Signals From True North Live | True North Podcast | Ep. 57

Summary

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True North Podcast — Ep. 57

Signals From True North Live | March 5, 2026

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Episode Overview

This episode of the True North Podcast features a dynamic group discussion following the recent True North live event. The crew—A, Mason, Dan, Mike, and Soleil—dive deep into the evolving landscape of Bitcoin-backed digital credit instruments, especially STRC (Strategy’s perpetual preferred equity), and their implications for the broader financial system. Drawing on first-hand event experiences, market metrics, and conversations with industry leaders, the team explores liquidity, capital structure innovation, and the mounting relevance of digital credit both for corporations and in macro finance.

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Key Discussion Points & Insights

1. The True North Event & Live Market Sentiment

• The live event gathered a diverse crowd: attendees ranged from hardcore Bitcoiners and MSTR “heads,” to global bankers, institutional investors, and even those new to Bitcoin but enthralled by perpetual preferreds.
• Electric Atmosphere:
  • “It didn’t feel like a bear market. Vibes were incredibly high considering the price swings we’ve seen.” (Mason, 06:29)
  • “The best part about attending True North strategy world during a bear market is there’s no tourists—everybody was hardcore.” (Quote via Eve, 07:15)
• Notably, representatives from the Fed, Barclays, Citi, Bitwise, and major custody providers attended, demonstrating growing institutional interest.

2. Innovation in Digital Credit & Product Market Fit

• STRC’s Breakout Liquidity:
  • “Yesterday STRC traded about $200 million. Today it traded about $150 million. This is 150x the daily liquidity of other perpetual preferred instruments.” (A, 01:40)
• Demand is not just institutional. Small businesses and individuals are exploring innovative “flywheels”: e.g., “self-repaying” loans and stacking Bitcoin with STRC yield.
• The product is so compelling that attendees brainstormed use-cases including treasury reserves, corporate leverage, and even proposals for perpetual event funding (e.g., golf tournaments).

3. Mechanics & Macro Implications

• The Gravity Trade:
  • Mason and Dan presented “The Gravity Trade,” illustrating how capital from traditional 60/40 portfolios is being inexorably drawn into Bitcoin, particularly via MSTR and its digital credit instruments.
• The Infinite Bid Argument:
  • “If there’s infinite demand for STRC, then obviously there’s an infinite bid on Bitcoin… if STRC actually works, this is about the Bitcoin market fundamentally changing.” (D, 16:21)
• Scalability & Systemic Impact:
  • “This thing is infinitely scalable. They could issue $10, $20, $30 trillion worth of this stuff. And if they’re issuing that much, what’s the price of Bitcoin do?” (A, 16:51)

4. Liquidity Profiles: Digital vs. Traditional Credit

• Comparative Analysis:
  • Traditional bank perpetual preferreds (e.g., JPM, C, WFC) trade millions per day, but STRC sees $150+ million in daily volume at just 8 months old.
• Implication:
  • “If you had $100 million in one of those traditional instruments, it would take months to exit. With STRC, you can be in and out over a month.” (A, 46:19–53:13)
  • “STRC and SATA are 25 times more liquid than the next closest traditional preferred.” (E, 55:00)

Notable Quote:

• “Why would anybody hold these [traditional] things? If you’re going to issue equity as a traditional company, I think you’re dead.” (A, 57:09)

5. Product Architecture & New Financial Engineering

• STRC and SATA’s principal-stable perpetual preferred model represents a new asset class: liquid, high-yield, and risk-minimized due to transparency and direct Bitcoin backing.
• There’s excitement about building a robust options/derivatives market (puts for principal protection, etc.), and even the possible creation of perpetual “funding structures” for various long-duration purposes.
• Alpha for Early Adopters:
  • “You’re helping build liquidity profile. There’s alpha for those at the frontier.” (A, 46:19)
  • AI-powered arbitrage and portfolio management tools are already emerging in the community.

6. The Coming Age of Digital Credit & AI

• Discussion covered the implications of AI agents preferring Bitcoin and digital credit:
  • “AI is way better at perceiving risk… At that point digital credit and BTC-backed instruments win—expected return per uncertainty unit, not ideology or tradition.” (B, 66:24)
  • The biggest risk to legacy assets is disruption from AI itself, which will prefer transparent, liquid, and high-yield instruments like STRC.

7. STRC’s Trajectory: Adoption, Scaling, and Market Disruption

• Predictive discussion on when STRC might reach $1 billion in daily volume, or a $300 billion market cap—consensus is: as adoption compounds, “the next couple of bull markets” could see exponential growth (72:48–99:50).
• Analogy:
  • Bitcoin was fire; STRC is the wheel or even a space heater: easier to use, less risk, and transformative for capital markets. (A & B, 117:28–118:02)

8. Institutions, Regulation, and the Death of Legacy Credit Markets

• Major legacy banks and custody providers are now building BTC infrastructure—they are being forced to adapt or risk irrelevance.
• The liquidity and utility of digital credit, combined with AI, will drain traditional bond, fixed income, and private credit markets over time.
• Notable Quotes:
  • “If you’re a fixed income fund manager, your services are no longer required… take two weeks off and then quit.” (C, 59:54)
  • “[STRC] is an equity. It sits in a brokerage… it’s using the existing system but transforms it.” (A, 111:36)

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Notable Quotes & Moments (with Timestamps)

• On Market Sentiment & Cult-Like Vibes:
  • “It didn’t feel like a bear market. Like, vibes were incredibly high considering the price swings we've seen.” (B, 06:29)
• On Product-Market Fit:
  • “It’s the most liquid perpetual preferred equity that's ever existed.” (A, 01:40)
• On Infinite Impact:
  • “Stretch is going to drive Bitcoin to a million dollars. Exactly. Stretch alone is going to drive Bitcoin to a million.” (B, 17:17)
• On Trad Credit Disruption:
  • “STRC and SATA are 25 times more liquid than the next closest... That's a crazy multiple.” (E, 55:00)
• On Alpha for Early Builders:
  • “You’re helping build the liquidity profile… there's alpha for those at the forefront.” (A, 46:59)
• On the Impact of AI:
  • “When an AI can fully price risk… capital allocation stops being narrative-driven… digital credit and BTC instruments win.” (B, 66:24)
• On Capital Structure:
  • “Every decision we make is focused on the credit quality… is it credit positive or credit negative?” (A, 102:54)
• On Institutional Relevance:
  • “Banks are put in a position of adapt or die… starting to adapt at their own speed, but in time.” (B, 105:44)
• On the Future:
  • “It’s like showing people the wheel. Bitcoin is fire… STRC is the wheel. It’s not going to kill you, but your life will be a lot easier.” (A, 117:28)

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Timestamps for Key Segments

• [01:40] — Market Update, STRC liquidity metrics
• [04:17 - 09:43] — True North event recap: crowd, energy, institutional presence
• [11:29 - 12:34] — The Gravity Trade presentation
• [16:21] — Infinite demand/infinite bid hypothesis
• [46:19 - 54:59] — Liquidity analysis: old vs. new credit markets
• [66:24 - 68:20] — AI’s impact on capital allocation and legacy disruption
• [72:48 - 99:49] — STRC’s scaling/adoption trajectory, symbiosis with equity, amplification risk
• [105:44 - 108:43] — Banking industry’s digital pivot, regulatory adaptation
• [117:28 - 118:02] — Final analogies: fire, wheel, and STRC as a modern tool

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Final Thoughts & Takeaways

• Stack Sats: The crew remains resolute—cold-storage Bitcoin remains the base layer, digital credit products like STRC are powerful tools for short/intermediate-term capital, but BTC is king.
• Show People the Wheel: Digital credit is a new utility, a new “wheel” for capital management—liquid, transparent, and superior to legacy options.
• AI + Transparency = New Capital Reality: As capital allocation becomes mechanistic and AI-driven, transparent instruments will outcompete legacy narrative and opaque structures.
• Community-Driven Innovation: The open-source, grassroots building of tools and analytics around STRC and digital credit is a “superpower” propelling adoption.

“Figuring out how you can incorporate digital credit into your company, your corporation, your life, is energy worth spending.” (A, 115:35)

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Spread the signal. Subscribe to True North Podcast. See you next week.

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Transcript

[A]

Sa. Here we go. We are back. True north episode 57, the investment grade Bitcoin podcast and we are here with the crew today. We've got five of us, Myself, Mason, Dan, Mike and Soleil. We are going to rip it. We've got a lot to talk about. Strategy world, or as we should probably call it, just Stretch world at this point, Digital Credit World. We've got a lot to talk about on that front. We had the True north event, had some great conversations there. We can walk through that a little bit and we will talk about liquidity profiles of preferred equity instruments. Maybe we'll dive into a couple, talk about some of the conversations that the team had with Sailor and the strategy folks and really we'll just keep the party rolling. MSTR IBIT is up. We are seeing some positive movements there. A great day in the markets, I think. First, first day. Bitcoin's been up 7 plus percent in quite a while. So great to see that some of the equities are ripping. But job's not finished. We got a lot of work to do. The world is waking up to digital credit. It's very apparent. You could see it everywhere on X. It is impossible to scroll on X for a minute without seeing STRC labeled somewhere. This is the most liquid perpetual preferred equity that's ever existed. Last year, the thing yesterday STRC traded about $200 million. Today it traded about $150 million. This is, this is 150x the daily liquidity of other perpetual preferred instruments. And we are truly experiencing something that has never happened before. And we are on the verge of an explosion of innovation. And it's just an incredibly exciting time to be working here. So first, before I keep going forward, let's jump in with Tim for some not financial advice. Ladies and gentlemen, what you're about to hear may be amazing, but it is not financial advice. It's for informational and educational purposes only. Jeff, We are back. Okay, so for if this is your first time listening to True north, we are here. We talk about bitcoin, we talk about Bitcoin securities, we talk about credit instruments, we talk about how these things are permeating throughout the global financial markets. I think this is a massive advancement in the plumbing of the entire bitcoin ecosystem that we haven't seen previously in past bear market cycles. And we are now seeing these products being created that are pulling in different pools of capital that are getting bitcoin exposure with that are just a different investor profile. So maybe I'll just kick it over to you guys. I mean, how are we feeling? What are we thinking about? Mason, I'll start with you. Maybe just quick. Quick feeling on the day.

[B]

Yeah. I mean, first off, our event was incredible. Just the support that we received. We had people come out from Ecuador. Right. Switzerland. Any other places I'm forgetting? There are some more.

[A]

Yeah.

[B]

Singapore. Singapore, Germany.

