts to develop
and we really start hammering the ATM on the preferreds
and the debts comes up, I think IV returns.
I think it's pretty much that simple.
There's also been just so much pressure
pulling this thing down, right?
Like you look at the assets under management of Misty
and watch how that's grown over the last three months.
It's gone from 2 billion in AUM to 4 billion of AUM of weekly call sellers.
That's dampening volatility, right?
That is shorting the stock every week to monetize that volatility.
And you're seeing other products go that direction as well.
On top of ATM pressure, which has scared away some of the options traders because of the more liquidity in the market.
So it's super difficult to quantify an option position, right?
Yeah, I think that's a good point.
Well, I think you will grossly underestimate the impact of how the options market plays into this whole price dynamic that we're seeing with the volatility.
but um you know there are a lot of individuals that and guys correct me if i'm wrong that i'm
seeing on social media that are essentially in strategy just for the options right so i and i
think a lot of them are also creating this narrative that the that the trade is breaking
down that the investment thesis is breaking down that are being hypercritical about it
because to jeff's point they're so to jeff and so leo's point they're looking for a particular
outcome in the options they're not getting it and they're and in my view they're just getting pissed
off and they're either exiting the trade or creating a lot of noise around the trade um so
i think people need to come into an understanding of are they going to be a trader or are they an
investor if you're an investor in strategy i think you need an entirely different view of this
opportunity versus if you're a guy trading options we're looking to trade this stock on a day-to-day
week to week basis yeah it's it's interesting i mean we're talking about mstr on the investment
grade bitcoin podcast and one of the components that i think a majority of the market is kind of
failing to grasp or recognize i think at the moment and this is this is me saying i i am long
on everything that's touching the bitcoin ecosystem right now i'm just bullish on everything as it
goes into price discovery. I'm going to start with that. But I think risk is being miscalculated
and risk adjusted yield is also important to think. If you're creating an optimized portfolio for
risk adjusted returns, I think you need to, it's critical to think about what is the risk of some
of these equities downside upside what the return what the infrastructure what the architecture all that stuff so it might be time to get into meta planet because i know that what everybody wants to hear about and talk about and maybe we just jump into like a little bit of lay of the land what going on
at least some of the data that i'm aware of and that i know and then we'll see what you guys want
to talk about that sounds great joe sound good okay so i'm going to pop over here and this is
Japan's bond market. So this is the background of what's going on in Japan. So this says Japan's
bond market is breaking. The 30-year is at 3.13%. The 40-year, they have a 40-year bond,
which the US doesn't have, which is interesting, is hitting all-time highs. So you've got pressure
from the bond market. So when the bond prices are going up or when the yields are going up,
bond prices are crashing. They're going the opposite direction. So if you have a bond
portfolio in Japan and you're watching this happening, you're fleeing to stocks. You're
fleeing to equities because your bond portfolio is just getting totally hammered from interest
rates going up. So we're seeing some pressure, significant pressure in Japan. And I think they
had a couple of failed, what is this? A couple of failed treasury auctions. So nobody wanted to buy
the debt, which is a signal that's a tricky place to be. If you're an investor in Japan and you
invest in bonds, you're looking for alternative places to go. And I think this is part of the
whole Japan carry trade circumstance, but that's a little bit beyond me and how this all kind of
plays together. The other thing that's going on in Japan. So there's these accounts. They're
basically like IRAs in Japan. They're called NISA accounts. And these are effectively retirement
accounts. So individuals can invest up to 1.2 million yen, 80,000 per year in these NISA accounts.
And these are exempt from Japan's 20% capital gains tax, which is an important statistic because
in Japan, any gains from crypto are taxed at the ordinary income tax rate, even if you've held them
for longer than a year. So at the highest tax bracket, you could have a 55% tax on holding
Bitcoin. So how do you get this exposure? What's the most efficient way to get this exposure?
It's in a NISA account. It's in a Japanese retirement account because of the capital gains
treatment. Additionally, there's no ETF in Japan. There's no Bitcoin ETF specifically in Japan. So
they've got the benefit of no access to an ETF. I think investors in Japan can buy MSTR,
but maybe not in NISA accounts. I think you've got to be like in Japanese equities.
So you've got pressure that's coming in the door trying to get this Bitcoin exposure
with the backdrop that you've got, you know, bond market is ripping and people are looking for
safe havens. So on top of that, you've got, so MetaPlanet is the most shorted stock in Japan at
the moment, and they are betting against MetaPlanet stock. This is very similar to what we saw
with GameStop. However, the difference here is MetaPlanet is holding, and all of these stocks
that these hedge funds are shorting, they're holding Bitcoin, which is the strongest asset
on the planet about to go into price discovery and rip to the upside in terms of that you can't
turn the buy button off here. It's almost the complete opposite. You can't stop Bitcoin. It's
hard to break the sentiment because people are just piling in. So it's a unique framework here
that you've got. This is a shorted stock in Japan. Additionally, with what's going on with
of MetaPlanet. I think one of the fastest growing Bitcoin treasuries, 12 months ago, they had a
hotel and some cash. And then it started with 300 Bitcoin, then 1,000 Bitcoin, 2,000 Bitcoin. And
now we're up at nearly 7,000 Bitcoin as of last week. I'm sure they'll have 8,000 Bitcoin next
week, growing incredibly fast. And one of the ways they're doing it is that they are selling
moving strike warrants. And moving strike warrants is effectively the Japanese version of the ATM.
It happens on the next day. It's a little bit of a tricky, like complex structure. It's a bit
difficult to understand, but just think of it as the ATM. So if you hear moving strike warrant,
that's just an ATM. They only sell shares when the stock is moving on up days. So they're not
selling on down days, which avoids that dilution scenario when the stock is moving down. Additionally,
like within the Japanese market, I'm pretty sure you can't short the stock on down days either. I
think you can only short the stock on days that it's going up. So you've got a lot of pressure
that's coming in the door to buy the stock and the shorts are coming in when the price is going up,
but there are no days where it's going down. Metaplanet isn't issuing any more shares when
going down. So there's no additional relief from the hedge fund's perspective when they need to buy
back the shares for the short position. So the architecture of the market is very unique in Japan.
And I think this is the second or third largest equity exchange in the market as well. So this
is a pretty big deal. It's a $6 trillion market. And what's going on here is pretty significant.
Anybody else have anything to add? I've got a few more things, but I need a breather.
Yeah, I think this is a perfect example of what Bitcoin is ushering in, which is within corporations is just competitive cooperation. Before it was like cutthroat.
But now, and Sailor was kind of dragging and curb stomping Microsoft and the Mag7 at the World Conference.
And, you know, it was kind of like putting everyone on notice.
If you're not a Bitcoin treasury company, then strategy is the apex predator.
And you're about to get eaten.
But if you become a Bitcoin treasury company and now we're cooperating, you know, we're still separate companies. So to a certain extent, we're competing, but we're now cooperating. And now, you know, Sailor will tweet when you buy Bitcoin.
and metaplanet is just a shining example of um you know instead of you know it strategy being
the apex predator they're like the apex benefactor and you know you want to be the next company to do
this you want to be inside the tent um and benefiting from uh you know from cooperation
And it's just it's putting every non-Bitcoin treasury company on notice, I think.
Yeah, because because this is a cooperative trade, like you just mentioned, and Bitcoin's underpinning all of this, it's everyone's incentive to drive the price up and to get as much interest in these cooperative plays as possible.
And, you know, Jeff already touched on all of it with regards to the dynamics in the bond market in Japan and the fact that the short interest is so so steep.
well, it's crushing actually for the shorts.
The fact that the moving strike warrants interjected in a completely different dynamic.
The Japanese and Asian markets, well, the Japanese market specifically doesn't have an easy vehicle to get Bitcoin exposure.
There's just so many different dominoes that are lining up perfectly for this thing to just keep running
and each one acting as a feedback loop into the next.
And it's really interesting to watch happen in real time right now where you have different companies.
You have the CEOs of different companies interacting with one another, retweeting one another, saying to buy Bitcoin, saying why it's a good investment opportunity.
This is a whole different scenario that I think the market is just not used to.
And to Soliel's point, when you look at those dynamics in a market that's traditionally very dog eat dog, and now you have the dogs forming a wolf pack instead, it creates a very, very different dynamic that I think traditional markets are going to have a hard time addressing to.
cyber wolf pack cyber wolf pack yeah actually it really is because think about it sailors
retweeting simon simon's retweeting sailor eric similar's retweeting sailors sailors
reaching out similar they're all helping each other out it's wild to see happen in real time
it's yeah it's it's totally crazy uh yeah i mean it's totally crazy it's hard it's hard to um
i i'm imagining this one of the reasons i've been up all night on my computer all day is like i'm
trying to conceptualize where this goes how like how to put some numbers behind it what's the
framework you know who's involved uh all of these different things and um it kind of seems to me
like there's going to be a strategy in every single jurisdiction on the planet in every equity market
on the planet there's going to be a strategy and there's it's like a i don't want to say winner
take all but it's winner take most if you're first in that jurisdiction and you are the vehicle to
accumulate bitcoin it's pretty much winner take most and uh and that's kind of what we're seeing
play out and it'll be really interesting to see how how this meta planet situation um or the the
short side of the meta planet situation unwinds i'm sure simon and dylan i'm sure these guys are
getting phone calls off the hook to do private placements on shares to clear the short positions.
I'm sure of it because the only other way to do it is on the open market. And they could choose
not to take those calls, et cetera, et cetera, but they should be capitalizing on those phone
calls and those opportunities and they should rake them over the coals to do it. The alternative is
I'm just trying to wrap my head around this is like,
this is a huge liquidity event for the bank in Japan, right? Like if these,
if, if these are Japanese based hedge funds that are shorting this,
which I have no idea, I have no idea where these,
where the capital is coming from that are shorting this.
If they go down,
they start liquidating everything else in their portfolio because of this
position. And that could cause it, you know,
domino effect on other things in the market,
whether that be the Japanese market or the US market. And we're in this global economy now
where energy and money moves incredibly fast and it's all algorithmic. So it's hard to imagine
a scenario where this doesn't lead to significantly more money printing and more liquidity, which
Bitcoin just continues to soak up, which rises the tide for all of these other Bitcoin treasury
companies. I couldn't imagine a better time to be a Bitcoiner. This is the best time on the
planet to be a Bitcoiner, holding Bitcoin equities, adding to your Bitcoin stack,
having exposure. I can't believe that most of the world has no idea this is going on right now.
