The Hurdle Rate Podcast
Episode 52 – "An Increasingly Digital World"
Release Date: March 24, 2026
Hosts: Tim Kotsman, Jeff Walton, Ben Workman, Matt Cole
Episode Overview
This episode centers on the rapid evolution of the financial world toward digital products, with a deep dive into digital credit, private and commercial real estate markets, and the broader macro shifts impacting institutional and individual investors. The hosts discuss recent product updates from Strategy (Stretch, Strike, Common Equity), shifting market dynamics, liquidity and default risks in private credit, and the growing case for digital credit—particularly in the context of Bitcoin—as an alternative investment vehicle.
The conversation is candid and insightful, with the group challenging mainstream narratives and connecting present financial disruptions (like remote work, real estate repricing, illiquidity in private credit) to the future of investing in a digital world.
Key Discussion Points & Insights
1. Strategy’s Expanding ATM Programs and Focus on Stretch
- Summary: Strategy has scaled up its ATM (at-the-market) programs, signaling a massive focus on the Stretch product, while scaling down its Strike offering.
- Notable Points:
- $21 billion capacity set for both MSTR common equity and Stretch (STRC)—the firm’s flagship digital credit product.
- Stretch’s appeal: stable, monthly, variable-rate product, meeting investor demand for predictable, lower-volatility yield.
- The move underscores a shift away from riskier, more volatile or amplified Bitcoin products toward products more accessible and relatable to mainstream investors.
Quote:
"They obviously want to get rid of all of the convertible bonds... people are going for stability. And that stability they're finding in Stretch. It's predictable. They know how to frame it in their mind." – Matt Cole [04:22]
Timestamps:
- ATM program details and strategic pivot: [01:06]–[05:56]
2. Product-Market Fit, Traditional Investors, and Messaging
- Summary: Both Strategy (with Stretch) and Strive (with SATA) are narrowing their messaging to focus on digital credit products that appeal to a broader audience—particularly those seeking yield without high volatility.
- Key insights:
- Real estate investors are expressing interest in digital credit products as alternatives to increasingly unattractive property investments.
- There’s a recognition that the traditional "amplified Bitcoin" message caters to a niche, whereas reliable, yield-focused digital credit is more universally appealing.
Quote:
"How many people are, you know, real estate investors?...the real estate community is a massive untapped market for these types of products." – Matt Cole [09:39]
Timestamps:
- Investor messaging, product strategy, real estate crossover: [05:56]–[13:59]
3. Liquidity vs. Default Risk in Private Credit
- Summary: Private credit markets are experiencing liquidity stress, not yet a full-blown default crisis, but redemptions are being gated—causing investor anxiety and potential contagion.
- Key insights:
- Recent examples like Apollo capping withdrawals reveal widespread illiquidity and the difference between liquidity crises (asset can't be sold) and default crises (asset collapses in value).
- Liquidity crises can trigger forced asset sales in unrelated liquid markets, amplifying contagion (e.g., agency mortgages getting hit as a result).
- Digital credit products are positioned as solutions to liquidity woes: they have transparent, 24/7 tradability and predictable cash flows.
Quote:
"In a liquidity crisis...what that means in practice is...you sell what is liquid. And so...agency mortgage markets spreads widening...because they were the vehicle for liquidity." – Matt Cole [16:32]
Timestamps:
- Private credit liquidity issues and market contagion: [13:59]–[19:43]
4. Commercial Real Estate: Secular Shifts and Investment Repercussions
- Summary: The commercial real estate sector is undergoing historic stress due to remote work, AI, and declining urban demand, leading to sharp drops in asset values.
- Insights:
- Many leases up for renewal post-COVID are not being renewed, leading to increased vacancies and falling rental incomes.
- "Legacy" properties lack exposure to growth areas like data centers and are suffering the most.
- Collateral backing commercial real estate debt is losing value, which poses risks for lenders, investors, and asset owners.
- Investors are increasingly seeking alternatives—such as digital credit—to escape real estate’s new risk/return paradigm.
Quote:
"Greenway Plaza, a Houston large, multi-billion office complex, was appraised at $1.03 billion in 2017 and is now being marketed at a 60% discount." – Ben Workman [24:02]
Timestamps:
- Deep dive into real estate changes and risks: [19:43]–[28:49]
5. Digital Credit as a Solution for the New Era
- Summary: Digital credit products, especially those backed by Bitcoin, are touted as "antifragile," offering yield, transparency, and daily liquidity—as opposed to the uncertainties of real estate and traditional credit markets.