[A]

There was. There was somebody from the Federal Reserve in the room. One of the largest institutional investors of mstr, aside from Vanguard, was in the room. We had Bulge Bracket Bank, Barclays in the room. We had people from Citibank that were in the room. Bitwise was in attendance. We had a CEO of a recent publicly traded custody company that went on stage and talked about somebody that's. That operates at Anchorage, that talks about trading and custody. I mean, these are operators that not only have the people come from all over the place, like, the people that were in the room were people that are operating and at the forefront of what's happening in this entire ecosystem. Also had people that had never even really heard of bitcoin. They just love these perpetual preferred securities, and they love them so much, they'll get up in your face and punch you about it and talk you through it.

[B]

Jeff.

[C]

Jeff.

[B]

There was one guy met who never heard of True North. He was like, I don't. I don't know how I got here. I was like, dude, what are you doing?

[C]

I was wondering if that was the Fed guy that just didn't even know why he was there.

[A]

Yeah, so it was. Yeah, I was. I was blown away by the. By the attendees and the people that. That were there came from all walks of life, very interesting people.

[C]

Mason, if it was the same guy I'm thinking about, he. He came up to me in the back of the room, and it was in between our first panel and when I had to go up and do the interviews, and he's like, oh, so what are you doing here? And I'm like, oh, I'm in it. I'm in the thing. And he's like, what? I'm thinking to myself, like, do you have a wristband, dude? Like, how did you get in here? Like, if you don't know what you bought a ticket for, like, what. What is happening here?

[D]

Event, guys. It's the new idea, guys. You just go to events.

[A]

Yeah.

[C]

He was looking for ideas.

[B]

Yeah. I mean, what a great event to stumble into. Yeah. It just felt. It felt lively. Jeff. I think we were talking about this in our internal. It didn't feel like a bear market. Like, vibes were Incredibly high considering the price swings that we've seen. And this is a room of pretty hardcore MSTR heads who, majority of them have a lot of their net worth in it. But I think more than anything they see the vision and they see the fundamentals and you could just feel the excitement in the air. Like people, this is a very forward looking crowd who's in it for the duration. And it was exciting to see and exciting to be around those types of deep thinking investors.

[C]

Yeah, 100%. I think Eve had the best quote of the week for me from one chair podcast. He said the best part about attending, you know, true northern strategy world during a bear market is there's no tourists. Like everybody was hardcore, everybody was dialed in, everybody wanted to have, you know, elevated conversations. It was, it was, it was kind of electric. I was loving it.

[D]

And I think this is our first, this is our first event where obviously the press have been out, right? The last time we did an event, the prefs weren't in existence. And so I think the amount.

[A]

Brand new. They were brand new.

[D]

They were okay. And the amount of, I think excitement around a product that has product market fit like STRC has evidenced by its trading volume and by its peg has shown people that like Saylor has actually in fact in the team at Strategy created something that's using bitcoin as high powered money to bring what ultimately has the, you know, biggest use in the entire world. And that's high yield, durable, high yield to the market. So people are super excited about the product.

[A]

There were also several conversations I had at the evening event about people that are, they're creating their own flywheel with, with these instruments, which was totally fascinating. Like I had guys come up to me like, hey, I've got this, this dentist practice and I'm holding STRC on my balance sheet with my cash position and I'm taking a margin loan out on it so I can get a leveraged position. And any income that I get on the yield, I'm buying bitcoin with it. And it's like this whole cycle that was kind of perpetuating. And then there was another guy that came up to me, self repaying student loans and self repaying mortgages. Had some conversations on that front. Lots of people fascinated with levered stretch. Like it's so funny. Like the people love this product so much, they're like, how can I get leverage? Saylor spent a lot of his time talking about digital money and like a low volatility, you know, 10% product. But there's a tremendous amount of interest in the levered type product of strc just from the die Hards. Right. Like that. That want even more exposure to it. Mike, what's, what was your takeaway? Just general.

[E]

Yeah.

[A]

So.

[E]

So my takeaway was. Was for, for the True north event on Monday. We sold what, about 125, 130 tickets. I want to, you know, call out and thank our sponsors. So a bitgo. Bitwise Medici roasting. Am I missing some other ones? You know, Anchorage. So look, the people that show up, I mean, I got to my interview was with Matt Hogan, the chief investment officer of Bitwise. And Hunter Horsley was there from Bitwise. And you had Matt from Barclays. I remember his last name. And yeah. And you know, the questions and the answers that they give. There was a summary that was written also. James Lavash. Right. Wow. Right. James Lavish, the four doors, when he explained that. And I just think that the speakers that we had were very comfortable and they were comfortable because they knew that we were hardcore people. But it wasn't, it wasn't. They were comfortable because they were easy questions. They're explaining what they think is going to happen. So that event I think was right. We didn't have a stage and we just had, you know, just handheld microphones. And it was really a really great event. There was probably about a total of 100, what, 150, 160 people in the room. And it was pretty impressive. People were, people came up to me and they're like, wow, you guys are, you're growing your event and your speakers that you have here are no longer just us. So I thought that that was, I thought it was a really great event, you know, to kick it off on Monday and, and, and the amount of information that the people were willing to share I thought was something that you do not get on, on what do you call it on X. Dan and Mason's president. You guys take. Tell us about your presentation. You guys presented. Give us, give us a quick one minute snapshot.

[B]

Well, I think we're going to record it and release it put on the YouTube channel. So if you weren't there, I think you're actually going to get the chance to, to release it. But we, you know, Dan and I talk a lot on the phone privately. Right. We're just, we're trying to figuring out. Figure all this out.

[C]

And I knew it.

[B]

It was, it was kind of. Yeah, we're mostly talking shit. Just kidding. But you know, we're trying to figure out what's going on in the market. And, and this was kind of our, our macro view to, to some respect at a very high level view of what we think is going to happen with traditional assets or the traditional 6040 portfolio and how, how kind of the gravity of that capital is towards Bitcoin. The, the presentation was called the Gravity Trade. And, and really it was, you know, a layer beneath that was looking at how MSTR is, is benefiting and also facilitating that that gravitational force into Bitcoin.

[C]

Yeah, I, when you, when you guys did the gravity trade, it took me back to, I had a flashback from one of Sailor's old interviews where he was talking about the physics of it and you just can't escape physics. And it was kind of like the, I don't know, with some billionaire, whatever, that wasn't paying attention and backed off of the Great Wall of China. And it's like you can be the richest person on earth, but if you don't pay attention to physics, then you get wrecked. And people who are not paying attention to what bitcoin is doing, it's, it's, it's like the center of gravity and it's just sucking up everything totally.

[A]

I've got some conversations next week with some capital managers in New York thinking about like part of the conversation that I'm having with them is just informing them what's going on. Hey, FYI, there's a company out here that's got $50 billion worth of Bitcoin and they've got a perpetual preferred equity instrument and they've sold $8 billion of these pref instruments and they're selling the liquidity on them is $100 million plus a week. They're better than every other credit instrument that's ever been created. They're more liquid, higher yield. It's a digital credit form. And just kind of walking through it like put them on notice. Hey, FYI, if you're not paying attention to this, you're going to get left behind. This entire industry is going to get left behind and there's so many things we can do with this. So yeah, it's going to be some fun conversations. But the gravity is definitely there. And there was so it's funny, there's, you know, some of this, there's been some attention recently on the Strait of Hormes, like lockdown, like the insurance companies in Lloyd's of London are not ensuring the transport of these oil tankers that are going through the Strait of Hormones. And the US Response was the US Government is going to basically be a backstop of risk for any of these vessels that are going through the straits, so that energy can kind of pass through. Now, the reality here is that strategy has more capital than Lloyd's of London. It's a big deal. It's a big deal. We need the energy. And Lloyds of London's important, they're systemically important in the insurance industry. But their stranglehold on the capital world is diminishing. And it's diminishing relatively rapidly, especially if you can see the size and scale of capital and where it's moving globally and how it's changing and shifting. So I think it's one of those moments of, yeah, this is a big deal. We need energy to be transported safely, securely, and we need the oil to be able to move. But the scale of capital at play is a little bit smaller than I think it would have been considered to be in the past.

[D]

Yeah, I think an interesting critique that I've been seeing, and I think it's actually a bull case from our perspective, is that especially on Twitter, and it's kind of a dichotomy at the event, we're all very, very excited about the future because we're seeing what the volume is doing on stre. It's progressively increasing and they're able to issue more and more volume above $100. That's perpetual bid on bitcoin. And they're also matching that kind of 2 to 1 or 3 to 1 with MSTR common equity issuance, which is totally accretive right now, considering we're trading at a 1.2 times MNAV on online, on X. People say that can't exist. And you ask why? Like, why can't that exist? They just say, well, they can't do that forever. There's not always buyers. I'm like, well, there's buyers beneath 1M navigation and there's an infinite demand for strc. And if there's an infinite demand for strC, then obviously there's an infinite bid on Bitcoin. If there's an infinite bid on Bitcoin, then leverage Bitcoin, all mstr. There's kind of an infinite demand there. So everyone, I think the big talking point now is like, this has to break somehow. But I don't think people are thinking about the implications, like if STRC actually works. This isn't just about strc, this is about the bitcoin market. The bitcoin market fundamentally changes if it's the backbone for the best credit in the entire market.

[A]

Finance Supply infinitely scalable. This. This thing is infinitely scalable and can grow to be. They could issue 10, 20, 30 trillion dollars worth of this stuff. And if they're issuing 10, 20, 30 trillion dollars of this stuff, what does the price of Bitcoin do exactly?

[D]

No, it's like at some point the price budges.

[A]

At some point the price goes nuclear.

[B]

Dan and I had like multiple moments where we're sitting at the conference and we go like, you know, when it finally kind of sinks in, you're like, holy shit. Stretch is going to drive Bitcoin to a million dollars. Exactly. Stretch alone is going to drive Bitcoin to a million dollars. Not to mention all the other chaos and disruption and everything else that goes in bitcoin's favor. Just Stretch alone.

[D]

And we talked and I referenced Grain a little bit there because you know how. Grain, you always mentioned the. The stock buybacks, right? The, like, Apple generates 100 billion in free cash flow per year and uses it to buy back their stock. So that's why. And we've heard these anecdotes of people who are like, oh, I just put my money in Apple because they're always buying back stock and the float is always being lowered. What is Stretch? It's the bitcoin buyback. Literally. It's like Bitcoin, the fiat capital into bitcoin. So if Stretch continues to work, which I believe it will, there will be a potential buyback or bid or sequestration of bitcoin into MSTR that won't move.