Go walk down the street and talk to your neighbors. Nobody has any idea this stuff is going on.
meanwhile we're running around yelling from the top of our lungs like running around the heads cut
off because meta planet limited up and is up 100 on the u.s market uh and trading in all these
different marketplaces and all this stuff nobody knows this is going on this is like such a such a
quiet thing outside of the the fin twit sphere well to that point um there are a couple guys i
know that work at hedge funds here in scottsdale and one actually works um closer in dallas um i
text them and try to talk to them about meta planet and their exact words were what's meta planet
yeah and they and they work for for i don't want to not i don't want to dox them but they work for
rather large hedge funds in in the local area and it was kind of shocking that they didn't know what
meta planet was but they knew about strategy which was somewhat weird but i think the dynamic we're
seeing playing out here kind of back to the label's point about being a cooperative trade is there's
a lot of synergy here and i think when bitcoin really starts to run because right now it's a
little bit it's going it seems like we're going into price discovery with bitcoin right so if
bitcoin really starts to run right now you would have you could have all these other equities that
exist on top of bitcoin running simultaneously for an entirely different set of reasons
how do people try to trade that you see bitcoin causing similar run you see bitcoin maybe causing
meta planet and strategy and and um striving on whomever else to run all at the same time all for
a different set of reasons it makes it almost impossible to anticipate because one equity is
not going to react the same as another and you can very very easily get caught on the wrong side
of a trade that's going to blow you up yeah i can't stop thinking about the wolfpack thing because
jeff it is a wolfpack it is a cyber wolfpack you coined it but yeah it's a cyber wolfpack for sure
So Jeff Booth likes to say that the future of Bitcoin, the future of the world looks like 8 billion people in service of 8 billion people.
And what you just said about that makes me think of what does the world look like when there are thousands of corporations in service of thousands of corporations?
Just this giant network of cooperation.
my mind is getting a little bit twisted upside down imagining what that looks like because it
doesn't look like anything that has ever existed i think here's what it looks like you've got to
you've got to re redesign the entire like the world from the ground up and from a cooperative
point of view and this is one of the things i always hated about like the traditional financial
ecosystem or the traditional financial world is basically in order to win you had to be born in
right family or you got to cheat and i hated it i always felt like icky right like what like
right exactly you gotta yeah you gotta cheat um and and this is the this bitcoin ecosystem is so
much more appealing to me because it's cooperative right like there there is a there is a rising tide
here right like if as long as you have bitcoin as your core right like that there is that rising tide
situation.
So,
to really think
through what this looks like,
I know there's some people that are saying that right now
we could be in a bit of a frothy stage with regards
to the Bitcoin treasuries and the Bitcoin
inequities. I don't think we're there yet.
What does a blow-off top in that kind of
scenario really look like? Where's
Bitcoin at in that kind of environment?
Is a blow-off
top caused by too many companies adopting
a Bitcoin strategy too quickly?
Or is it caused by Bitcoin
getting progressively more upward buying pressure and then causing a blow off top with some of these
companies and a bunch of companies piling in at the end causing some kind of a, I don't want to
say a bubble but some kind of a retrace What does it lead to Is it a steady increase over the next several years or are we going to experience the same kind of boom and bust cycle i know what my theory is i just kind of i just kind of curious about what your theories are yeah i mean there not a ton of leverage in the system right now
which is so funny because the traditional financial world will just say ah there's sailors taking on
so much leverage it's like well their leverage ratio is actually at all-time lows and they're
sitting on a 60 billion dollar balance sheet and they could crank it up um whereas last cycle in
the peak their leverage ratios are like 50 at the peak and then it came down to you know 108 like
they were they were over they had less assets than they did have debt on their balance sheet so
everybody's just so much stronger right now um i mean meta planet is incredibly strong right now
they've got a little bit of debt on their balance you don't want to say they're like leverage ratio
is like five to eight or something like that but if you uh and if if you go watch the recent i
i highly suggest if you're interested in what's going on with meta planet go watch the video with
richard byworth and uh simon grovich um very good video and then also the what climb and the bull
rider guys are doing like and peter duan go go watch that i think they've got some good content
so it's really really fascinating what's going on over there well yeah so really quickly here's why
i here's my thesis on and why i don't think we're going to see the same kind of blow off top we have
have too many institutional players in the market right now, this isn't like all season.
They're not incentivized to sell at the end of the market. They're not incentivized to rotate
into Farcoin or some nonsense like that. They're incentivized to stay within the market, control
the market, and drive the price higher. If you have corporate players that are adopting this
strategy, what incentive do they have to sell Bitcoin? Why would they sell an asset that caused
crazy appreciation and volatility on their stock just because they had to retrace? If anything,
that would try to reproduce those circumstances again, wouldn't they? Versus selling. So what
I'm getting at is where does the sell pressure come from? Because traditionally, I think we had
boom-bust cycles because people were going from Bitcoin, they were making the gains there,
they're going into altcoins, making gains there, then they were selling. And the liquidity wasn't
coming back into the market. Now we have strategy similar, MetaPlanet, IBIT, FBTC,
they're buying they're buying they're buying where does that equivalent sell pressure come from
I think we I think we do see a retracement I don't think we see 80 I I think it's likely
it's let me rephrase I think it's probable that the retracement that we see is far less
significant than we've seen in previous cycles because the same dynamics and longer exists
people still waiting for all season it's not happening I don't think it is yeah yeah I I
think so either. And if you think about what's the solution here, right? If all these hedge funds are
trapped and this triggers like a global economics collapse because of, you know, poor risk management
by some traditional finance bros running hedge funds that are salty about Bitcoin going up,
and it's actually not going to zero, then you have a print of epic proportions and everybody's got to
figure out what to do right or you're caught your pants down or you're caught with your pants so so
it's like okay if that's the case then uh you have every company known demand figuring out
in in a in a very harsh reality that their dollar isn't worth much anymore because the this huge
print of epic proportion and you've got to look for harder assets and things to things to hold
and you know people will find this but it will take time and it could be painful for a lot of
people and as we speak by the way bitcoin is running till 111k i love it 110 110. i love it
yeah i think the boom and bust thing could happen if let's say instead of uh earnings reports being
like okay let's see who has the most eps or you know who can move the most widgets if it comes
down to like okay now it's an m nav measuring contest and i gotta you know i gotta have a
bigger m nav than the next guy and the only way to get it is just lever up more and and then then
the next company levers up more and then the next company levers up more somebody's gonna over
leverage and get wrecked well then people are gonna be fomoing in with leverage and you know
it can't go up straight up forever.
And those corrections are going to cause some people to get crushed.
The one pushback I'll give to that.
Oh, go ahead.
Yeah.
It's because it's reflexive, right?
We've seen the periods of time during which MSTR has been able to yield the
highest percentage wise BTC yield and issue the most ATM is during those
times when the multiple is the highest and the FOMO is the highest as well.
And that's the same for most stocks, most of these Bitcoin leveraged equities.
And so for that reason, I think it works up.
And then when the pin drops and it starts moving back down, it's difficult to keep that yield higher.
So that like that new metric that people are using out of that created days to cover MNAV.
That's that's a really great metric.
It's historically looking and it's historically facing and you're extrapolating out that continuation of that yield.
it can diverge very quickly for any sort of company.
If a company ramps up their multiple expands,
they ramp up their purchase,
the days to cover MNAB quickly converges
to the other companies.
Whereas if the multiple compresses
for a different Bitcoin equity,
then their days to cover their multiple
slows down a lot.
So there's a lot of independent variables
for days to cover MNAB,
but I think it's super interesting.
I read this three times
and I need the ADIQ version.
Explain to me.
Well, yeah, and the only pushback I'll give on that is that for me, just in my opinion,
MNAV is primarily sentiment.
You can't really manipulate.
You can only react to it.
So I don't know.
It is possible.
But again, just in my view, I think that you can't really manipulate sentiment so much.
You can really only react to it effectively.
And that, to your point, could create dynamics where we have a whipsaw effect.
where people are not reacting effectively, where they're not being proactive in their strategy,
they're being perhaps too reactive or not active enough. I don't know. There's all kinds of ways
you can play it out. So not saying that you're wrong. I just want to throw a little wrinkle in
there for consideration. Yeah. And I don't like MNAV as a goal. If I'm a company, I'm not going
to be like, you know what, I'm going to try to get the MNAV to X, you know, 1.X. Because I think
it's Goodhart's law that it says when a metric becomes a goal, it no longer serves to function
as a valid metric. Because now you're kind of like distorting the free market inputs,
because you're trying to game the MNAV into something. So if you just measure it, it's
accurate but once you once you make it a target once you make it a goal you're kind of corrupting
the metric itself so it's a moving goal post you're you're is what it is and that's why that's
why i primarily think of it as a measure of sentiment and that is only and that's why i say
it's only something you can react to so to your point trying to game your trade to to manipulate
mnav in a variety of different ways i think is setting yourself up for trouble yeah
Yeah, this days to cover MNAP, I think is really interesting.
I mean, some dynamic that it doesn't take into play is like the underlying architecture of the market as well.
I mean, one of the reasons I think that this is high for strategy is just because of the architecture of the market.
Like they have this passive bid.
They've got a huge moat.
There's nobody else that can catch them.
And so I think it kind of comes back to this risk component
that I don't think is taken into consideration
in most of these metrics that are created today.
And I think it can be folded in.
I'm just not exactly sure how I'm trying to crack this
at the same time where it's like risk adjusted days
to cover MNAV, right?
Like how many units of risk are you taking on
in order to have that kind of yield?
I think that's a good, that's really interesting, Jeff. Totally agree. And people don't think about it like that enough, right? If you have a five year track record, acquiring BTC per share and doing it effectively, then if you're even if your days to cover MNav is longer, shouldn't it be priced higher because it's a more reliable future looking expectation?
Right.
And one, I mean, for me, like how I kind of view this as well as like one of the risks,
I'm trying to develop a risk framework for what this looks like. And one of the risks here is
copycat risk. Like what if somebody comes up and pops up in your marketplace,
it's got more money than you, buys more Bitcoin than you do and starts running a strategy.
and how quickly can they do it? Can they catch you? And I think that needs to be taken into
consideration for some of these MNAV metrics. And right now, everybody in the market that's in the
market doing this, they've got so much of a headstart. Maybe it doesn't matter right now.
But I think as this market evolves and we're going to start to see a lot more people come
into the scene here, right?
Like the next hot broad is going to come walking in the door with lingerie on.
And you're going to be like, whoa, you know, like it's the classic meme of,
you know, flipping your head.
Let me check that one out.
And I think that's going to happen, right?
We're going to like, we saw Metaplanet Madness podcast pop up.
We're going to see that pop up with all of these other entities
in these other jurisdictions.
And everybody's going to be fighting for media attention and retail attention.
So yeah.
Yeah, and that's why, you know, and I'm not trying to say one metric is better than another.
That's why I think about MNav the way I do.
I just think that it's, you can theoretically manipulate MNav in the short term,
but long term is not something you can actively manipulate and pivot up and pivot down as it suits your strategy.
So that's why for me, while this is an interesting metric, I just want to make sure that I consider it.
in the totality of what MNAV is
versus trying to think of it as a simplistic metric.
Because MNAV in my view is a point in time
and it's gonna shift
and you can manipulate that points in time.
So days to cover MNAV for me,
I have trouble kind of grasping it.
Well, yeah.
And it's like, okay, this is a cool metric.