- Key themes:
- Institutional buyers (particularly in credit) are still restricted from holding Bitcoin outright; digital credit offers a way to access yield linked to Bitcoin with structures they understand.
- The personal risks involved in commercial real estate (recourse, guarantees) are less palatable versus transparent, liquid digital credit alternatives.
- This migration is part of a broader secular shift in how capital will be allocated over the coming years.
Quote:
"Credit investors can't buy Bitcoin...the frictions to invest in something...they need cash flow. It just...works and it's a great hedge to these risks." – Matt Cole [26:30]
Timestamps:
- Digital credit in institutional portfolios, yield, and risk profiles: [28:49]–[32:24]
6. Private/Public Credit Correlation & Regulatory Constraints
- Summary: Potential cracks in private credit could impact public credit markets, especially lower investment-grade bonds; insurance companies and pensions may face capital constraints if ratings deteriorate.
- Notable moments:
- Downgrades from investment grade to junk have regulatory and capital effects, possibly requiring forced sales or rebalancing for certain institutions.
- Rating agencies may not be keeping pace with the speed of technological and economic change.
- In a crisis, illiquid assets in a liquid wrapper (like ETFs for high-yield bonds) could expose the fragility of assumed liquidity.
Quote:
"Putting a liquid wrapper around illiquid instruments in a liquidity and credit crisis—it's just an interesting analysis looking back at these periods of time..." – Ben Workman [50:50]
Timestamps:
- Correlation risk, regulatory impacts, and liquidity in public markets: [32:24]–[50:50]
7. Historic Risk Events: Lessons from ETFs like HYG
- Summary: The panel discusses the behavior of junk bond ETFs (like HYG) in past crises (e.g., COVID-19), noting how quickly prices can move when liquidity and credit risks converge.
- Takeaway:
- Liquidity can dry up fast, causing amplified moves in bond prices; ETFs offer price transparency but can be subject to severe drawdowns if sentiment sours.
Quote:
"25% move in bonds is nothing to sneeze at...meanwhile...the US Treasury market had a liquidity issue, the yields of Treasuries plummeted to zero...high yield got absolutely smoked during Covid." – Matt Cole [51:10]
Timestamps:
- Historical perspective, ETF pricing, and crisis mechanics: [45:38]–[51:48]
8. Conclusion & The Year of Digital Credit
- Summary: The hosts agree that portfolio construction will be reevaluated in light of swelling liquidity and credit risks. There's consensus that 2026 is shaping up as "the year of digital credit."
- Final Thoughts:
- The shift to digital, liquid, and transparent investment vehicles is accelerating.
- Uncertainty and technological change will continue to drive adoption of new financial products.
Quote:
"I think we are entering uncharted waters here...It is the year of digital credit." – Matt Cole [51:58]
Timestamps:
- Closing remarks and outlook: [51:54]–[52:18]
Notable Quotes & Moments
- "Why digital credit over buying cold storage bitcoin? ... This is like asking, why would you buy asphalt instead of jet fuel?" – Ben Workman [12:59]
- "Every single risk that we're talking about here is something that is likely to benefit the underlying risk of digital credit in Bitcoin." – Matt Cole [25:34]
- "You might not realize as an investor how much you value liquidity until that liquidity gets tested." – Matt Cole [41:51]
Overall Tone
Candid, technical, and forward-looking, the hosts mix humor, market anecdotes, and battle-tested wisdom. The tone is skeptical of mainstream narratives and deeply focused on educating listeners about how "the rules" are changing in finance.
Suggested Listening Points (Timestamps)
- Strategy’s ATM announcement & product pivot: [00:00]–[05:56]
- Insights on real estate and digital credit crossover: [09:39]–[13:59]
- Crisis mechanics in private credit: [13:59]–[19:43]
- How digital credit hedges against new liquidity/credit risk: [25:34]–[28:49]
- Public vs. private credit, regulatory impact: [32:24]–[50:50]
- Closing look ahead: [51:54]–[52:18]
This summary captures the episode’s rich, informative discussion on shifting financial landscapes and the emerging centrality of digital credit products for both institutional and individual investors in 2026.