[E]

You know, the other part related to. Now that you bring that up, the press are not counted for the assumed diluted shares outstanding on strategy and not for the basic shares outstanding. It's issued as. As shares, but it's not included those two metrics because legally it's considered. Even though Sailor calls it digital credit, it's considered to be debt. So it's a equity. Right. But. But the. But the reality of it is it's not counted in those shares. So it does function like a stock buyback because it's acquiring more Bitcoin without increasing the denominator.

[A]

Right? Yeah.

[E]

Right. Bitcoin per share. So shares are on the bottom, Bitcoin's on the top. It acquires more Bitcoin, but those shares aren't outstanding. Now, there is a drag on that. We did get a bunch of questions. You know, how do you model the press going forward? I don't have a good number for that. And I think that, you know, what's a good amplification Rate. I think right now we're in a phase where we figure that out. And I think I did ask that question to Saylor and he said, look, it's going to be right now, I believe it's 33% on their website. And he said, look, sometimes it's going to be higher, sometimes it's going to be lower, but I think the average for the year will be about where it is today. And I think we don't know what the amplif. You know, Jeff, I talked to you the other night. You know, if you have a lot of amplification during a down market, when, when, when it's bearish, when things get bullish, that amplification rate drops because the price went up.

[A]

Correct.

[E]

Right. And so that, that's when you're like, oh, I guess I should have levered up more. But you don't want to do it because you have to be responsible, you know, running a company.

[A]

Yeah, you've got to be responsible running a company. You've got to. Well, the market may not give it to you as well. I mean, we're in this like, stretch is eight months old. Like the thing is trading 200, 150 million, $200 million a day. It's eight months old when this thing has a two, three year, four year track record. I mean, the amount of capital that's going to be coming in the door with interest in this type of thing is going to be incredibly high. The really fascinating part about this is that both of these products are so symbiotic. And so as the demand for the credit rises, their ability to issue more equity will also increase because the technical valuation, that excess volatility is flowing to the common stock. So that drives more interest in the common stock, that drives more open interest in the derivatives market, that drives more trading. And people that are disagreeing or agreeing with the valuation. Right. They're going to short it, they're going to long it, they're going to do all of those things. And that increases the relative volume in the common equity, which is increasing their ability to raise capital in the common equity. So it's like if one moves up, the other gets more liquid and more interesting, which gives them more access to the equity capital market. So it's like leverage deleverage. Leverage deleverage. They're climbing a ladder to the top of the publicly traded markets via these instruments. And we're in the first inning.

[D]

Yeah.

[C]

To your point about stretch getting Bitcoin to a million. So I asked Grok, I'm like okay, if Strategy sells like 1% of the $300 trillion fixed income market over 10 years and maintains amplification ratio selling common, you know, how many bitcoin do they end up with and what's the price at one XM nav and it thought longer than it has ever, you know, GROK thought longer than it's ever thought on any question I ever asked it and then told me they were going to get 26 million Bitcoin, I'm like okay, well maybe not, maybe not quite 26 million. And then I had to try to like rationalize with it and do some sanity checks but I got to work on my prompting. But GROK is pretty bullish.

[D]

Yeah, I think that's a really good and it illustrates a point. Right? Like so we think these products over the next three like the first three years need to execution has to be flawless. Then after three years the big money, the big capital can start entering. But what matters is that the products are set up correctly from the get go. Like if they had a misstep or the preps weren't constructed with all the proper covenants. If the capital structure wasn't pristine X, Y and Z, then the instruments are no longer durable. They can't sust, they can't remain, you know, strong instruments for three years. So and they can't really be changed. They can't be changed after issuance. So I think that's what's so amazing about strategies. Capital structure obviously strives as well. Here is the capital structures have been gotten right via the preferred model right off the rip. No converts, no secured debt above it. Therefore, once these things are seasoned after two, three years, there won't be any problems in the capital structure. It'll be pristine and they'll be durable and able to last for, you know, in the next 10, 20 years. They don't need to be changed.

[C]

Yeah Dan, I, I, I told it to follow the power law model too. And what I thought after it gave me the, you know, insane calculations is like maybe stretch breaks power law to the upside.

[D]

I think bitcoin could turn into an exponential at some point.

[A]

Yeah. Then you bring up capital structure and that design. It's Saylor's presentation. He talked about the different types of debt and how that changes your capital structure. You could go get margin leverage on an exchange. That's the shortest term. It's like a day. Then you could go get senior secured debt and that might be a year. They'll tell you it's a seven year term. But it's actually more like seven months, it's like a year because they know you need to like refinance in between that time and then you can go junior secured and that's a higher interest rate and it may be a longer term. And then they found the press. So it's basically like they kept running away from the type of leverage and covenants and then they found the prefs and then they were running until they found the perfect instrument where they had the largest demand right off the bat and they're seeing the scale with massive liquidity and now they're leaning into that particular instrument. I think the other instruments will have material demand in the future once there's a multi year track record. But Stretch has become the clear winner on how to scale this instrument and it's the main reason why we at Strive made a very similar product. We saw the success of this product, we watched all like I've been watching and talking about all of these things for quite a while now and we saw that the demand there and it became very apparent that there's going to be significant opportunity for multiple issuers of this into the future. So yeah, a lot of learnings and a lot of scaling potential now that the capital structure is in place. They've got the pref model and ready to go.

[D]

I agree. And I think the underrated instrument is Strike. I know Strike doesn't have product market fit right now. It's actually had some of the worst product market fit. Once MSTR gets to 500, 600, 700, 800, that thing is going to be humming, ripping. People are going to want the downside cushion, they're going to want the especially in a zerb environment or something, it is going to be humming because like what if you want to enter at 3 times m nav but you're nervous about mnav Compression to one strike solves your problem, right? Like that bond floor is massively valuable, I think to people wanting to participate in the equity without risking the volatility of the equity, obviously.

[C]

Well, if we're playing favorites, I still like have a soft spot for strd and I made that post when I was sitting at the airport because when STRD came out I was sitting at the terminal and when we were coming back from Vegas, I was sitting at the exact same terminal, you know, waiting to fly out. And I'm just, it just brought back those memories because as soon as they announced Stride it was like, okay, well we now we have to figure this out because we have to cover it on the very next episode. So like, I have to like know and understand this thing immediately. And the way that it's trading now, you know, well below par and with the, the possibility of interest rates coming down, STRD just seems like an insane bargain right now. And I thought it would just fly off the shelves like I thought it would be doing what STRC is doing. But you know, obviously I was wrong with that. But eventually, you know, once it's seasoned, you know, maybe they all start selling like hotcakes. But I, I still kind of like STRD with the, the benefit, with the interest rates maybe coming down.

[A]

Yeah, it's an interesting, like, because they've got multiple. It's an interesting model. Right. Because any capital that's issued at STRC would theoretically be senior to stride too. So the risk profile of it might stay depends if the price of bitcoin goes higher and they're able to continuously issue STRC at the same time that the relative risk position might stay constant, whereas the credit profile of all the other instruments is getting better. However, the biggest question here is does the market recognize the risk profile of these things as appropriate or not?

[C]

Yeah, because I'm assigning almost zero risk.

[A]

The sdrd, I would agree with you. You're a bitcoin bull. We're all bitcoin bulls here. Right. Like you would say the entire capital stack is investment grade. Right. They could probably crank the interest rate up to 1516 still probably investment grade. That presentation that Saylor put together. Right. You could see the curves of like where would be investment grade and high yield based on that risk model and risk portfolio. But like, I think that's the concept, right. Is the market doesn't get these things yet and there's alpha within that.

[C]

Yeah. In full disclosure, I don't actually own any strd. I'm still a, you know, a leveraged long junkie. So I can't bring myself to, to peel off any strategy shares.

[D]

One interesting thing is how, how poorly Stride's been performing relative to bitcoin. It used to be almost like one to one bitcoin correlation, but right now it's performing just terrible. Not terrible, but it's not going up at the same rate of bitcoin. I think it's because the market's starting to price in the kind of domination of STRC relative to all the other prefs. So people are like, they're thinking like, okay, Stride is going to kind of be pushed down in the capital stack because of the massive stress issuance. And I talked to A guy yesterday who talked to a bunch of, right now he's saying he runs a little hedge fund. He's like, the only people trading these things are the hedge funds. And this is kind of how they're thinking. So I think it's part of why Stride isn't catching the bid the same way we might have expected.

[C]

So that meme where the, the mom is like paying attention to one kid in the swimming pool and the other one's like drowning, like, that's strd.

[B]

Yeah.

[D]

I think we have simpleton models of the bitcoin credit and they use like if it's 3x over collateralized or 5x. Even though like pretty much Stride is as credit worthy is the rest of them. Like barring all.

[A]

Mathematically, mathematically, if you take bitcoin going to probability of bitcoin going to zero off the table, then mathematically the credit quality of all of the instruments is pretty similar.

[D]

Exactly. Yeah, exactly.

[A]

It's so high. They're all so high.

[D]

No, yeah. The world, this thing's gonna chug. I would say the world's not going to know what hit him, but nothing's going to hit him. It's just these things are going to keep chucking along. Bitcoin is going to keep getting purchased. It's going to go up. People look back in 20 years and be like, strategy. I was on the bitcoin, the price of bitcoin is higher.

[A]

I was thinking about that earlier today. Nobody knows this is happening outside of this world and everybody's X profiles and whoever's working in the industry. Not many people know that this is happening. They probably just saw the price of bitcoin go down 40, 50% and they're not going to look at it for another couple of months. They're like, oh, scam died again. And that's, I think, the reality of where we're at. And then, you know, if this thing start, if bitcoin starts ripping again, maybe people pay attention and filter in here. Maybe.

[E]

So I being the older gentleman in the room, look, when I got into bitcoin, I knew about Bitcoin in 2014, didn't buy any. And then I went all in May of 2017. At that point, I thought I was six years late, right? Or seven years late because I should have bought earlier. I remember what the price was in 2014, but what I'm saying now is that I'm going to be coming up in my ninth year in May. And you guys were all in this before any of the press were launched. And I know exactly what's going to happen three years from now. You're going to be like, remember when we were talking about this and we didn't talk about in the first True north? And it's now three, three, four years from now, strategy stock, MSTR is whatever, $2,000 a share. And we'll be like, remember in the old days, three, four years ago? It's going to go by really fast. I know you, the young guys, you don't see it. It's going to go by really fast. This is our second True north that we had at Strategy World. I think we'll have a whole bunch of them. And I think we're going to look back and be like, wow, that went really fast. And we had no idea how we knew. We knew it was big just now, not now how big it was, right? And I think that's what we're going to see unfold, you know, if we get the bull market continuation. And I want to chime in on something else. When I heard that we bombed Iran, I woke up, I'm on the west coast, and I'm like, oh, God, I don't want to look at the price of bitcoin. It's going to be in the 50s, it's going to be a five handle. And I looked at it and this was like a few hours after it happened, and it had already recovered back to 66,000. And I'm like, oh, I guess it wasn't as bad as I thought it would be. Now, if you would have said to me, whatever day that was, Sunday morning or something, if you would have said that we would be at 72,000 a few days later. No, I didn't think that at all. And so everything seemed to change really, really fast. So, you know, that's what I'm trying to say. There's two things, you know, there. The. The long term seems to go faster. You know, it seems far away, but it seems to happen a lot faster than you think. And I think the price can catch people off guard.