Does the entire market use it?
you know like do all of the algos use it no precisely yeah like the sole you're like i need
the adiq version right like how many people are saying that right like uh yeah it's an interesting
it's an interesting data point and it shows i guess kind of efficiency i mean even adam
livingston created this new i'm you know hey i'm not in dark mode here adam livingston created this
new metric torque adjusted btc yield which is uh you know i think a little bit based on some
conversations we had about risk adjusted, but torque adjusted, talking about efficiency
of the BTC yield and how efficient it is calculated. And it's interesting metrics that are coming
into play here. And this is what I was saying, like the world of traditional finance, like you
can get a master's in finance just by watching what people are doing out here on Twitter and
literally build the future. Everybody's building the future at the same time.
And to that point, that's what's so great about this. We have guys that are
not big hedge fund players, that are not multi-multi-millionaires pushing the market in which
way, that are doing this high-level analysis, is really a case of the group environment front-running
the hell out of traditional finance. And it persists. The more of these leverage plays that
come out, this front-running of the retail player, the retail investor over the big player,
the trend is not stopping. It's only getting more and more great. And I just think it's fantastic
to see happen real time back to that you know cyber wolfpack analogy i think that um we're
going to mob up on these guys pretty pretty heavily in the overcome in the coming years
it's going to be fun to watch yeah one more data point i want to hit hit on here just you know go
leaning into the data here a big data episode is strategy's average trading volume i think as of
today and i have it here on the strategy tracker actually as of today strategy traded 7.3 billion
dollars of shares. It's the ninth largest publicly traded equity in the market. They were ranked 88th
largest equity in the market. This is a staggering statistic. Since October 30th,
strategy hasn't traded lower than the 15th top publicly traded equity since October 30th,
which is just a staggering statistic. And I just want to put this in perspective. MetaPlanet was
most actively traded stock out of 12 000 on the otc markets which is awesome these btc treasury
companies are floating to the top 388 million in volume across 28 000 trades so you you put this
into perspective it's like 388 million in volume relative to the 7 billion 7.5 billion uh that
happened on strategy today so it's just interesting to compare and then that relativity relative to
its market cap, MetaPlanet is higher. Over the last day, $388 million relative to a $4 billion
market cap. That percentage is around 9-ish percent, but that's just on the last day.
So probably trading somewhere near the average trading volume of market cap. Why is it important?
That's important because it's liquidity. This is a representation of liquidity and how deep,
how liquid these equities are. And I think if you're trading significant volumes of stock or
options or whatever that may be liquidity is important uh to have the ability to go in and
out and move quickly within trades what's up ben what's going on guys it's hard to be anything but
pumped today huh you just can't get over 111 but we're gonna get there this thing's coiling hard
people are uh people are ready i'm ready but what you were just talking about with the liquidity i
I think what we're starting to see, and we're going to see it really loud on X, is the difference
between an institutional grade investment vehicle, where institutions can execute their
trades at the size and scale and speed that they want to, versus the rotation of capital
that's probably going to happen largely in the retail market for people that are chasing
the higher returns the speculators So you going to start seeing capital rotate throughout the market and you seeing that right now for sure with meta planet i mean the squeeze is amazing
i love to see this and i'm really open that dylan and simon capitalize on this because this is one
of those rare events that you get where you've got the capability to really rocket yourself up
the leaderboard. I mean, I put out a post earlier saying I think it was going to take like 650 million
in capital raise to get them into the top five publicly traded equities in terms of Bitcoin
holdings, which is incredible. And so you'd almost be negligent not to take advantage of this here at
some point. And I know there's nuance to it and the Japanese markets are strange, but the behind
the scenes, the private placements, the calls that are going to be happening, the ability to,
you know, issue these in blocks through, you know, some of the brokerages or directly to some of these
funds that are short is probably going to happen, but they've got all the leverage right now on the
terms to make that happen. So it probably comes in some way where they do like a really tight VWAP
from a pricing perspective. Maybe it's like a five-day VWAP, which keeps the price they're
issuing these warrants at to all these companies at a really close level to the market price so
that these guys aren't getting favorable conditions. But regardless, I just can't imagine
that they don't take advantage of this. But you're going to see this quite a bit. I mean,
Japan's going to be really unique because that's just a unique market in the way that they operate
and the way that they shut down an equity for an entire day when their circuit breaker hits.
But you're going to see rotation from all these new entrants into the market because retail
investors have started to figure out that there's this period at the beginning of this where you've
got just massive ramp up in Bitcoin yield. And when you get into these really early, you've got
the ability to have significantly outsized returns. And because strategies reach such scale,
it's not going to be the lightning fast mover that like a meta planet getting squeezed is going to be
anymore. You're still going to have those moves. I have no doubt about that. I have zero loss in my
thesis around micro strategy. I think it's still going to be a very great play, but you're dealing
with a different type of trading instrument now because it is such a deep market. And some of
these other companies are still trading really thin. So it doesn't take very much capital to move
those equities around. So you're going to see the rotation, but you're also going to see people get
burned a lot. And I think that's something that this audience in particular needs to be very,
very curious about when you start watching all these new companies launch is you're going to
have to start getting up to speed on the nuance of all of these different deal structures because
it's complex and they're coming fast and there's more coming. I mean, this market is just exploding
right now. And so you're going to have to start getting up to speed on things like lockup periods
and all this other stuff, where if you're chasing one of those pumps and you get in at the wrong
time, you've got the chance to get burned. So I love that this market's evolving so fast because
this is kind of what we used to always talk about happening over the next three to five years. And
now it's happening in like three months. There's just so many companies that are coming out and
entering the space and giving people a different flavor. And ultimately, I think you see the Bitcoin
treasury market segment much the way you see a lot of the other equities where you're going to have
what we'll consider the Bitcoin value plays, which is ultimately going to be strategy at their scale
and probably a couple others that really achieve scale. And those are the ones where institutions
can play and trade and do all the things they want to do. And then you're going to have these
growth and hyper growth. And so they're going to graduate up the ranks as they build that Bitcoin
treasury. And it's going to make really unique investment opportunities for people to find
different ways to structure their portfolios based on whatever their risk preferences are in this
space. So it's evolving incredibly fast. And it's just going to be so exciting for the next year.
I think that this space is just going to continue to explode. But I do want to see more companies
come out and just announce that they're just adopting Bitcoin treasuries, not going out and
doing the capital markets play. I think that there's going to be a segmentation of the companies
that can actually pull off raising money in the capital markets. And ultimately, I do think that
you're going to find that operating companies are important to that. I know right now the sentiment
is it isn't. They can just go use the capital markets and issue equity and they'll be able to
run it. That's fine in a bull market. In a bear market, you need a stabilizing factor, I think.
So I think we're going to see some segmentation here.
And over time, you're going to see different performance between companies that do have
operating companies and ones that are just pure shells trying to raise using the capital
markets.
But there's a flavor for everybody now.
So you get to pick your sandbox that you're going to play in.
And there's never been a better time to be an investor in this space.
Yeah, I think that to Ben's point, what we could see is a Bitcoin equity season, not
all season.
and what will end up happening.
And again, I don't want to belabor this point too much,
but while some of these companies will get over their skis
and they will blow up,
and I don't mean the company will go down,
I mean their Bitcoin treasury plan will go down
and they'll have to pivot.
I still think that bodes well for Bitcoin overall
because that's a different kind of sell pressure
and a different kind of market dynamic
that we saw in past cycles
where you have like all season, right?
Where you have massive levels of running up
and then you have these shit coins doing 15, 20, 30 Xs
and then exploding when everyone takes profits.
So being these Bitcoin equity plays, these leverage Bitcoin equity plays, these Bitcoin treasury plays, the one benefit that I think we have, and guys, check my logic on this if I'm wrong, is that traditional companies are not going to be as violent leaving the market.
it's going to have to be a staggered exit if they have to move away from a bitcoin treasury i think
they're not going to just you know dump everything all at once without warning and then move on
leave everyone back holding i don't think i don't think they would do that as readily as a vc that's
running an altcoin pump and dump scam right so the the dynamics can will still exist to some degree
people are going to get blown up people are going to get over their skis but even with that i think
this is still good for the overall thesis of bitcoin and the overall thesis of bitcoin treasuries
because the companies that survive the ones that end up surviving like a downturn or potential
downturn or some turmoil like a strategy i think going to be seen as very very solid plays in years
to come and that'll give them a lot of staying power i think some of these companies are just
going to do this backwards where they're going to start the treasury strategy right away because
the capital is available to them to get out and start achieving scale and then they'll look at
acquiring a company to build that operating side of the business later so that's my hunch at what's
going to happen with a lot of these some of them won't some will just try to operate them as these
basically you know holding companies that have access to the capital markets but i do think
that you'll see some that achieve scale first in the treasury side you know kind of doing it
backwards and then they'll go and look for operating companies that they can acquire and
roll into that so there's going to be a lot of flavors of this and you know yes the banks are
creative and people are really thinking very differently about how to execute this and how
to get into this market because they see bitcoin now as an inevitability right it's coming you keep
seeing all the cracks in the traditional financial system getting wider getting louder people are
starting to notice you're seeing everything happening with the japan bonds you're seeing
the impact on the u.s rates here i mean people are awake now and they're realizing that there's
probably a very significant need to begin to participate in the only decentralized store value
asset that's out there that's at any scale and that's why i do want to see a lot of these companies
just start treasuries as well you know this this whole using the capital markets is amazing
but i think that there's probably going to be limited capacity in the markets where you might
be able to get 50 to 100 of these that are doing it really well, or at least doing it at some level
of scale. But if you want to get to 10, 15, 20% of all publicly traded companies with Bitcoin on
the balance sheet, you've got to start championing the other side as well. And so I would love to see
some more companies just come out and just start converting their own treasury holdings.
Not that they have to go and actively raise capital around it, because I think just converting
the reserves you have on your balance sheet is going to be a competitive advantage on its own
relative to your peer group. So there's going to be consolidation in the market if you play this
out over 10 years and one company out of a five company peer group puts Bitcoin on the balance
sheet, holds all their cash reserves in Bitcoin. Bitcoin continues to compound at 20, 30% a year.
After 10 years, one of those companies is significantly better capitalized than the others
and you might be the one to consolidate your industry and really cement yourself in that spot.
So I think there's a competitive advantage just to acquiring Bitcoin.
We get excited about the high octane version of the Bitcoin treasury and I love it.
It's what I spend all day on.
But there's another, there's a lot of space for just more traditional companies that adopt Bitcoin as a treasury reserve asset.
And I'm pretty pumped to start seeing those.
Yeah, absolutely.
And if the market starts to adjust and reprice here, I'm thinking about maybe a year or two down the road.
And let's say there's a bear market, but for everything, like stocks go down and Bitcoin goes down.
You may see a situation where a company may want to sell their Bitcoin to pick up an operating company that's got cash.