[C]

I was kind of actually expecting a little bit of a pump, because if the market doesn't like uncertainty, it was kind of like, okay, you can see that the forces are building up and like, we're expecting this to pop off, but you don't know until it does. So if we had, you know, reached an agreement and like, okay, we reached an agreement, then uncertainty is gone. Or we just start dropping bombs, Uncertainty is gone. And so the market's kind of like responding positively to something happening instead of just what's going to happen.

[A]

Yeah.

[C]

And you know, this is, it sucks that, that, that things like war pump our bags. But like the drones that Iran has cost 50 grand a pop, we shoot them down and it costs us a million dollars a pop. So if they have a hundred thousand drones and we shoot them all down one for one, which sometimes it takes 10 to shoot down one. Like even at one for one, that's 100,000 million dollars. We have to print. So, you know, Larry Lard was like, okay, we're going to get the big print. And then Lynn was like, well, maybe we get the gradual print and. No, we're getting the big print. It's, it's printing.

[A]

Yeah. Every, every bullet, every missile, every time there's one of those is shot, another one's getting made. That's the, that's the crazy part is it's all, it's all still going. Right. Like, it's not like you deplete reserves and you don't build up more reserves of all of these instruments. I mean that stuff is infinite capital deployment at the moment.

[E]

Yeah. And I'll give a comparison. You know, last week at Strategy World we talked about mostly about strc. We had our event on Monday. Then we had bitcoin for corporations. So I think that that went really, really well. But I don't think anybody had predicted this week that Kevin Wash would be nominated in the morning. That Kraken. I didn't even know Kraken applied for a Fed Master license. Right. And then it was granted. Right. Nobody brought that up. And so I think, you know, last week we were all there thinking about how these companies are going to build out bitcoin on the balance sheet. And we've got a whole bunch of really good information. Just even today coming out. I thought that that was, you know, pretty interesting that nobody last week was even talking about that. Rule number four, Bitcoin is powered by chaos.

[A]

100%.

[E]

Yeah.

[A]

Yeah. This definitely feels like one of those weeks that I think Dana mentioned this. Right. Like decades are happening in a week. There are decades where nothing happens and there's weeks where decades happens. And this is definitely one of those weeks. It's just like news, news, news, news, news, news.

[B]

I think this is like a five year period of a century.

[A]

Oh my God. Yeah, it's incredible. Mike, you brought up an interesting thing about the price of bitcoin and markets and thinking about strategically, Donald Trump is very clearly a markets guy. He came out and said, we're going to war With Iran midnight eastern time on Friday, markets are closed and gave the whole weekend and so you saw the price of bitcoin go down and pop back up. You gave the whole weekend for that uncertainty to kind of work its way out while the markets were closed. And then that way on Monday the markets opened and it wasn't too terrible, right? There wasn't like a huge like vix spiked a little bit, but it wasn't too much. The price of bitcoin kind of went back to where it was pre the announcement of all these things. And it's just, it's fascinating to see the decision making process that went around it too. It's like that's definitely a markets first guy.

[E]

Yeah. You know, something that I started doing I don't know about three, four months ago is that starting on Friday night at about 7 o', clock, I try not to look at anything. No bitcoin, no bitcoin charts, you know, X I try and refrain from it and then just have a normal like, you know, just do my weekend thing. So I didn't really, I didn't know that that had happened. So that's why when I woke up on Saturday morning like what the heck is. And then I realized, oh, I think this, I think the price recovery will happen by Monday. And I, you know, it was surprising. So the other thing is that would you just said there are, you know, weeks where years happening. Years where weeks happen. And I think that's true. What I was trying to say is that the days are long and the years are short. So as we're living this, it's like, well, you know, it seems to take a long time during the day for something to happen. And then when you look back in retrospect, how did two years go by very quickly or three years or four years? And I think that's where we are with this. I think it's, you know, I'm not a fan of Trump. I didn't vote for the guy. And anybody that's critical of him from the bitcoin perspective, I point out he pretty much delivered everything he said he would do, right? Big beautiful bill, not bitcoin related. Got the Genius act, has a strategic bitcoin reserve. Executive Order SAB121 repealed. Freed Ross Ulbricht, ended Operation Choke Point, you know, 2.0 and a whole slew of of politicians that are, that are bitcoin friendly. So if from a political standpoint, again don't like the guy, didn't vote for him, but from a bitcoin perspective, he, he put these people into place. And so if you don't like the price action, it's probably not due to the politics.

[A]

Yeah, yeah.

[C]

And, and these products are going to change politics too. So I don't know if you guys saw that the Netherlands is trying to get an unrealized capital gains tax.

[A]

Yeah.

[C]

And if they do this, at first I thought, okay, well you know, maybe that doesn't even affect stretch because it's not going to go up in value, it's just going to stay pegged. But no, they're going to, they're going to tax the dividends too at like 36%. And I thought, okay, that's just going to drive all the wealth out of the country and even the people who are stuck are not going to have access to something like Stretch and you know, be able to appreciate these fixed income products. And so it's literally just going to hurt everyone in these countries and other countries are going to have to take note of that and be more friendly, I think, to these type of products.

[E]

Agreed. And by the way, you know, I just thought about this recently. I think there's two hurdle rates. Now. Previously the hurdle rate was Bitcoin's CAGR. And so over the rolling past five years, it's about 26%. And so people will be like, well, what's your Bitcoin CAGR? Pick a number between 20 and 30%. Right. And you know, there could be diminishing returns coming in. That's one CAGR. But now the new floor CAGR is STRC. It's 11, 11.5%, let's say it drops to 11%, the new CAGR. If you could just put money into STRC and it pays monthly, that's the new floor for your cagr. The high floor is going to be whatever you layer on top of it. Right. Buying straight bitcoin, putting in cold storage or buying IBIT or MSTR stock, that's your upside. And so if somebody is like, oh, I'm only getting 3% on CDs or government bonds, that's a choice on your side.

[B]

I had a tweet about this. So there's the concept of UBI Universal Basic Income. Right now we have UBR Universal Basic Returns. And that's what stretches. It's like the, if you're a bitcoin maximalist or you have belief in bitcoin, it's the base floor for your short term money.

[E]

Yeah. And you know what, Mason? I think you're right. And the other thing is I think we have a new trading pair with strategy and the trading pair is, hey, I'm super bullish on MSTR stock, but I think that this down, you know, the down downturn could last a little while. Well, you know, I think the bottom is in, but it's like, well, maybe I'll sell some mstr, buy some strc, get some monthly gains or buy some strk and then I'll use that in the bear market and then, oh, I feel more bullish. Then I'll allocate, I'll rotate in from, you know, STRC back into mstr and I think that's what we're going to see now. So do I think that in bull markets, st. I think STRC still goes up in the bull markets, without a doubt, but I think people will trade between the two.

[C]

Yeah, strc, if it's, if it's pegged, it has to be an uncorrelated trading pair. This is not going anywhere. And whatever else you're trading is going

[A]

to go up or down, it's going somewhere. This is why I created the Pentagon, the bitcoin Defense Department, because it's infinite trading pairs. You're going to be trading in and out of all of these different things. And you could set it up with a computer, a computer can run it. You could set up calculations such that when this is this and this and this and if then statements and it's just bouncing along, you could have an AI figure out what the trading pair should be and you could run it. You give it 250 grand and just run it and have it go back and forth and earn your yield and make consider return of capital treatment. And like that's where this stuff is going. Those computers are going to be in and out of these things, in at different points in time for different reasons. And everybody's going to build their own different reasons as to why they're going in and out of these things. And that's the future I want to bring up.

[E]

So there was a presenter, the gentleman from Prevailon Energy, and he said, yeah, I'm just going to put whatever an 8 figure, so more than $10 million into STRC. And basically he goes, I'm going to buy and sell it and basically use it as a checking account. And he said this on stage and the guy was, he's like, oh, I'm a big bitcoin believer. And I think, was he the cfo? Is he a CFO or the controller for the company? I don't know what role yeah, that's right. Yeah. And then he just said, I'm going to basically use it as the check because if I have money that sits there, I might as well get paid. And I was like, wow. I mean, that's what we wanted to hear. Now is he building the whole company on this, you know, to build some other product? No, but it's. If I can get paid 11, why wouldn't I take it 11 and a half?

[C]

And then he said he wants to push that holdings to nine figures.

[A]

Yeah, yeah.

[E]

So I think that that was one of the great, one of the really good presentations that happened last week. What about for you guys that you sat through this? There's, by the way, there's this guy, Dan, Hillary, and he presented on some, some, you know, stablecoin built on strc. But besides that. Yeah, you were there. I was there.

[A]

Also I had a presentation too. Grain.

[E]

Well, tell us about your presentation.

[A]

No, I. The most fascinating thing, Mike, and you hit the nail on the head is that this is, you could. Companies are thinking about this as treasury capital. And this is one of the conversations I had with Sailor afterwards at drinks. If you're a corporation and you're thinking about short term capital, you've got one month, two month, three month capital. Historically you'd have two options. You can have a liquid low yield instrument in money markets or you can have illiquid higher yield instrument like in the bond market. You go get like 5 or 6% and you've got to take on just a little bit more credit risk in the investment grade market, but just incredibly illiquid. So your time horizon is much longer. And so now the entire capital world is being flipped upside down because you have a digital credit instrument which is high yield and high liquidity. You got both. Historically, you had to pick which do you want? Do you want liquidity or do you want yield? Now you got both. That's fascinating. That completely flips capital management upside down. Now, how much do you deploy? What's kind of a rule of thumb? And Saylor was talking to me about rule of thumb, like thinking about capital management, because I asked him, would there be a situation where strategy would put digital credit on their balance sheet? Thinking we've got a digital credit instrument, what would it take? And the, the concept became, or what he talked about was effectively, you don't want to have a position that's greater than the average daily trading volume if you've got one month money. Because you need to know that I can scale in and out of this without having a drastic impact on the price. So my mind instantly starts to go, okay, what's the average trading volume thinking about stretch, it's about $100 million. Okay, that's interesting. And so you hear the guy at Prevail on Energy. So if they've got a eight figure position in STRC, let's just say it's $20 million. They could feel pretty confident that over the course of a month they're likely going to be able to pull their principal out and still earn the yield on it. That completely changes capital management like capital allocation globally, everywhere. Every company on the planet, private company, public company. Your hurdle rate is now SDRC or Digital Credit Instruments because of the liquidity profile and the yield. And that is like transformational in how people are going to manage capital. I mean, you've seen it, right? Anchorage added it to their balance sheet. Orange BTC added to their balance sheet. Prevail on Energy added to their balance sheet. I can bet you over the next two to three months we're going to see several companies add this to their balance sheet and think about it as a treasury reserve asset for short, moderate term capital. Nothing has really existed like it before.

[B]

Jeff, what's, what's crazy to think about is that it's, it's probably, you know, it's too small still for, for major capital to come into it. Right. So in some sense it has to be bootstrapped. Right. Like it needs, it needs, it needs, you know, whether it's retail or smaller companies, it needs like the initial capital to come in and create that liquidity and, and bootstrap it in order for the huge institutional capital to feel comfortable to come in. Right. It's a process. This whole thing's a process.

[A]

Yeah. There's alpha opportunities for those that are at the forefront. Right. Like you're helping build the liquidity profile. The most fascinating thing, and we also talked about this is I asked them, I'm like, who's selling stretch at 99.98? Like that's, that's more interesting to me. Like, forget who's buying it, who's selling it, why are they selling it? And what does that look like? And so he taught, he gave an anecdote like he watched. So if you ever go to a bitcoin event and you see Sailor sitting at a desk, he's always got his computer open and he's watching the tape trade every single day. And every trade that's happening because it's like a movie you can like see, you can see how it's moving. Anyway, he mentioned this trade where it was a $40 million market sale of STRC and the dropped the price from 99.98 down to like 99.40 and then the price ripped right back up to like 99.98 or 99.96, something like that. And so that's fascinating for multiple reasons. So that means there's an incentive structure for somebody to arb that bring it back up. So somebody was buying it after there was a big sell. There's, there's a likelihood that that 40 million dollar liquid was a liquidation in defi. Somebody was posting it as collateral in a defi leverage situation, got liquidated and then it was market sold. Like why would you market sell $40 million of this instrument when you can scale out of it in two hours and not have any change in the principle? So it was like, it's fascinating to start thinking about like the, the incentive structure. And the incentive structure works because strategy and Saylor have come out and said we are not selling stretch below 100. So he's leaving market opportunity for anybody else that wants to buy and sell and operate under and below 100. So there's arbitrage like recognizing that he's also told you I'm going to increase the interest rate if the price, if the VWAP, the 30 day VWAP is under $99. So not only did they create a financial product that's brilliant and elegant, they created an incentive structure that incentivizes liquidity to be there. That's the unlock is the liquidity profile and the incentive structure. Often overlooked. People don't even care. Like when you turn the lights on, you don't need to know how like the energy got to your house. Kind of the same thing. But like that's why it works. That's why the liquidity profile is building, is because there's incentive structure to build on it. So I made this post and I want to share it again because it's totally fascinating. This is traditional credit for digital credit as a comparison and I wanted to look at liquidity profiles of other perpetual preferred equities to put them on a, on a level playing field. So I pulled Bank Perpetual Preferred equities and KKR which are some of the more common commonly traded prefs. And so these are the tickers over here on the left hand side. They're all highlighted in blue and the effective Yields range from 5.5% to 7.27%. Okay. Notional outstanding ranges anywhere from 850 million to 4 billion or to 6 billion. So decent size relative to STRC or SATA. And you look at the daily volume, average daily trading volume. The highest average daily trading volume is the JP Morgan pref at $4.2 million. STRC traded $150 million today. This is a bank instrument that pays six and a half percent. And like, okay, I can, I can now have an 11.25% instrument with very high liquidity. Okay, that's interesting. And so you got to think about relative liquidity too because these all have different notional size outstanding. So when, when you normalize the, the daily trading volume relative to the market cap of these instruments, the numbers are staggering. Right? Like the average 30 day volume relative to notional outstanding. So this is the 30 day volume divided by notional, you get, you know, 0.23%, 0.08%. So if you, if you wanted to scale out, if you had any scale in any of these instruments, let's just say you had $100 million. It could take you months to scale out $100 million based on the average daily trading volume. So historically, like if you bought this instrument, you'd have to hold it through the duration of the instrument in order to get your yield out of it. Okay, that might be like 10, 12, 15 years. Okay, what can happen in the next 10, 12, 15 years? What's the risk of the next 10, 12, 15 Years for banks, for, you know, any company that's issuing a credit instrument? I think AI has just made the uncertainty umbrella like, significantly larger. Right? Like the, the certainty of those cash flows and these business models I, I think has just drastically changed in the last year. So that's fascinating when you think about the ability to get liquid on any of these things. If I were holding these, this is not financial advice, but like this is, this is a crappy instrument. These traditional credits look crappy relative to the yield profile and the liquidity profile of these other instruments. It's just math. Like, it's just the data that we're seeing. And like, why does this exist? It exists because it's transparent. Like you, you can see the risk profile on Strategies balance. Like on Strategy's website. On Strive's website, we have the data of the capital that sits on our balance sheet, the relative risk profile, you can go calculate it 24, 7, 365. And that's interesting. And it facilitates a liquidity profile because they are, because it's incredibly transparent.

[D]

Can we also talk about the novel architecture of a Stable principle perpetual preferred security. These other perpetual preferred securities don't have stable principle. And the stable principle pool was, is a direct result of strategies prefs and now SATA being the first perpetual preferred instruments with an active ATM shelf registration. If that wasn't the case, you wouldn't be able to limit the upside on the price and then plus you need the variable rate monthly dividend. But those two things combined allow for the management of stable principal and so you don't have interest rate exposure, which is a completely new paradigm, something which we've only gotten exposed to via money markets. Right. So this is a new category of fixed income security, completely new category. And I think that's one of the reasons it's having massive product market fit.

[A]

Everything digital is better than everything analog ever. I mean, you could argue that like records are probably better than MP3, but

[D]

let's not go too far, Jeff.

[A]

But I mean the digital world and the digital economy is always been better. Like there's, there's advancements and things like this. Like these are innovations that have led to materially better products. And I'm, I'm not surprised, right? Like this is going to continue again. Stretch is eight months old when, when it's a year old, two years old, three years old. Like, imagine what this future looks like. I mean, this might be a hundred billion dollars of notional outstanding. The entire credit market is going to have to rethink the relative risk of all of their instruments, all of them.

[B]

So.

[E]

Hey, Jeff, Jeff, can I share my desktop for a second?

[A]

Yeah, yeah, yeah.

[E]

Give me a second here to do this. I'm gonna show you what I just did. Let's see if that works. Is it sharing? Okay, what I did was I screenshotted what you just shown. Right? And then what I did is your estimated days to cover is your last column.

[A]

Yeah, days of turnover days.

[E]

Sorry, days to turn over. And I just told chat GPT, I said recalculate the last row, but make SCRC, make SCRC 1.0 and give us the multiple. And so that way you don't have to divide 28 into them. And so when you do that, so SATA, so STRC is 1.00, SATA is 1.04 equivalently the same. And then if you look at the other ones, like for instance, you said, what was it? The JP Morgan was the second biggest one. Yeah, the biggest one, it's 20. It takes 25x longer in order for that to cover. It's just 25 times given. Given that.

[A]

So if you want 25x less liquid, it's 25.

[E]

It's 1 25th the liquidity. That's the way you look at it. Or strc is 25 times more liquid. And, and that's the best one out of, out of all the ones you saw there. So again, whether it's 125th or 25 times against, STRC and SATA are 25 times more liquid than the next one. And that, and that's a, that's a crazy multiple. That's why I like to make these integers really easy, you know, so nobody has to calculate anything. And this takes two seconds. So I, you did the hard work by getting all the data, so thank you. But that, that's the way I represent this. But the other ones are crazy.

[A]

Look at The Wells Fargo one. 146x right.

[E]

Is 100. So if you had a hundred million dollar portfolio in there, it would take you 144 times longer to lever out of it, which means effectively, it's stranded. It's stranded money.

[C]

Yeah.

[A]

Why would. I just don't know why anybody holds these things. Like, I think if you're going to go issue equity and you're like a traditional company, like, I think you're dead. Like, your access to that market is like in my, it should be gone. Like if I, yeah, if I'm Barclays, which, which I'm not, but. And I don't know if I'm Matt Gannon who came, came to the, the True north event and somebody's coming to you like, hey, I want to go issue pref capital at, at 8%. And you're like, well, I just issued 11, you know, 11 prep equity over here and it's backed by capital like 4 to 1.

[E]

Yeah.

[A]

Why, like, what do you, what, no, the cost of Capital is now 11. You know, like people come to these

[C]

events for, for alpha, but that guy got more alpha than anybody. Barclays came, got interviewed, and he got like more alpha than anybody attending.

[E]

Yeah, I mean he was brilliant, what he was talking about. And I want to go back to something. So look, I'm an accredited investor. People are like, oh, if I had access to the private markets. When you do a private placement, the minimum is typically five years. So if you fork over a hundred grand, let's say, and sometimes they have 100 grand as a minimum buy in, right? And you're like, it's five years. And they're like, well, I want to get out of it in six months. There may be no redemption clause for Five years. You were inside that investment for five years and you're like, well, I want. If there's no secondary market for it, you're stuck. So any investment, if you want to do a private placement, right, you're a credit investor and you can make 11% on STRC. And you're like, you know what? After two years, I want to go put my money in something else. You sell it all market order and you're out of it. And I think people, they wish that they were able to get in private, into private deals, but then when I tell them that you're stuck in it for five to seven years, they're like, oh, I want to get out. You can't. And I think that's the reason. That's the point. We were trying to say right here, if you have a big position and you want to go sell it, but if you're selling it's going to tank the market, then you, then it's not really a good position to be in.

[D]

Yeah, agree. Green. That's like a Warren Buffett kind of way of thinking. Like he's been asked, okay, why do you buy public equities as opposed to real estate, private equity, you know, private debt, et cetera, et cetera. He's like, well, there's money to be made in most markets, like their markets present opportunity and capitalize on them. And there's massive value in being fully liquid in your position, whether that be to raise cash, to deploy more, et cetera, et cetera. That, that optionality of a massively liquid equity is, is very valuable.

[C]

So what I think you guys are telling me is that the fixed income market is officially disrupted. Like if you're a fixed income fund manager, your services are no longer required and my recommendation is just take two weeks off and then quit.