Maybe it's trading.
maybe the cash company is trading at a discount to its cash and you're able to convert it into
bitcoin and get the operating company on top of it yeah i think the the future the evolution of
that is going to be really exciting to watch right like all so many eyes are on this meta planet
thing right now which is it's it's incredible it's amazing what's happening it's like i said earlier
it's like you get the butterflies in your stomach i'm probably gonna have a hard time sleeping
be tonight watching what's going on. But at the same time, there's so many other things that are
going to happen in the next 10 years. If you want to be around this, there hasn't been a better time
to be close to this stuff. Who's having a better time than Dylan right now? I love the meme where
he takes the hat off and then puts that on. When you're in this position, this is what you dream
of if you're running one of these treasuries. Yeah. Right. Everybody's very aware that there's
an arm play between the market value and the book value of the company. Right. I mean, that's been
highlighted over and over through strategy in the ATM. So when you get these chances where you've
just got these series of events that line up and result in this crazy squeeze that starts to happen
and you build this, you know, relative to all the peers in the treasury space, you build this
massively outsized premium in your market cap versus the book value, I mean, you got to be
downright giddy because they're going to be double, triple the size of the company or of the treasury
in relatively short order here. If any of these guys want to get out and they're going to want
to get out. I mean, there's no doubt that they've got a big cohort of people that are pinned at the
moment. And that's a real problem if you're a fund. And if you want to save face and get out
of this, you're going to start making calls and being friendly and wanting to partner here.
and figure something out to get out of it.
So it's just such a unique space.
But I think what they've really highlighted
is that there is a source of alpha here
in the foreign jurisdictions, right?
Outside of the US, looking at the foreign markets
and finding the nuances in these markets
and looking for weakness in particular markets
and areas to capitalize on inefficiencies
and things like the tax codes,
like what they have in Japan.
am so i i think it's really cool that we're starting to see announcements pretty much every
week of a new market getting a new version of an lb or a treasury company and there's going to be
nuances in a lot of those markets and it just means that we're all going to have to keep getting
smart on what's happening in all these different countries because we're going to get another crash
course in their bond markets and the way their currency operates and their tax regulations and
their rules. And that's how you're going to find the opportunities. Cause most people don't want
to do the work to figure that out and to find the nuance and to find where there's an edge,
but it's going to be out there. And there's going to be more than one of these markets.
That's going to have some unique setups. Like, like Japan has, I have not learned as much as
I have in a lot. Like I've learned more in the last couple of days than like, you know,
most of my financial education, right. You're sitting on AI. I'm like, what is this? You know,
what is this? And it's cranking it out. I'm reading as fast as I can, scrolling like,
all right, next question. What is this? And man, holy moly. There's so many things going on. And
access to information is faster than it's ever been. Everybody's getting exponentially smarter.
If you're not using AI, you're totally screwed, crawling behind. I can't believe people aren't
paying attention to this stuff. It's crazy. It's probably going to be a knowledge retention issue
That starts popping up out of this.
I mean, you use those AI tools all day and man, are they powerful.
And those deep research functions, if you've got a specific topic that you want to get smart
on is amazing.
But the problem is you can almost digest too much data at one time, right?
And so you're quick to read it and move on to the next thing.
And then you got to be able to connect that picture later.
So it's going to be tough because it is fun to go down all the different rabbit holes.
But sometimes you do have to specialize in a certain area to make sure that you can truly
be an expert and see differences that other people can't see and markets are going to be no different
yeah i just thought it's speaking like those people because of ai tools yeah six people yeah
six wow uh dan speaking of specialization i was going to kick it over to you because i know you
put together some stuff you were thinking about the market the landscape you're looking at similar
you're looking at other equities you're trying to put all this data together um what are you
thinking about? What are you looking into these days? Oh, you're on mute.
Now it's a corporate meeting. This is what happens.
Still on mute. Still on mute.
He might have lost his mic or something. Yeah, that's all right. Maybe he'll come back.
You there? Yeah, I'm off. I'm off. I can hear you now.
I can't hear you.
You're good now.
Yeah, sure.
I'll share my screen.
And I just have a very broad overview of the different companies that we're looking at.
And then we can talk Strife and Strike ATM.
I think, well, Strike ATM.
I think that's kind of the most interesting topic in terms of strategy.
Sharing the wrong screen.
Yeah, right here.
Sorry, guys.
I'm a novice over here.
Window.
There we go.
That will...
Now we see each other.
So that's the whole window, and then you should be able to see...
All right. While he's doing that, Dan, while you get that figured out, I'll jump into a leverage
update. MSTR leverage update. We've shown this past couple of weeks. This is as of 521, MSTR holds
576,000 Bitcoin on balance sheet, Bitcoin price at 110,000. You've got assets of 63 billion. This
is up from last week. I think it was like 57 billion. Debt held on balance sheet, 8.2 billion,
preferred stock 1.7. Net capital held on balance sheet is $53 billion. So if you were to put this,
If you were to put just their net capital next to the market cap of all the publicly traded companies in the market, MSTR would be ranked about 180th just by net capital if you put it next to the market cap, which is just incredible financial strength.
This is one of the strongest net balance sheets on the entire planet.
They've got a leverage ratio of 13%.
The Bitcoin price would need to go down to $14,200 for the assets to be worth less than the liabilities.
on a pro forma basis. If you back out the debt that's currently trading in the money,
it's about $3 billion that's trading in the money. The leverage ratio would be about 8%.
And the Bitcoin price needed for the assets to be less than the debt on the balance sheet would
need to be about 8,600. Again, everybody and their mother would be selling everything in order to buy
more Bitcoin if we went back down to 8,000. So very, very strong position that strategy's in
from a financial perspective and uh you know leaning into that dan you ready
now you're on mute again lost his mic again did you guys talk at all before i got on about the uh
the debt ladder that they've got out with the convertible bonds with strategy and now that
a ton of them are already convertible and now they're super deep in the money where they're
effectively equity and you might be getting back to the point where it's time to be on conversion
watch yeah i haven't haven't hit on it but that's effectively what i'm getting at here and maybe i'll
maybe i'll hop over to the strategy to the debt page and i did bring this up a little bit earlier
so um i had a tweet about it earlier so you've got about three billion that's currently trading
in the money ben to your point here and i think you can sort it by conversion price yeah you've
got about four of them right now that are effectively equity right where there's really
no more gamma trading right now and if that happens i think you could probably see those first
four and i can't what do you got 1.8 billion 2.6 3.3 billion yeah 3.2 yep that would roll off and
that would open up for some really big converts to come because i do think converts are coming i know
i know a lot of people think that they're only ever going to use the atm again but i don't believe
that at all they're not that far out of the 60-day window from the last one that they issued and so i
think now when volatility is coming back into the bitcoin market again it's going to become very
advantageous for them to start rebuilding that ladder again and you're going to see a lot of
these either convert or because they're so deep in the money they'll just start issuing new ones
because they're under levered anyway so they've probably got capacity to do five six billion
pretty quickly if they decide to and that'll start reigniting that volatility again
and the bewilderment i don't think they're done pulling on this lever but i just think that as
you get more tools available to you like keep in mind strategy is the only one with as many tools
available as they have and at the scale that they have so while they're working on scaling up strk
clearly that's one of the primary tools they're going to use in the future given they allocated
21 billion directly to that. It's going to take some time. So in the meantime, they're going to
have to re-lever up in other ways. And I still think that they're going to need to juice the
leverage with the convertible bonds to right-size the leverage ratio while they continue to build
the liquidity on STRK. And the ATM is probably going to keep being used while they're not issuing
the convertible bonds. But I'm expecting these to come fairly soon as long as the market conditions
remain right. And it's going to let people see that now that they're achieving the scale,
they're going to really focus on making sure they execute these at the most opportune times
when they can get the best terms, when they're getting the highest premiums, the lowest coupons.
And they're going to be very strategic about how they deploy these because this is longer term debt.
And so they want to make sure that when they get it, they're getting it during the perfect market
conditions. And those are starting to show up now, right? This move in Bitcoin is going to be really
important for getting more convertible bonds out if they want to get the right type of pricing. So
I think we're hitting that window now where you're going to start seeing this tool be used again.
It's kind of a matter of when and how long this volatility in Bitcoin remains.
So you hit on two things. There's a 60-day window generally from your prior convertible bond. I
think that you can't issue another one within 60 days. So the last one that they issued
was February 21st, 2025. There are some exceptions. I think they issued two back-to-back
in March of 24. So there are some exceptions to that. Yeah, you have to get a waiver if you're
going to do that. So it is possible to issue them in succession, but you probably have to have like
joint buyers that are that are buying those bonds where they're okay with you issuing two right in
a row. Like you might be a buyer in each of the bonds if you want to stack out your maturities
or whatever you're doing. So but yeah, so they can get a waiver and issue two in close succession.
But the standard is 60 days after the last one before they're allowed to go issue another one.
Yep. And the two most recent, the biggest ones, so you got a 5 billion that's trading now. And as the price is around this $400 range, you're now entering this high gamma zone where a lot of the ARB trading is happening.
When the stock was really depressed on these specific convertible bonds, there was less ARB trading happening because the bond was trading as pretty much a bond. And now you're getting into this period where it's like bond and equity.
So you're seeing a lot of trading going back and forth between the ARB.
All right, Dan, you ready?
Yeah.
All right.
We're talking about strike, so we can talk just strike weekly volume if that's interesting for people.
Let's hit it.
Yeah, I love it.
So strike volume, I've denominated this in dollars as opposed to shares.
It's easier to kind of look at.
And these are the Mondays of each of the weeks since strike ATM started trading.
and you can see the strike ATM usage here. And those should be in dollars. I apologize.
Can you throw some commas in there? Yeah, there you go.
Yeah, those should be in dollars. And this is a percentage of the weekly volume.
So because the strike is a function of the liquidation preference, interest rates,
the credit worthiness of strategies, capital stack, you can issue strike at a really high
percentage of the total traded volume without diluting or putting a lot of downward pressure
on the SDRK equity price. We've seen SDRK just go up a ton in value over the past few weeks.
And you can see there's been 30, 35, 43% of the traded volume issued in SDRK ATM. So what that
shows you is strategy is doing everything they can to get this out the door as quick as possible.
And I think the demand continues to creep up with the most recent ATM being 60 million, which is about 10% of last week's Class A ATM.
So I think it's quite good for the long-term prospects of collateralizing the balance sheet and using a preferred ATM to acquire BTC per share for the Class A holders.
But it's just taking time.
It's not an overnight process, unfortunately.
So is that volume up to date?
Is it as of today, the 21st or May 19th?
This one here, this May 19th is as of today.
Yeah.
So that's the three trading days, Monday, Tuesday, Wednesday.
Got it.
Yeah.
Then obviously we haven't seen the ATM this week.
So unfortunately we don't.
So we're on track to do more volume than last week,
depending on how we finish Thursday and Friday.
Okay.
Let's do a quick primer on strike, right?
What is strike?
Strike is a perpetual convertible preferred stock.
Strike itself, here, let's pop this down.
Perpetual preferred convertible stock.
Convertible perpetual preferred stock.