[E]

Yeah, look, look, I agree. Look, Charlie Biello, there was just a chart. The bond market has been in a 67 month bear market. 67 months. That's five years and seven months. The previous bear market was 16 months. This is the worst bear market for bonds ever. And it's going on five years. And if you're in an illiquid bond, right then you know it's weak. And so look where we are today. It's just going to take time for people to, for this to sink into them. I do want to show, Can I show another thing?

[A]

Yeah, yeah.

[D]

Okay.

[E]

Share window here. So let me share this. Share this window. So Rohan met him for the first time, but I've been talking to on the phone. So he, he's a True north fan. He's not a coder. And he has coded this site Bitcoin. Bitcoin Quant Co. And I've reposted this. And he has. When you, when you log into this, you could see that. And he doesn't charge for it, but you can see my name, my real name is right there, logged into it, which is fine. But he has a bitcoin preferred equity digital credit dashboard. And I love this one over here with STRC volume. And then he shows you what the volume is above 100. And then he has this whole analysis on it. So one of the reasons why I like his page is he, he says ATM as a percent of volume. And then over here, I believe he has it set. The default setting is a 40%. And you could drag it lower. Oh, it's showing you on the right, it's 25% there. And you could say what percentage of the amount over $100 were ATM. And then it tells you the estimated ATM proceed proceeds. So if you want to be more conservative, you say only 25% above the hundred bucks will be used. And then it tells you the equivalent Bitcoin and it calculates, but you're like, oh, let's be more aggressive. So we'll go to 40%. And then it tells you on each day how much bitcoin they can conceivably buy. And the total for the week here is 2,500. So, you know. Yeah, in three days. So look, look this, there's lots of smart people there. And, and what I want to say about it is that Rohan is not. He's. He's a. He's a, a business guy. He taught himself how to Vibe code, makes this website, right? And he made the original website. You know, there's two different log, not login, two different pages for bitcoin treasury companies. But he does this and, and Vibe codes the whole thing and he keeps on updating it and this amount of information. You don't have this with other companies, like with Apple. I'm unaware of an Apple website that tells me how many iPhones they're shipping and computers are shipping. I just don't think. Or maybe it exists for Tesla, you know, how many cars they're shipping, where people guess it. But this type of coding that you see is just, is just truly unprecedented. So I just want to point this out and this is where we get, you know, people are like, who do we talk to? Yeah, I have the benefit of talking to Dan or Mason or Jeff or, or Soleil. But you know, these other guys that come about to do this work, it's just brilliant work.

[A]

Totally. I mean that's, that's like, there's so much opportunity to build here like that, that is. It's going to be used everywhere. I think there's another one. STRC Live. STRC Live. Yeah. I found out today has like a, a bunch of different tools. So bi weekly paycheck simulator, drip compounding calculator rotation back tester, STRC yield calculator, STRC versus savings and basically just build a bunch of different tools on top of this to look at different perspectives. Like, that's so cool. As one person that's just building this thing. I think, I don't think it's multiple people.

[E]

Yeah, I, I think these are one guy that there's always. It seems to be a dude. All the. You guys are, oh, I just coded this up. And you're like. And they're like, they're like, I just whipped it out. And like, you know, they're all like geniuses, right? But they're using AI, they build these websites, they do the auto update and, and they're brilliant. The color and I just, I love how you could just do like you could drag the, the columns and you can move them over. So again, this is some amazing information. And, and he does like I said, when you log in, you can click to the preferred equity versus the Bitcoin treasury and then they have their overview and again everybody's got different, different versions. Bitcoin tax model top 100 table. So I just think this is brilliant with the community puts together.

[B]

Jeff, can I, can I change topics a little bit?

[A]

Yeah, sure.

[B]

Bring something up. So this, this week there was this report put out by Bitcoin Policy Institute that said frontier AI agents prefer Bitcoin over stable coins and other forms of money. It asked over 9,000 AIs, you know, during a conversation, what's your, what's your preferred. You know, what do you think is the best payment method for. I, I'm sure, you know, I didn't look in too deeply, but I'm sure it was long lines of like agentic payments or something along those lines. Lines. And overwhelmingly it was Bitcoin. And Fong quote tweeted it and he said, how long will it take for AI agents to prefer digital credit and STRC over traditional credit and other forms of investment? I was like, that's a super interesting tweet. And so it started, I started thinking, I was like, okay, holy Shit, AI is way better at perceiving risk. Like it's literally a calculator, right? It's a computer, it's a calculator. It's way better at, at viewing risk in its full reality probabilistically than any human will ever be. So, so Sole, you're, you're, you're. What you just said about like if you run a credit fund. Well, I think you're, you're anyway, because why, why would you trust a human over something that can see, you know, the world more in, in, in you know, 4D. Yeah. More transparent than a human ever could. And so I responded. When an AI can fully price risk probabilistically and act on it once agents can model counterparty risk, duration, regulatory tail risk end to end capital allocation stops being narrative driven, kind of emotional and starts being mechanical, right? It's just he like here's the risk. Boom, boom. At that point digital credit and BDC backed instruments win unexpected return per unit of uncertainty and not ideology or tradition. So it's not some like gray haired credit manager who's saying, oh, what's this bitcoin shit? Like?

[A]

No, the AI underwriters disappear.

[B]

Yeah, yeah, yeah.

[A]

Computer is the underwriter.

[B]

But, but, but then I went like, and then I started thinking about this. I was like, okay, so what like for all forms of, you know, traditional assets, whether it's, it's credit or it's equity, I was like, what is like the biggest perceived risk right now? And I was like, I think it's disruption from AI, right. I like, I think that's the biggest perceived risk. So, so I was like, wait, the AI is the one modeling the risk, but it's also the one disrupting it. I was like, when is that? When has that ever occurred in history? Where, where the, the thing that's modeling the risk is causing the risk? I, I don't know if that's ever occurred before. Maybe like the computer, but I think this is just another. Yeah, it's, it's absurd.

[E]

It's when, it's when the.

[A]

Christ.

[E]

Right? It, it's when the disruptor is also the disruptee. It's like really, you're, you're, you're, you're injecting, you're changing the whole market, but yet you're, you're, you're not seeing that. So I think that yeah, this is crazy.

[A]

You think about like the private credit market, it's like again, the, the rate on private credit is going to go to like 20. Like if you want to Do a private credit deal. Like if you're, if you're having to compete with digital credit, the rate's gonna have to be higher, not lower. It's going to have to be 15, 17, 18, 20. Because there's no incentive to, to like give your money somewhere else for like an opaque risk that I've got a lockup for an uncertain period of time and I'm uncertain on what the outcome may be like. How do you like that market should dry up? It might, it might take a decade to dry up. Like you can imagine a scenario, junk bonds too.

[B]

Like if we're going into a world where a lot of businesses are going to be disruptive, disrupted, a lot of them are going to be grasping for some kind of injection. And I think what Stretch does is it actually speeds up creative disruption, it speeds up capitalism because now there's a new floor, a new hurdle rate. And if your business sucks, the capital is going to go elsewhere. That's just another way of saying that that risk is mispriced.

[A]

Risk is mispriced, yeah, the cap, the capital can flee and it can, it could move fast. I think here's an interesting trade. Short HYG, long STRC HYG is the High Yield Corporate Bond ETF. Here's the, here's the performance since 2010. So you could see, here's the last five years performance, it's down 7%. The volume is high, the relative yield is 5.7%. That's interesting. If you think risk is mispriced and these instruments are completely different. Right. Like that, that might be a very fascinating trade because you have this liquid bond etf. If you think this entire market like cost of capital is going to get repriced if the interest rates rise, the prices fall. So if the interest rate associate associated with these instruments rise, the price of this should theoretically fall. It might move the opposite direction. Right. Look as if you know the actual cost of capital fed funds rate drops, maybe the price of this rises. So like I may be a difficult trade on the short term, but on a long term basis I, I think that seems like a really fascinating comparison. And this is like the only other highly liquid high, higher yield alternative to I guess money market funds and it's more volatile. Right. Like if Stretch is planning to be pegged at 100, you look at this thing and back in 2021 it was $88 and it dropped all the way to $72 and back up to 80 and it's only paying 5.7% yield because there capital appreciation here, right? Like do we think cost of capital is going to go lower? I don't know. So yeah, it's, I think risk is just completely mispriced. Like the computers are going to be able to calculate this stuff way faster. It's all transparent. They're going to understand it quickly. I think, think that the future of this stuff would be that your only access to the capital markets is if you do have Bitcoin on your balance sheet. Because you can it. Like if you had bitcoin in your balance sheet, your base risk decreases. Just the base level risk decreases. Where if you have like yeah, money, you have money, you have money to do stuff with. If you just have any amount of bitcoin on your balance sheet and if your whole entire goal is to take your cash flows and buy more bitcoin, your access to the capital markets should be greater. It's pretty clear with MSTR that they've got really great access to the capital markets because of the business model. Okay, should other businesses do this? Like if you want, if you want money, if you want access to the capital markets. This is a pretty interesting business model.

[B]

Can we, can we talk a little bit about the. You know when we, when people talk about Bitcoin they say like Bitcoin had a, had an adoption curve and STRC now has its own adoption curve because it is Bitcoin but it's a layer four or layer three. Right. It is helping the trajectory of the bitcoin adoption but itself as a product has its own adoption curve. Do we have any predictions? When does strc, when do they sell a billion dollars worth of it? When does that happen? Yeah, in a day.

[C]

In a day.

[D]

I think Fong was saying, I think, I think the next benchmark is $500 million of daily traded volume average 30 day trailing. I think that's plausible in a bull market. And so what are they selling right now at a hundred dollar. They're selling about 50 million a day with their co current trading volume. Assuming it trades around 100, $100. So that would be like 250 million a day in sales. If they can sustain that, which is just absolutely insanity. At some point I think it will, we're going to see like a sustained period at like 99 and a half. Like a little bit. Just because once the market gets flooded it's going to take a little bit of time to reset but then arbitragers come in. So I think it's going to take time to build that liquidity But I think it'll happen with a euphoric bull market and I think the leverage makes them like the first people to get a 2x strc etf out there. I think it's really going to change the landscape massively.

[B]

It would be like the next Misty.

[D]

It'll be like the next Misty, except it's just like every single way.