Perpetual convertible preferred stock.
It's one of those.
It's in that order.
And what that means is preferred stock, it sits higher on the capital stack in liquidation
preference. So in the event of a bankruptcy, the holders of debt, debt instruments get paid out
first before common stockholders get paid out. So this is a preferred instrument. So it shifts
higher up on the capital stack, which reduces the risk of holding that specific instrument.
strike itself pays an eight dollar per share dividend so at a price of a hundred dollars
it's paying an eight percent annual yield as the price of the strike you know moves around
that relative yield also moves around and uh the interesting thing about strike is
10 shares of strike can convert into one share of MSTR. So you've got multiple components that can
move the underlying price of strike. You can have interest rates move the underlying price of strike
where if interest rates drop, this product looks extremely more attractive. So the price would go
up. Vice versa, if interest rates rise, the relative interest rate on this would look less
attractive. So the price would fall similar to like a bond. Now the really interesting component
is it's got this convertibility, which has the ability to move with the price of the underlying
equity. So as the price of the underlying equity goes up, the conversion value, the conversion
premium goes up. So the underlying price of strike would go up too. So you effectively,
you get this free call option. You get, and as of today with the price trading at a hundred dollars,
like right at par you get eight percent annual yield and effectively a free call option dan and
i explored this uh about two weeks ago we've got a piece of content out and we'll maybe reshare it
after this so if you're interested we kind of walk through all of the dynamics so that that's the
baseline there and uh and maybe we'll jump into this because i calculated and went and compared
strike to a piece of real estate and i'll share my screen i walk through it i'll walk through
analysis i did just out of curiosity maybe i'll zoom in a little bit can you guys see this
yes it is interesting when you think about strike if you kind of take the price of it and you back
out the component that's allocated to common stock so 10 of a share of strategy stock so call it 40
right now. So you can look at it and the yield on the cash actually looks a lot better because
you're essentially getting an $8 dividend on call it $60 value because the other $40 is actual
shares of common stock. So it's a really interesting product when you break down the
way that it works. And I think that's why they're so confident that it's going to be so popular.
And you're seeing it now because clearly there's demand for it that pushed it up over a hundred
and you can be sure they're using the ATM.
But as we've talked about before,
this is one of those where it's a self-healing product
because if you use the ATM and it does drive it down,
the yield starts to rise
and people start coming in and the demand raises
and it comes back up to the market value.
But the other thing is,
while it doesn't have really high liquidity,
a lot of that ATM is probably being issued
through block trades,
which is essentially big buyers
that are calling up saying,
hey, I want, you know.
50 million, 100 million.
Yeah, I want 50 million of this. And then they're issuing that in one block trade so that they're not moving the market and they agree on pricing for that block. So that's probably how a lot of the ATM is actually being done on this product as it's scaling and you're growing that liquidity because you really don't want to be hitting the market too hard with any type of an ATM product. So I would guess that a lot of this is getting traded through blocks at the moment. But it is a really unique product. And I think the markets, it's going to take a little bit to get smart on it on just how good it is, particularly if you want
protected downside and being higher in the capital structure, which is really important to some of
these really big investors or people that are trying to diversify the risk profile in their
portfolio. So it's a really cool product. So I think that we're going to see this scale pretty
quickly here because it's clear that with the pricing and the way that it's been moving,
people are catching on and they're moving a lot of these shares.
Exactly. And I'm about to rip into it on why to buy strike over real estate. So over here on the
left-hand side, this is a real estate calculation, first of all. And then over here under the orange,
this is the strike calculation. So on first blush, when you're just looking at this without
even looking at the numbers, real estate on the left-hand side, complicated, a lot of things going
on. Strike in the middle, not complicated, very simple. And that will play out here. So I put out
a $500,000 home price and assumed you put down a 20% down payment. So you've got $100,000 down
payment and you took on leverage on this property. So you have a loan of $400,000 and let's just say
an interest rate of seven, which is the current interest rate. So you've got all of your monthly
expenses here, principal and interest, property tax, maintenance, repairs, utilities, vacancy
allowance, property management, insurance, et cetera. So you've got monthly expenses of $4,400
taking the 1% income rule, assuming you get 1% of revenue from this property, you get $5,000 in
door a month. And we'll come back to this vacancy in a minute. So on the year, on a net basis,
you're going to yield $7,000 a year. That gets taxed at your ordinary income tax rate. So your
yearly net, maybe $4,500. So you've got a down payment of a hundred thousand dollars. Your cash
on cash return is that net $4,500 relative to the down payment. So about 4.6%.
compare that to strike right same principle you got a hundred thousand dollar principle
the current price is a hundred dollars yield is eight dollars per share so you're getting eight
percent here expenses are zero annual yield is eight thousand dollars your tax assuming this is
a qualified dividend which i think all data that i've reviewed so far is that this is going to
qualify as a qualified dividend so you get taxed at a preferable long-term capital gain treatment
which would be 15%, which is a huge benefit. Your net, this is not financial advice. I don't think
that has been confirmed. I don't think that dividend has been paid yet. We will see if it
will be qualified. So on a net basis, that'd be $6,800. And yes, somebody said I'm leaving out
the tax write-off, but we'll get back to that. And net cash on cash return is 6.8%.
Now I want to look at this on a 10 basis Like okay there multiple things playing out care right You got two different instruments You got Strike and you got real estate And you got to think about compound annual growth rate So Strike I assumed let assume Strike has a compound annual growth
rate of 30. Strike will have a compound annual growth rate very similar to MSTR once the price
of MSTR is over a thousand. So it may have a similar upside to Bitcoin, nearly Bitcoin upside,
maybe even potentially more. So you think about a compound annual growth rate of 30 may be very
realistic. It may be low. Principal, $100,000 yield 8%. And assuming on the real estate,
you've got a three and a half percent compound annual growth rate, $100,000 principal,
your yield being 5% and your rental rate increase every year of 10%. You know,
just got to make some base assumptions. So we walk through this.
So if you look at this on a 10 year performance basis, your principal,
if you held it in strike, grows from $100,000 to 1.06 million with a 30% compound annual growth
rate. And you get a yield of $68,000 over that same time horizon. So your total at the end of
year 10 is $1.1 million. Now, under these same assumptions for the real estate performance,
you've got the home prices compounding at 3.5% annually. Your loan balance is going down
at an increasing rate. So your equity is growing and you've got the annual yield that you get
along the way. And so the total in this circumstance is $697,000. Obviously, a lot of
assumptions are going into this. You're assuming everything on the left-hand side with real estate
and all of the expenses, et cetera. Now, the important thing to take into consideration
is all of the risks associated with each of these. So on strike, when you're looking at strike,
what are the risks and how do you quantify and value the risks? You've got collateral risk,
volatility risk, the stodian risk, jurisdictional risk, copycat risk,
and MNAV deterioration. You've got all of these potential risks that you've got to take into
consideration, but they're all digital. These are all real digital risks.
And then you think about the risks of owning the real estate and you look at vacancy, dollar
debasement, catastrophes, insurance rate increases, interest rate risk, liquidity risk,
and population shift, right? Like people just move out of your move out, like you don't get paid.
So that's why I put this other highlighted column in here. This is extended vacancy months. So if
you think you've got just two months of vacancy every year, all of a sudden you're starting to
lose $30,000 on this property because you're from a yield perspective, because you have vacancy risk.
um conversely conversely if your insurance goes up you know it doubles goes to you know your house
burns down uh it goes up by 4x or 5x that cuts into the yield you know all of these things need
to be taken into consideration so when when you're looking at the relativities maybe we'll put this
back to 150. when you're looking at the relativities even if you drop the cagger of strike to 20.
I think a lot of people would say that the next 10 years, strike is probably going to have a
compound annual growth rate greater than 20 because it's following MSTR pretty closely,
unless you're bearish on MSTR, like the recent crowd. That would be a situation where
it maybe made better sense to hold the real estate. But you've got all of these other risks
to take into consideration. So you think about risk-adjusted yield of each of these different
products and how much, how many units of risk do I want to take into consideration relative to the,
the principle. Okay. Pause there. Any questions?
No, you also got to put the time into the real estate.
Time. The amount of actual man hours that it's going to take to manage all of that. I mean,
you know, being able to free up your time is a real gift. And now being able to have all these
unique products that provide people with really unique opportunities to tailor a portfolio is
going to be huge for a lot of people that don't want to spend the time managing portfolios of
real estate and chasing around tenants and doing repairs on damage and and all the things that come
along with it because you know while the appreciation has been really good historically
and it used to be kind of that you know i viewed it as a really good investment for a lot of people
particularly in the early days because it was kind of a forced savings account because it's not all
that liquid so that appreciation could build up you're not just going to offload it and it's not
something that you can just trade in and out of right there's some friction there to getting out
of there and to accessing that liquidity but now that you've got opportunities here for cash flowing
assets where you can very clearly define what your risks are and you can monitor them in real time
because you know with a product like strike where you stand in the capital structure you know how
over collateralized they are at any given point in time you can monitor that and you can make
adjustments if and when things do change and so you've got the ultimate in flexibility and you
get to be hands off so you get your time back and i think that's a very underrated benefit
to a lot of these products when you compare it to something like real estate that requires a
a significant amount of time and effort to do right and to do well. So it's, you know, all these
things are being enabled by Bitcoin and the unique characteristics that Bitcoin brings into the
markets. And, you know, when you found out that this was strategy using AI tools to create really
cool products, you can just imagine what's going to come next, because there's going to be more
companies offering different flavors of these types of products. And you're going to have
different collateralization profiles and different risk returns so you can really customize and if
you're looking to build that cash flow which a lot of people are right it's clearly a very hot topic
because msty really exploded in popularity which told you that people are looking for income income
imst is another one we'll find out what their dividend looks like tomorrow and so you'll see
how that one's performing and then you've got these which are going to be really stable over
collateralized you get to watch them it's very underrated in my opinion it's very it's very
liquid strike is not going to have a leaky roof and strike is also not going to have property taxes
that go up in perpetuity so there there's all kinds of um ways to look at this to your point
you could simplify it into just how many ways can get screwed right like okay in real estate i could
could get screwed way more ways probably than you could get screwed with strike and it's not liquid
right um i mean even yeah if you needed to get out of something that's like okay well now i got
to go get an inspection i got to pay cost to sell the property i've got to you know replace a window
i've got to do all this stuff to make it you know put the lipstick on a pig and and oh it turns out
actually Amazon is making all of their people go back to work.
So nobody actually wants to live in my area anymore.
Nobody's moving back out to the burps.
You know, like you've got all of these potential
all kinds of ways it can go wrong.
You just get screwed everywhere, everywhere.
Or you can just hold strike, get the money, stay liquid and
not financial advice, but which is which is great.
I feel like this is great for humanity, right?
Like there's unaffordability everywhere.
rampant because so much capital is just flooded into real estate as a store of value.
And they're not actually using it. And it really, really strips out the
store of value nature of real estate over time. It'll take a century maybe, you know,
but it will really boil down to like utility value. Maybe you don't need that third or fourth home
because you know bitcoin or bitcoin related equities or perpetual preferred stock is a
better place to hold that into perpetuity than um you know that third or fourth house that you may
have had just to store five million bucks or whatever but yeah and this dynamic like with a
professional with the perpetual preferred stock you're really picking between perpetual preferred
stock and perpetual incurred costs with real estate and what i mean by that is back to the
property tax example you're going to have property tax in perpetuity and it's only going to go up
over time right so do you does someone make the decision to your point that you know everyone's
been using real estate it's kind of like a savings account essentially essentially for the last 50 60
probably even longer than that 50 years if you remove that dynamic and now you have other
vehicles where people can actually put capital into get return on investment get their appreciation
without the the costs that exist in perpetuity with real estate maintenance costs property taxes
the list goes on and on that we just talked through i i think it does change the dynamic
quite a lot when it comes to how people view their money and their relationship with money
and the ways that they can live live um into the future real estate no longer becomes a default
savings mechanism these passive bitcoin investments do right right that's exactly it and you've got
the the new uh efficient frontier right uh shall we shift gears i wanted to talk on s p 500 potential
inclusion earnings q2 uh maybe i'll bring my screen back up uh because this is a big deal
first of all i'm gonna look at the scale of bitcoin treasury companies because i think this
is important too this is this represents all bitcoin treasury companies uh or at least the
next 10. So this is the top 11 Bitcoin treasury companies. You got MSTR over on the left-hand side,
holds 576,230 Bitcoin. Each square represents a thousand Bitcoin. The representation over
on the right-hand side, this is the next 10 closest companies holding 171,000 Bitcoin combined.
So this is just a visual representation of these are all of the companies. It's how much Bitcoin
they hold. Just to show on a relative scale here of the moat, right? This is an enormous
moat and the number of companies with the cash or capital to potentially capture MSTR moving forward
is very, very limited. I think there might be one company in the world that's got enough net cash
on balance sheet to potentially buy as much Bitcoin as MSTR holds. Whereas you look at all
of these other companies and there are hundreds, if not thousands with net cash on balance sheet,
they could buy 2,000, 3,000, 7,000 Bitcoin in a couple of purchases.
Now let's get into earnings estimates. So this is Q2 MSDR earnings analysis pro forma. So Bitcoin
price as of today, 110,000. Bitcoin price at close of Q2 is 82,000. So the Bitcoin held from Q1,
they're looking at about $14.5 billion gain on the Bitcoin held from Q1. They also purchased
more Bitcoin here in Q2, about 48,000 Bitcoin. The purchases already made in Q2 are already in
a profit position of $736 million. So the total gain held on balance sheet is about,
the total gain for Q2 on an estimated basis would be about $15.2 billion.
the net loss in Q1 or the net loss of the last four quarters was $5.3 billion. So they would
clear the hurdle for positive earnings over the last four quarters by about $9.8, almost $10 billion,
which would then qualify them for the S&P 500. Again, they have never qualified for the S&P 500.
Over the last 300 days, they've qualified from a market cap perspective, but they haven't qualified
from this earning perspective. And I think this will, at the close of Q2, which is coming very
soon, end of June 30, they will report an earnings, depends on what the price of Bitcoin is at the end
of June, they will have an earnings report in August. And I think that will result in significant
confusion in the market where the market's trying to reprice what's going on,
trying to put this relative to the other companies in the equity market.
And yeah, if you look at the S and P 500 has an average P ratio of 26 QQQ average P ratio of 35,
max seven average P ratio of 31. This is an average. So there are some with significantly
higher P ratios. Um, if you hold the P ratios constant in that perspective, you're looking at
a price, uh, significantly higher than where we are. So from a value perspective, comparing this
to the rest of the market, there is, uh, there's significant balance sheet strength,
significant growth on the balance sheet. Bitcoin continues to be added to the balance sheet. This
is an operating company. It's not a closed end fund. And yeah, I think we're going higher from here.
Dan, Adrian, Ben, any points to add?
I'm over here scrolling down the S&P 500 list to find out
where that gain, just the gain alone would put them on the list.
it's like it's top five it's top five no no just in terms of like the market cap of companies in
the s&p 500 yeah yeah what was the gain there that you had uh 15 billion well you had nine or
so or was that the net nine was the net over the last four quarters so q2 net income of 15.2 billion
So 15.2 would put them at 421.
So their net income potentially in Q2 would qualify for the S&P 500.
That's pretty crazy.
And then even the 9.7 or whatever it was is like 477.
Yeah.
Wow.
So pretty crazy, right?
I mean, these numbers, we get so numb to them because we look at this stuff all day long
that you don't realize how baffling some of these gains are like the size of the capital that's
moving around here is just absolutely incredible it's it's a it's a steamroller the size of
you know the empire state building right like it's going to move a little bit slower but once
that thing gets cooking like watch out right like this is this is taking over everything
uh i also did some interesting analysis on comps in the sp500 and i mean you can't see shit here
but basically there's two companies with a market cap over a hundred billion dollars,
right? There's two companies with a market cap over a hundred billion dollars that are not
in the S&P 500. It's Apple 11 and MSDR. And so that just goes to show you every other company
that has above a hundred billion dollar market cap has the passive flows of the S&P 500.
That's why they're up there.
That's why they're $100 billion companies.
And now it really fascinating when you see the relativity of these two companies that aren even included yet There probably some front running going Obviously retail is front running this but I think there mass confusion in the market And I think it going to be hard for the S 500
committee, particularly if Bitcoin continues to rip and these numbers get astronomically large.
I think it's going to be hard for the S&P committee to exclude them from the S&P 500.
And they probably will get excluded first go around.
But I think the bewilderment will take a hold and Larry Fink will give a call and they'll eventually get included.
Go ahead.
Yeah, I'm inclined to agree.
And also, coming back to like if we just go back to the conversation we had earlier in the call about market sentiment, I think people are really grossly underestimating just how much this will do for sentiment once they are included in the S&P 500.
Just imagine the dynamics that come into play when a levered Bitcoin play essentially, I don't want to say forces their way into the S&P 500, but it kind of takes it by storm and goes from a $1 billion company to over $100 billion company.
And now they're in the S&P 500.
Now they're getting additional passive flows.
I think market perception and market sentiment are going to start taking up in that kind of a dynamic is what my guess is.
with front running and then after inclusion.
I do also see a lot of comments asking,
is this just balance sheet appreciation
that doesn't hit the income statement?
The way that the accounting rules work now
is that change in the fair market value
does hit the income statement.
So this will be reported through the income statement,
which is why we're looking at it as earnings
because that's how it'll be reflected.
Right.
This is FASB fair value accounting,
which they adopted for the first time in Q1.
just the way that the price of Bitcoin fell. I think it ended Q4 at $94,000, ended Q1 at $84,000.
So it was just another extended quarter of bewilderment of people, right? That's where
we saw 82,000% miss on earnings estimate. And it can be the complete opposite, but to the positive
degree for the first time in the last five years. And there's been so much negative press every time
you know, and earnings has come out. It's just been seeking alpha, Forbes, you know, negative
press, negative press, negative press. And it's so funny. You go look through the articles,
they had no mention of FASB fair value accounting. They look at the software business,
don't even mention Bitcoin, don't even understand what's going on. And this is a really significant
event. I think this is the biggest story of 2025. I mean, MetaPlanet is making a run for
the biggest story of 2025. If they like kill the Japanese bond market and everything blows up
because of MetaPlanet. I mean, that's an enormous story right there in itself. But
if they get included in the S&P 500, that is an enormous story. The largest Bitcoin treasury on
the planet that holds $60 billion of Bitcoin, probably to be 100 billion at that point,
is added to the S&P 500. Credit quality goes up. Access to capital goes up. ATM ability goes up
because you have passive flows. Everybody and their mother that has a 401k has exposure to S&P
500 and that's passive zombie money that's coming in the door and nobody even knows right they don't
even know that they hold microstrategy strategy right my favorite is that with these earnings
when they have those misses you know where they missed earnings by 85 200 or whatever it was
there's no follow-up to figure out why no like that's just the headline and the analysts shrug
it off and like well we were wrong you know by a little bit i guess you know 85 000
And it's going to keep happening for a while, but this is absolutely the story.
You know, whether the story is microstrategy or not, the story is definitely Bitcoin treasury
companies.
Yeah, for sure.
2025 is undoubtedly the year of the Bitcoin treasury.
Hell yeah.
And the outperformance because of the strength that Bitcoin's showing amongst weakness everywhere
else in the global markets is just going to really amplify that message.
So anyone who is still asleep at the wheel that's not paying attention to Bitcoin as an asset class, not paying attention to Bitcoin as an asset class, not paying attention to Bitcoin as an asset class, not paying attention to Bitcoin as an asset class.
That aren't outing Bitcoin for their own personal balance sheet.
This is the year that that message is going to get deafeningly loud and people are going to pay attention.
And I think that, you know, these new all time highs that we're seeing is just going to amplify that message and accelerate this thing.
Keep in mind that a lot of these buyers that are coming into the market, they're long only buyers.
So you've got this structural bid building up underneath Bitcoin that any of these traders or sellers have to compete with now.
It takes a lot more sell pressure to exhaust these buyers because now they're bringing in by the billions of dollars.
And you keep seeing more and more and more of these companies coming in and building a bigger and bigger structural bid underneath Bitcoin because they're not all buying at one point in time.
it's consistent now. Now you've always got someone in the market raising money,
buying Bitcoin with it globally, not just in the US markets. So it's creating this really
crazy dynamic out there that's putting such a strong bid on Bitcoin that you just have such
a hard time seeing this getting some massive drawdown now because you have so many buyers
that are there to absorb it. So obviously anything can happen. And if the markets get really thin,
volatility can spike for sure it can become more volatile than less volatile if the trading gets
really thin because it's all gonna change hands at the margins but you know you it's just such a
strong bid now that i have a hard time particularly in the short term seeing this thing slowing down
i think we're gonna have a really awesome summer here i think it's gonna be a ton of fun
yeah i i agree um that's what i was talking about earlier i don't see that 80 drawdown coming in the
the market with all these different players um in it it just i just don't see how it happens in the
same way and bitcoin also just crossed 111 for a little bit on coinbase so i just want to point
that out for for shits and giggles but um you know to ben's point um and with what i was discussing
earlier the players that we have in the market right now are fundamentally different than any
other cycle and the and with regards to the dynamics that creates i don't think it creates
an event where people are just going to be exiting bitcoin and mass because they're rotating into
something else everything that is going on right now whether they rotate from one lbe to another
they're still passive bitcoin buyers right so it's still creating the impetus for upwards buying
pressure on bitcoin itself regardless of what they rotate into so everything kind of like what soleil
was talking about becomes a cooperative trade the pressure the pressure remains no matter where they
go. So the 80% drawdown, I just don't see it. 20, 30, 40, sure. But us going from like, you know,
200 or 300,000, all the way slamming all the way down to 40 or 50, I just don't see it.