[A]

Yeah. Without decay. It's like you're not selling upside well

[D]

because you could also do a total return swap. I don't know. I'm just putting it out there for whoever wants to build this instead of doing, you know how like you can lever it by doing borrow. Like you borrow at 4.8% and 2x lever, you can get up to like 17 and a half percent just on 2x. I mean you could do like a total return swap and potentially get that dividend rate without the cost to borrow or the lower cost to borrow by transferring the risk. It's difficult, but it's doable. And if you did that, it would just be absolutely insane. And then like we talked about before, like the put market. Right, the put market, you'll be able to sell these puts because there's a little volatility theoretically at a rate higher than the actual dividend income. So it won't be rock dividends, but it should be higher income stream over time. I mean you can create an ETF out of that.

[A]

Yeah.

[E]

So. So I was just going to say. So STRC, the week of November 17th, it did nine. It had $987 million traded for that week. And then the week of February 2nd to the 6th, 957 million traded in a week. So it looks like the average is, is getting up there and I, you know, getting into five. You said five, Dan. You said 500 million in a week average in a day from here.

[D]

4x from here.

[E]

Well, it's, it's done over a billion in a week. So it really just has to get that out. He doesn't. I'll, I'll make that a feature request. Request for, for Rohan to add in the weekly to get that trend line going up with the weekly averages.

[A]

What's the, what's the trend line of the average 30 day volume or the 60 day volume? Like what's that, what's that looking like? Yeah, I mean part of it is just scaling it up and getting it out there. In order to get the volume out there, you need, you need to issue it and I mean they're, they're well on their way. Like I Think even at the beginning this, it was. The average daily trading volume was much lower. There was a period of time where it was much lower. Yeah.

[E]

You know, and. And I'm going to go back to what. What Matt was saying from Barclays on Monday was. What people don't realize is that. So if Sailor wants to sell STR any of the press or any mstr, he needs institutional buyers. And so what Matt was explaining the mechanics, how it works. He has four different desks. He has an equity desk, he has picture a prep desk, he has a convert desk and he has a bond desk. And then he goes to different desks and they're like, well, we wanted. We want. Strategy wants to sell this. He has to call the institutional investors and say, this is what we're trying to sell. And then those guys then sell it off to their clients and he can only sell what people want to buy. And I think that's what we're seeing from strc. That's the validate. It's not the Sailor doesn't want to sell really the other products. It's that. That's the one that the buyers really want to buy that they're honing in on. So that's that positive feedback loop.

[A]

Yeah. I think he doesn't want to sell stripe because stripe should be $250. He thinks the value of Strife is much higher. Thinks that probably very similar to Dan, where Strike should be ripping at a future point in time when bitcoin is ripping. Stride is probably.

[D]

Yeah, I don't think it'll just always have. I think Stride is so dependent on Strife. That'll be interesting to watch.

[A]

Like. Like the delta between the two.

[D]

Yeah, exactly.

[A]

So, Dan, you brought up put. The put market. Can you. Can you walk through that? Like, you think that the put market for STR STRC will be one of the most liquid put markets on the planet.

[D]

Absolutely. I think it's super interesting because considering the call, the options, the call options market above 100 will be pretty. Won't really zero. Maybe I'm long. I'm long. Maybe like the, you know, the 100. Maybe it's like 100.1. There's a call option marker there at some point, whatever. Okay. But below it, ultimately there's always going to exist some sort of deleveraging risk. Like if. If for some reason leverage gets flooded into strc, which I expect it will, I think it's going to be like massively levered. And then if like bitcoin shits the bed or something happens with strategy, blah, blah, blah, or the dividends decreased one month, which ultimately it will be, you know, maybe it trades down to 99. Okay. It turns out 99 cascading liquidations for all the people. Leverage trades down to 97, 96. Okay. But if you're, if you want to hold that leverage and you can't sustain that sort of drawdown in strc, then I think there's gonna be a real market for, for protection, for principal protection in that scenario. So you can pay the put cost at 95, 96, 97 every single month, and it eats into your yield. But we're. What you're ensuring is that that razor thin sort of price difference between 97 and 94, that could wipe you out, you're protected against. So therefore, I think there's going to be a massive market there for people who want protection, principal protection. There also will be a market for people who want to sell it. Right. Because when you sell a 98 strike strc put, you're essentially selling the obligation to buy strc at 98. And as we've talked about throughout this podcast, who wouldn't want to buy it in 98? I mean, you're locking in 2% plus the yield. So therefore, and you have the, those will trade at a premium to the dividend because especially the 100 puts, because people will be paying for the protection. And since people are paying for the protection, there's a small amount of alpha in selling the protection to those people. Plus they're not rock dividends. So I think selling puts will be a great way to get leverage because you don't have to actually hold the capital to sell the put if it's not a cash secured put. Wow, that was a lot of, that was a lot to rip through.

[A]

But like there's, there's a lot there. But you're, you're talking about an institutional model of insurance and downside protection on a levered trade.

[D]

Exactly.

[A]

This is like the most certain lever trade that you could probably take in the entire market with high guaranteed yield. Like guaranteed and probably shouldn't say those words, leverage, high likelihood, high likelihood of outperforming like S P 500 and QQQ and even probably mag 7 on just the yield. If you're, if you're levered that yield, it's worth. Exactly, it's worth buying the downside protection. If it's a couple points, it's into a couple points of the yield.

[D]

Well, and think about, and think about the 90. Like let's just say you bought 90 puts, right. You're essentially capping your terminal downside in the case that SCRC goes to zero at 10%. So you're paying up front for that protection. But, like, for an institution, that's a pretty cool trade. It's like you're probably getting 7% or 7 and a half or 8% annualized return after paying for the 90 puts while only risking 10%. In the case of this, security goes to 0.

[A]

0.

[D]

Which is a fantastic, you know, risk profile for someone who thinks the outcome's binary here.

[A]

That should be an etf. Yeah. Yeah, it should be.

[D]

Well, let's. Let's start working the put market. We can get some automated bots going on.

[A]

Yeah. Get the put market rolling. But I mean, it comes back to Mason's point, right? Like the. The cowboy. Like the These. That infrastructure, just us thinking it through. The idea right there. Like, it will happen. It will happen because there's incentive to do it here, right.

[B]

It will happen because it's going on YouTube. And then the AIs will scrape the YouTube data and then they'll, like, looking for alpha trade. Steal it.

[A]

Yeah, they're just following Dan Hillary for alpha trades on Levered sdrc.

[D]

That's gonna be weird because they're gonna be launching tokens, right? Like, they don't have access to brokerage accounts yet. So, I mean, the amount of. We got a lot of competition here at Buck.

[A]

Yeah, man. Okay. Holy moly. So much. There's so much happening.

[B]

Do we want to go through, Jeff, the slides that you have?

[A]

Oh, yeah, yeah. I pulled. I pulled a couple of slides from Sailor's presentation. I just had to screen grab them. But digital equity absorbs the excess return, I guess. Let's talk about this one.

[C]

Really.

[A]

Digital capital, right? Like, what. What is going on with STRC and these instruments? The excess risk and the excess return is being stripped off and providing a low volatility digital credit product that's kind of that, like more stable, flat line, 11 and a quarter percent yield. And the digital capital is the Bitcoin. Right. Like that's. If you zoom out and you look at Bitcoin's price, that's effectively how Bitcoin's been moving just up and to the right super volatile capital asset. And how does this all. All work? There's a conservation of energy and that excess risk and that excess return that you've stripped off of the capital asset to provide the credit gets shoved into the equity. So there's massive volatility because there's effectively like, that Energy needs to go somewhere. Like that excess energy that you stripped off of the credit instrument needs to go somewhere and it goes to the common equity. And that's why we've seen this just incredible volatility in mstr and we haven't seen the volatility to the upside of the perpetual preferred equity model in the bull market yet. And yeah, hopefully we've got that on the horizon here soon.

[C]

I think every one of those.

[E]

If you look at this chart starting, if you look at the digital equity, if you notice what's interesting about the chart is that it dips below like whatever at about year, year seven. But after year seven, the digital equity does not drop below. Digital capital goes higher like it has, it has much higher lows and then higher highs in the previous cycles. They're saying that you could trade below the digital credit. The digital equity, which is the MSTR return, could be, you know, as low as, you know, whatever, 1%. But then it shows that after those, those two cycles, then it runs up. I think that, I think that this chart is right. The only question is you don't know which, which peak we're at.

[A]

Yeah, you don't, you don't. And the thing is, you're never going to know, like, you don't know you're out of the bull market or out of a bear market until you're past it. You don't know you're a bull market until you're past it. Right. Like the hindsight is 20 20. So, you know, it just depends on your horizon on, on how you're viewing this entire ecosystem. The one thing that's fascinating is like the one XM NAV bears, they're all, you know, running around like, oh, yep, strategies at one XM nav. It's going to be there forever. Like these, these things go in both directions.

[D]

Right.

[A]

Like there will be a period of MNAV expansion. We're seeing it right now on MSTR relative to ibit. I wouldn't be surprised if it expands farther than it's done, than it's expanded in the past as well. Maybe, maybe not just depending on the business model and how this all plays out, but there will be expansion there because there's this excess energy that's going into the equity that we haven't seen before. We've got this new instrument that's shoving this excess volatility into the common stock. So it's just a fascinating relativity.

[C]

Does that top chart also start to diverge and stops intersecting? Yeah, it does. Yeah. At first I Was thinking every one of those intersections would be an opportunity to rebalance your portfolio between the two. But at some point you just have to either rebalance periodically or just, hey, it's up or something's down. Time to rebalance.

[A]

I mean, even that concept like rebalancing bitcoin products five years ago, that didn't exist. What are you talking about? Rebalance of my bitcoin product? Like I have bitcoin, that's hit. Yeah. Like I guess I go rebalance into cash and some other stuff. Like if I think, you know, bitcoin has a blow off top, but now you're like, wait a minute, this is, we've talked about this since the launch of the press. This is the ultimate business. Like as, as there are, quote, unquote, blow off tops, people are going to rotate and they're going to rotate into the prep equity instruments and that capital is going to get, you know, they're going to ATM that capital and go smash by bitcoin with it. So it's just like, I mean, the plumbing, the architecture of this market is just fundamentally changed. And the incentive. The incentive, the incentive is to hold like all of these things.

[B]

Jeff, can you scroll down to the. Yeah, this one I. No, yeah, that one. So, so digital equity, that's, that's just MSC are common. And I think the important thing to note for MSCR common holders is that your alpha in this trade is the ability to get on the roller coaster and be on it for 10 years and you can't puke. Right. And it's a violent roller coaster. It's. It has insane lows and insane highs and does, you know, backflips and, and it's uncomfortable at times, but at the end of it, you're, you're paid handsomely. But it's two things. It's not only the volatility, but it's also the duration. Right. And I think those two things in combination break people. I think people can, can hold something for a long time if it's not very volatile or they can hold something for a short time if it's, you know, insanely volatile. But those two things together, it's a really tough hold for people.