Yeah. Or you exit and you go into Bitcoin, right? Like it's your safety.
Exactly. It's up with pressure. You're going from one to the next, but it's all Bitcoin.
Yeah, there's no running around between altcoins and trying to follow the energy. I mean, there's some similar type energy going on right now with these Bitcoin treasury companies. And I was talking with Grain a little bit earlier before this. And you've got this scenario where people are trading this stuff in their IRAs without incurring taxes.
So you basically like you've got your capital is in Dubai effectively by being tax advantaged and you can protect it and make trades in and out.
So you've got capital that's moving quickly and you've got a lot of retail that's, you know, trading these things and following the energy.
It's just be interesting to see how this all kind of moves around.
Keep in mind that the services are also evolving around Bitcoin.
True.
So when you think about things like lending getting unlocked and particularly lending at
favorable rates where you start creeping down closer to, you know, SOFR plus two, SOFR plus
three style lending rates, when that happens, people lose their need to sell because now you
can go borrow, not incur the capital gains tax. I mean, that changes the market in a big way
because historically you've had to basically pay loan shark rates to go and borrow against your
Bitcoin and people just didn't want to do that. But because of the style of collateral, how well
this works as collateral and the liquidity, the global liquidity 24-7 in the market, over time,
those rates are going to compress in a big way because it's the best collateral that a bank
could be holding because they're immediately liquid on it. And when that happens and all that
friction comes out and you're not getting gouged on the price and you're holding an asset that you
still think is going to compound at a high rate, you're way more incentivized to borrow against it
than sell it. So that's going to take additional sell pressure out of the market. So I just see so
many dynamics piling up here around this asset class that it just seems like we're really about
to hit that curve where people wake up to how powerful this is. And now they know they can
actually utilize the value, right? The messaging isn't, you know, you just have to buy it and die
with it and you can never do anything with it, you can use the value now. And it's going to get
easier and easier to do without having to get rid of the asset. So it's a powerful dynamic at play
when you add it in with all these institutions that are out acquiring it. They'll also start
borrowing against it so they won't have a need to sell and they'll still have access to capital if
they need it. It's all lining up. I mean, it's looking great. Yeah, people underestimate the
impetus to sell, right? What causes that real drive to sell? What's the benefit of doing it?
If you remove that, that's more upwards pressure. Also for shifts and giggles, we just blew through
111. We're at 111, 497 right now. So I think we are entering just a little taste of prices, February.
And for people that were calling for 90s, 80s, whatever, I think that's going to have to hold
off just a little bit here. Can we also just acknowledge how this thing's ripping? We're at
all-time highs. None of us even seem remotely excited about it. Like it's just normal to be
here. You're like, well, of course it's 111. People are going to wake up at some point. You're just,
it's, it's kind of amazing. It's lulled us into sleep where these moves don't even seem all that
significant, but for an asset class like Bitcoin to be breaking new all-time highs and entering
price discovery again is a really big deal. I mean, this is awesome. So now we just got to get
I'm cutting zero.
Next week and make sure that, you know,
we don't have the conference dump.
So everyone's gonna need to ramp the vibes up here
so that we can power through next week.
And if we're on the other side of that,
there's nothing stopping us.
If a Bitcoin conference can't stop this price pump,
we're in the clear.
That's gonna be the real test.
I'm really gonna be curious to see the conference curves.
It's amazing how superstitious we get, isn't it?
Yeah.
If we're all gonna be at the conference
looking at our phones and like, fuck,
and it happens again.
Big sigh of relief on Thursday.
Like, thank God we made it.
Yeah.
But, no, I think we might blow through a little bit here
and then see where we retrace to.
This is what I'm waiting for.
If we can beat the conference curse, though, that's huge.
If we come to the end of next week,
we only go down just a little bit,
and we haven't, like, dropped back down to, like, I don't know, 99 or something,
I'll be a very happy person.
I might have more vibes then.
There you go, yeah.
if dylan and sailor can team up and raise a bunch of capital and
just buy all week during the conference break this curse we're in business yeah uh yeah yes it's fun
to watch man it's really fun to watch that's all i gotta say it's wild i mean there's gonna be 35
000 people at the vegas conference this is gonna be totally crazy um 35 000 bitcoiners in the same
place like um i don't know another thing like that right i guess what if we're at like 120
and we hit like 120 at the conference people are gonna be freaking out people are gonna be freaking
yeah bitcoiners are gonna be swimming in the bellagio fountain and it's gonna be a mess
the vibes people are gonna have to reign them back in but yeah yeah if we if we run up during
the conference i i i'm just gonna have my phone ready for the for the memories because it's going
It's going to be interesting.
So the search conferences where you're very prepared for announcements to come out, right?
Yeah.
I won't be surprised to see several announcements come out.
So I'm excited for it.
I think this is going to be a fun one because we are hitting this curve.
So it evolves these conferences.
And now they become really big events for anyone who wants to try to make a splash if they're going to launch something.
And so you're always excited to see what comes out at these because you just never know.
I mean, some of the announcements are huge.
So we'll see.
And everyone's incentivized to hype each other up.
All these different companies.
That's what we were talking about earlier.
This creates so many different dynamics that I think the market is really unprepared for.
I really, really do.
But sorry, Jeff, go ahead.
I was just going to be cutting Jeff off constantly.
Yeah, sorry.
The surge interest for Bitcoin is a third of the peak in 2020 and 2021.
one. So, and it's, uh, yeah, it's about 40 or 50% of what it was around the election.
So I've gotten zero text messages from, uh, anybody I used to work with that knows I quit
my job to work in Bitcoin. I've got zero text messages from family. I've got zero text messages
from friends that all know where I work in Bitcoin. I think that's like, that's my gauge
of kind of how crazy things are getting. I I'm, you know, trying to not text anybody and
do the opposite to them uh because it's too late um they've got to kind of got to get there on their
own crazy stuff awesome uh just some more stats and data if you guys couldn't get enough uh the
top 10 etfs that hold mstr over on the left hand side and then top etfs that hold uh palo alto
networks over on the right hand side um palo palo alto networks about uh what is about six percent
of the companies held by the S&P 500 just out of the top 10 ETFs. And it's very clear just in
looking at this diagram here, the top 10 ETFs holding MSTR represent 10.3% of the holdings.
And whereas Palo Alto Networks holds 13.9%, the top 10 ETFs hold 13.9% of the stock. So I think
there's significantly more pressure from like retail and all of these other institutions that
are holding mstr relative to some of these other stocks that are around 100 billion dollar market
cap and passive flows coming from those shares that people don't want to sell is what kind of
pushes this forward into a into a new stratosphere cool anybody else got anything else
hi i think we gotta wrap this up before we you know jinx the price move and just let this thing
Let's just let it rip.
Yeah.
Let people concentrate the vibes on the price and just, you know, send this thing.
It's about time.
Vibe capital management is doing doing big things pushing pushing the price higher and everybody vibing out we never had concentrated vibes before where we were organizing around vibes out there so now we
there but yeah it's coffee that keeps you awake late at night to watch the price i've been just
mainlining this stuff so i'm gonna rip through these bags in a hurry but but this whole thing
really is a vibe and you know not to not to sound cheesy or anything like that but people are gonna
I'm going to get so pissed that we keep saying this, by the way.
It is, but let them get pissed.
It's fine.
Have your vibe moment, Adrian.
Let them know.
Yeah, this is fine.
Because, and maybe Ben, you can relate to this because you've been in it for a while
just like I have.
If you had told me in 2012 that by 2024, 2025, we would have companies that are not only
adopting Bitcoin, but we had one of them go from $1 billion to over $100 billion.
if you had told me that we would have, you know, many other companies that are coming in,
trying to adopt Bitcoin on their balance sheet for a variety of reasons, and they're trying to
accumulate Bitcoin for a variety of reasons. And if you had told me that we may, we have,
we've had a presidential candidate talk about an SVR, and that we are over 100, 110,000,
and we're just kind of chilling over it. I think that this is the cycle that Bitcoiners have been
talking about for a while where bitcoin becomes the main thing and it stays that way is what is
where i think that we are we're at and the reason why i say it's a vibe and it's all about sentiment
right now is because bitcoiners are kind of running the show at the moment this is the this is the
first time where i'm not hearing a lot of all coin noise and i've been searching for it i've been
looking and a lot of these projects have kind of lost a lost their mojo and the the concentration
is around Bitcoin and leverage Bitcoin equities. And on the tail end, you still have the interest
in the miners and all of that. Everything is becoming highly Bitcoin centric, which is why
I think that the dynamics of this market that exists right now are fundamentally different.
And yeah, it's a vibe. It's a Bitcoin vibe. I'm going to keep saying it until I annoy the fuck
out of someone, but I'm fine with it. But it really, really is a different market. So if I
a betting man, I would say that for the first time ever, and I'm probably jinxing it, but I'm
going to go with it. This time really is different. I'll just think of all the fun we're having too.
I mean, Bitcoin has the coolest people. It does. You guys all know it because you've been to all
these events as well. Like everybody you meet is just awesome and you want to talk to them and
they're interesting and they're doing crazy things that are out there. Like it's so much fun.
And the fact that we got our group together and the fact that we've kept a group like this together for so long, that's hard to do.
And if we weren't all having a good time and just like we all found the one thing that we're the weird person in our own groups about, but together it's just very normal for all of us to talk.
I think that's what a lot of other people are starting to resonate with, too.
Right. Everyone's finding their community.
They're popping up all over the place.
You get to find your flavor of the type of investments you want, whether you want just Bitcoin talk or you want equities talk and you want to talk about one company or lots of companies.
It doesn't matter. Right. There's a community out there for everyone.
And the engagement that comes with being a part of that community and the opportunities to meet people and do interesting and cool stuff is just absolutely incredible.
So I'm having a great time. I don't sleep nearly enough. I got to get that fixed here at some point.
But I mean, this is the time, right?
This is our year.
We've been waiting for it for a long time.
We all knew it would come,
but I don't think we knew it was going to come this quickly.
And I still think that we're early to all of this.
So early.
It's going to be a blast.
Early.
I'm happy.
We're so early.
Yeah.
And the thing about it is, though, is that and the reason,
and like Ben, what you're talking about is very, very true.
Bitcoin is fundamentally different
because to hold on to Bitcoin for a long period of time,
you got to be a little bit screwy in the head, I believe.
So we are a very unique group of people that are probably just a little bit masochistic, but also really believe in the investment thesis, really believe in the potential for it to revolutionize money and the relationship with money, you know, all the talking points, so on and so forth.
But I think the reason why we are such a unique cadre of individuals, whether we are in Bitcoin solely or in the Bitcoin equities, is that we suffer through the pain, but we still believe in the thesis, right?
and we test the thesis, we challenge the thesis, but we still believe. That doesn't exist with the
altcoins. They're community driven, sure, but it's a very, very different dynamic where what is here
today gone tomorrow. Bitcoin has been here since the beginning. It will be here at the end. And I
think that creates an entirely different dynamic and an entirely different investor base.
There's too much nonsense in the altcoins. If you've got some central issuer and you've got
a company running like you're open to the names or anyone says it's a security period this is the
one asset that got released to the world for everyone to do with it what they want and that's
an asset that people can get behind and they can support and they can build conviction around like
i can't build conviction in a coin that can change its issuance policy overnight if they want to
i'm not putting any real capital in that you got to be out of your mind so you need something like
Bitcoin that is true freedom money and it's decentralized. It's out of the control of any one
group, company, country. It doesn't matter. You can believe in Bitcoin. This is something you can
really get behind. And once you see the reason why you're holding this asset, you get real
comfortable because you know that it's a matter of time before everyone figures out what you've
already figured out and they're all going to come in the door. So we're in the waiting period. We
We already know we won and we know that we're sitting in the right position.
And now it's just time.
It's time and let all these broader shenanigans run their course.
And best thing you can do is allocate and sit on your hands and just wait.
Yeah, don't get cute.
Just let time do the work for you.
Yeah, yeah.
Don't get impatient and trade your way out of a winning position.
I mean, there's just no need for it.
You watch all the news all around the world.
you look at all the talk about rates and easing and all the things that are coming,
like they have to play games to keep a credit based system afloat. And so if you've already
opted out of that, you know, we're just sitting here in the one asset that is completely inelastic
supply to the demand. And you know that when that demand arrives, the only thing that can give us
the price because the supply isn't moving. So you get real comfortable in that trade when you watch
everything else happen and once you have bitcoin in cold storage and this is a point that everyone
needs to really really marry themselves to it is yours cannot be taken from you you're really
you're really sick and be taken from you your equity is going to be taken from you your bitcoin
can't be once it's in cold storage remember that never forget that that that that right there yeah
is what makes it unique yeah move move your bitcoin to cold storage go through that process
If you haven't done that, this is your call to go do that.
Go figure it out this weekend because it is a very empowering tool once you do that and you kind of see how that entire process works.
And somebody brought it up here, and I've said this a ton of times, right?
Like my thesis in understanding what's going on with MSTR, this is going to be the largest company on the planet, right?
This is the new, this is the Apple of 1998 that you're buying for, you know, 82 cents.
Like everybody has that uncle or that relative that they've told you that story.
Like, oh, I could have bought Apple at 82 cents back in 1998 or, you know, whatever.
And you're like, okay, well, you didn't.
And you wouldn't have had conviction to hold it.
Even if you did, you probably would have sold it the next year.
We're in a very similar place here with what's going on with MSDR, what's going on with Bitcoin.
There are shiny things.
Uh, and they're each, each product has different risk return metrics.
And, um, I just, just, if you're considering all of those things, think about that.
Think about the stress on your life to be able to watch those things and manage those
things.
Like if you're fully porting and YOLOing something, like that's a lot of stress and time and energy
on your entire life.
And you got to quantify whether or not that's worth it for you.
Um, I've told my story of my GameStop, um, experience to many people and I'd ruined a
whole week with my wife on vacation. I wish I could have got that back. And following that
energy and being that close to something on full yellow on one thing, aside from micro strategy,
because I had so much conviction in it, it's difficult to do. Be prepared to do that.
And we've talked about it before, but with something like Bitcoin, it becomes that only
peaceful part of your portfolio sometimes. I mean, I haven't talked about Bitcoin accounts in a very
long time because it doesn't matter. I'm not doing anything with it right now because I know where
we're going. So it's that one peaceful thing that you know, you own, you control. And because of that,
you can just sit comfortably because you know, you've done the work, you've positioned it
correctly, you've secured it correctly. You're ready for what comes next. A lot of people aren't.
and this is the planning that sets you up to buy your freedom back later in life. I mean,
it's very freeing when you do hit that point, when you've made the investments
that outpace your income from your job and they put you in that position of freedom where you now
get to go get your time back because that's the only asset you've got that's more important than
Bitcoin. And the sooner you can get that back and you can control your life and focus on the things
you really want to focus on instead of the things that you currently have to focus on,
you know, that's a different way to live. And you can become much more passionate about what
you're doing. Retirement never means that you're done doing anything. It just means you're done
doing things you don't want to do anymore. You're focused on the things that really light you up.
And you're seeing that people that are watching, you're seeing that with Jeff,
leaving his job, right? Bought his freedom. Now he just wants to focus on Bitcoin. You're seeing
that with a lot of people. You find that one thing that lights you on fire and you double down on
that and you just press the, you put the gas to the floor and you go and you have a great time
doing it. It never means you're done. It just means that you're evolving and you're pivoting
to what you want to be doing. So put yourself in that position where you can get that outcome for
yourself because it's the one thing in your life that you'll never regret.
You did what you had to do so you can do what you want to do.
Bingo. But before we go, final thoughts, and that could have been it, but there were a couple
questions i think that are worth addressing uh somebody asked what uh what kind of gold storage
wallets i use uh got trezor blockstream jade uh in the bitkey i've kind of used all those plays
played around with all of them they're kind of fun i mean cold card is the cold card is the other one
if you're interested in watching how to do that go follow btc sessions on youtube
go buy your bitcoin on swan exchange there you go ben shout out
I appreciate the shout out.
You're welcome.
The only thing I'll call out because it does make a difference to a lot of people is, you know, some people want someone there to talk them through that process of getting into like a multi-sig arrangement.
And Swan, as far as I know, is the only place that actually has advisors.
You can talk to the person and help them handhold you through that process if you're not comfortable doing it yourself.
So, you know, shameless plug there, but I think that's a really important service for a lot of people who are just getting into this and don't have, you know, the tech savviness to be confident in doing it themselves.
Yep. And your private keys are important. Yep. Absolutely. They are. They're way more important than the wallet itself, but private keys are important.
the other thing somebody asked about the lawsuit and very very interesting that there was a huge
short interest it's like uh jim chanos came out says like i'm short mstr and they're like oh
interesting class action lawsuit that comes out the next day very suspect timing uh it's really
just a money grab because you got a 60 billion dollar company that is willing to probably pay a
little bit of something to make those people go away it looks like a nothing burger read through
it. Not at all coordinated, not a chance. Yeah, probably not. I think it's pretty common.
Interesting enough, the other company that's over a hundred billion dollar valuation,
Apple oven is also getting short interest. They're like sending the S&P 500 letters to say,
don't add them to the S&P 500. They're sending that to the committee and they also have lawsuits
out on them. So it's interesting that you see these valuations kind of percolate and go higher
and then there's attacks that go after them cool all right maybe final thoughts dan over to you
you've been uh a little quiet but that's okay um you got final thoughts i like listening to you
guys talk uh yeah final thoughts um i mean don't let the price get to you i think uh bitcoin's
ripping that's fantastic the btc game will be really great and lawsuit isn't a big deal i know
there's a lot of people um i think you need you need to step off twitter and make up your mind
about your investment thesis and then come back to twitter and use that perspective to inform your
uh decision making so that's really important don't let the twitter noise
um change your course steer you off course yeah i mean like just go look like literally you could
see hundreds of people that have sold their micro strategy to go you know follow meta planet or go
do other things, which is like, okay, like more power to them. Like, that's what you want to do.
There's, there's risk associated with that trade. There's, uh, you know, you got to pay attention
to it. All of those things. I think that's good sage advice, Dan, from somebody that's, uh,
a little bit younger, good advice, not financial advice, just good advice, good life advice.
There's more to life. Go touch grass. I, my best part of my day today was like the 20 minutes I was
outside throwing the ball for my dog. Uh, it was just like blissful. I was in the sun, took my shirt
off, get some sunshine. It was amazing. Anyway, Ben over to you. Yeah, no, I've already said a lot.
So thank God Dan likes to listen to us talk because we're not shutting up. I think people
know that by now, but, uh, you know, along his lines, don't rent your conviction from anybody
else, right? Build your own because if you're renting it from other people, you're going to
get shaken out of your positions well before you should. So just make sure you do the work. I mean,
it's well worth it. It's a really important part of your life. Investing is. It is what buys you
that freedom ultimately, right? You build your asset base, you deploy it. It starts doing the
work for you. So it's a really important thing to be engaged in. So make sure you're building your
own conviction, digging into each of the investments that you want to be a part of.
And if you've done the homework, you can ignore the noise and you won't get shaken out when other
people start getting nervous or jittery or talking bad about it because you'll know what's happening.
So chart your own course, stay on it, execute in the long term, reap the rewards.
Bingo. Yep. Adrian.
Oh, yeah, I think I'm Dan and Ben have hit the nail on the head on a few different points.
I'll just echo some of that sentiment.
If you are online too long and you're seeing people making predictions or sharing their opinions and whatnot,
and you're referring to them versus doing the work yourself to understand what your investment thesis is,
I think that you are doing yourself a great disservice.
Whether it's us, whether it's whomever, you should be able to trust your own judgment and trust your own analysis
and trust your own insights before you trust someone else's.
if you are going along with what everyone else says,
whether it's pro or con,
I think you need to do a little bit of self-analysis
and self-reflection to figure out why it is you're doing that
because you're essentially outsourcing responsibility at that point.
You're responsible for your own outcomes
when it comes to these investments,
and you should treat it as such,
no matter what anyone says, whether it's us or anyone else.
And that said, NFA,
but sometimes the best thing to do is sit in your hands.
Once you've got a winning hand and you play it,
step away from the table and understand what you have and understand the opportunity that you have
there and be willing to live with the benefits and live with the consequences. That's pretty
much the best advice I can give. Own your outcome. Own your outcome. Yeah, try to assess risk.
I mean, everybody's rethinking what risk is now in this new digital framework of the Bitcoin
treasury companies. Everybody's trying to figure it out. And there is risk. There's risk everywhere.
I think risk is probably mispriced everywhere in the market the stock market bond market equity market And think about what risks are of every transaction But there a lot of
bullishness on the horizon. I mean, obviously we're in price discovery with Bitcoin. Last time
Bitcoin was in price discovery, it moved 37% in 18 days. It moved 50% in 50 days. So if we have a
very similar type situation here and companies that are putting their foot on the gas right now
with just incredibly strong financial positions.
This is a whole different ballgame
than where we were in November
or where we were in past cycles.
We've got Bitcoin treasury companies
that are ready to just attack
and just put as many sats on their balance sheet
as humanly possible.
So exciting time to be in Bitcoin.
I'm looking forward to all the other people
that are potentially going to exit the rat race,
the fiat hamster wheel.
and move into growing the Bitcoin network
and the Bitcoin ecosystem.
Also super excited to see anybody next week.
We've got the Bitcoin Vegas.
We're gonna have no show next week.
If you see us, come say hi.
There's gonna be 35,000 people there.
I'll try to say hi to as many people as possible.
And yeah, looking forward to it.
It's gonna be a ton of fun and yeah, good vibes.
Good vibes all around.
All right, I think we're going higher.
Going higher.
We'll catch you all later.