[C]

Yeah. Can you overlay my 1080s on this chart?

[D]

They hit the white line and fizzle out, unfortunately.

[C]

You want to talk about getting motion sickness.

[A]

Yeah.

[D]

Now, Mason, that's a really good point. But like, and that's actually an interesting parallel soleil. It's like with a call option, right. You could just be levering long On IBIT with like call options or something like that, or perpetual futures. But you end up hitting this white line. And when you do in fact hit that white line on the bottom, that's $0. You get liquidated.

[C]

Right.

[D]

Something happens. The theta decay, liquidation, whatever it is. This is all risk. This is all volatility associated risk. But because of the nature of the new perpetual preferred structure, no longer do you have this zeroed out risk because of some liquidation preference. More like liquidation clause or margin clause, et cetera, et cetera. So that's what Mason's saying is actually duration's real here now the duration's forever. You can ride any form of volatility.

[C]

Yeah. So I can just buy some digital credit, and then with my dividends, I can fund my 1080 addiction for forever.

[B]

Yeah.

[D]

And what I would argue is you don't need the 1080s anymore.

[A]

Yeah.

[D]

Like, I don't know.

[C]

It's just a meme at this point.

[D]

Yeah.

[B]

I was. I. So. So I.

[C]

The.

[B]

The idea of funding things forever, I think that's a really fun idea, and I think that should be a marketing ploy for strategy. Like the idea of you can fund something forever. And I was thinking of, like, you can fund, like, if I died and I had a fund that had Stretch in it, I could fund getting flowers delivered to my grave every day or every month. I know that's morbid, but it's a. It's a really powerful idea, especially if you're. I don't know, I was thinking for, like, nonprofits, just the perpetual nature of this is really something to behold. And we've never seen anything like it.

[A]

I had several people come up to me trying to incorporate this into their business and thinking about, like, can I pay my employees in stretch or, like, have bonuses in stretch, or how can I incorporate this? And then I had somebody else come up to me like, okay, somebody needs to raise capital. It's. It's funny, all this stuff ends up getting pitched to me. I'm like, why don't you do this? Somebody said, you know, you could go raise capital and by stretch and fund a golf tournament, like a professional golf tournament. And it's just an annual golf tournament, happens every year. It's just funded by stretch. It's once, once a year. All of the capital raised just kind of rolls into Stretch. And when you need to pull it out, like, you pull it out at the end of the year just so you can fund the event. And you bring all the pro golfers. It's like the Stretch event. And it's like strategy sponsored. And like, these are. These are great ideas. Like, these are all great ideas. And like, people are going to start doing this stuff because it's. There's just room. And this is something that Sailor talks about as well. It's like what the. The basis point fee when BlackRock sells instruments is. Is like 50 basis points. 25. 50 basis points. You're like, okay, well, the, the delta between the other, you know, credit products and these new credit products is 3, 400 basis points. Like, okay, like there's. There's room to 5x the expense ratio on these instruments just by building a product built on digital credit. You gotta hear Mike.

[D]

See you, Mike.

[E]

Yep. I'm gonna drop off. You guys are doing a great job. Take care. Thanks. I'll see you next week.

[A]

Yeah. Catch you tonight, Mike.

[E]

See ya.

[D]

Super well taken. And I'd agree. And I'd also say it's like, no, not no. Like, yes. Like, this is just the idea of not losing value over time. Like, we keep talking about these perpetual financings and this, that, and next things like, yes, that's all cool, but that's just the way it should be. Like, if you own capital, if you own money, whatever it be, like, it should just be more valuable over time. Like, that's the idea behind owning the s. You should.

[A]

Wow, novel idea, Dan. You should, like, not lose money.

[D]

Exactly. And like every year you should. I mean, you theoretically could earn interest on it. You know, God forbid. Like, there's so there's all kinds of things that we're saying here that are like, whoa. And like breaking our minds. But when you step back, you're like, oh, my gosh, that's just like an effect. Effective capital world. That's just an effective monetary policy. You know, like. So that's my $0.02 on that whole thing. Oh, that's just debasement. Not outpacing inflation. Like, or that's not, you know, stretch is just money that doesn't get debased. Like. There you go.

[A]

That's it.

[D]

That's it.

[A]

That's it. Mason, I've got a couple more here. Do you want to walk through these?

[D]

Nice diggity.

[B]

It's kind of hard for me to see.

[A]

Yeah, okay, well, maximum dividend yield to be investment grade. I thought these were. It was a fascinating little presentation there where he walks through different assumptions on btc, ARR, and duration. And what the theoretical.

[E]

The what?

[A]

The theoretical risk quality of these instruments based on those underlying assumptions. So, like, at a BTC rating of 4, BTC volatility of 30 and a 30% BTC ARR. Is that the effectively saying that it's within this green zone, meaning that the credit spread is associated with the same risk quality as investment grade instruments. So it was really just pointing out that the interest rate could be higher, the BTC rating can be low. If you're a bitcoin bull, the interest rate could be higher, the BTC rating could be lower. You can issue a very large amount of this instrument depending on your volatility and ARR assumptions and still have effectively investment grade style risk risk profile. And I think that's fascinating, right? Like I don't know in our. We've got a perpetual preferred equity instrument out there, SATA and it's just an interesting market dynamic where people are comparing our instrument to stretch quite a bit, which I think is fair. It's a very similar type of instrument, but really the entire world we should be looking at everything else in the market. We should be looking at all the other credit instruments and the credit spread between the actual risk return credit spread between those instruments and these instruments. Like this is a new bucket of credit products in the market. And that relativity between what exists today and what exists now is. It's like that. That's where in my opinion, I think everybody should be focusing their energy, shining a light on the risk profile of everything else relative to these things. So that's effectively my call to action is like build more comparisons to everything else in the market. Everybody's done a great job on building out all of this analytics based on these instruments. All phenomenal, all fantastic, keep doing it. But the real unlock is shining a light on the relativity to the rest of the world and being able to share that with other people like other institutional managers. Like, it would be amazing if I could walk in the door at an insurance company and say, hey, insurance company A, I analyzed your balance sheet, look at all the instruments that you hold and look at this one and just have all the data look at the website, like see everything here and that would be fascinating. I think there's a big huge hole that can be filled that will help equip all of these people that are operating in the market environment to communicate the this to the rest of the world. So

[C]

what struck me about the event was when these slides are going like people at my table and around the room are screenshotting them because they would be up on the screens and they're like screenshotting because they're like, okay. And they'll just plug them into AI now they're like doing research in the middle of the thing or. Okay, I'm going to save this for later and I'm going to do a bunch of research. It's just kind of crazy that the people who are just into this are so far ahead of the people that you're talking about that haven't even, like, contemplated making these comparisons. And, like, we're definitely in a cult because the, the obsessiveness that, you know, people are, you know, the lengths that people are going to. To go to these events and, like, take pictures during the 5 seconds that this is up on a screen, just to bookmark it and do the research. You know, stuff that you're talking about later is. It's just insane. And it's going to continue to grow.

[A]

Yeah, I had people taking pictures of my wrist presentation and talking to me afterwards about it and. Yeah, there's just, there's so much opportunity to continue to grow in the space. Like, I'm. I'm honestly surprised too. Like, I'm figuring out what my role is in this entire world and ecosystem and figuring out getting closer and closer to capital and how to integrate these instruments into the traditional world. It's a fascinating time.

[C]

We need you training the LLMs to understand digital risk.

[A]

Right.

[C]

Somebody's got to do it.

[B]

All right, here's a question. When does STRC overtake the preferred aggregate outstanding market cap? When is it? 300 billion.

[A]

300 billion? What year is it?

[B]

100x from here?

[A]

It's 100x from year and it's 2026 today. Honestly, I think like 2031. 2030. 2030.

[B]

That was.

[A]

They sold 8 billion last year. Okay, so what if it, like, what if it, what if it triples every year?

[C]

Yeah, I was gonna say, like the second bull from here.

[A]

Yeah.

[B]

Are we in a bull right now? Solely. Are we in a bear?

[C]

No, I'm saying from the next one. You know, if we get one this year, 2027. Okay. Okay. Then the next one, one after that, we probably get there.

[D]

Look, I don't know what you guys are talking about. We're just going up only till 2030.

[A]

So it could be. It could be up only. Probably not, but it could be. You think about again, it's like it all comes back to risk profile, these things, right? Like, I mean, if they sell more of it, they have more bitcoin, credit quality goes higher, you know, like, the BTC rating gets better. Like, and it makes the equity more interesting. They raise more capital on the equity. The credit profile gets better, the price of bitcoin goes higher, the credit profile gets better. It's all about credit. That's another big takeaway. I've had my conversations with Saylor. This is all about credit profile. The credit impacts the equity, the equity impacts the credit. And they're both symbiotic and they both rely on each other. So, you know, one of the questions I asked him is like, you know, how, how do I, like, how can I think about amplification? What's too high of amplification? You know, how does this, how does this like, whole thing work together? And his response to me was, just because your airplane can pull the G's without the wings flying off the plane doesn't mean your passengers won't be dead by the time you get off the plane. It's like, you know, the, like, you might be having a great time flying this airplane and you land and, you know, wipe your hands and you're like, woohoo. That was fun. And then you go back and there's just blood everywhere because everybody killed each other. It's like this, these are jumbo jets and they rely on everybody being happy. Like, if your guy is sitting in first class, spills his wine, he's going to sue you, you know, so, and what, what he was meaning by that is the, the instruments are so symbiotic and they, they work, they work in tandem together. Like if you're, if your credit investors are happy, your equity investors are happy and that, that relationship is just critically important. And, and there was, there was one comment that he made in the interview. It was Fong and Sailor at the end on the Bitcoin for Corporation panel. And he said, somebody asked about, I think it was like dilution or atm. And Saylor's comment was, every decision we make is focused on the credit quality of the company in the short term or the long term. So I think the response was effectively like, I don't care about your M. Nav numbers. I'm raising capital to improve the credit quality of my company every day. Like every decision I make, is this credit positive or credit negative? Is that improving my b. My company or not improving my company? And fascinating response because, like, why did he say that? Because the preferred equities are the product. Like that is the product. Like if you want to go sell. And I don't know if you noticed there was hardly any talk on MSTR during, through the entire event. Very little. Some of it was about like, you know, this conservation of energy excess volatility goes to the common stock. But all of it was about the product, the digital credit product. MSTR will figure itself out. Right? People will figure out what the valuation of MSTR is. The market will dictate what that is. It's probably going to be significantly higher than it is right now. But the product and the focus and the credit quality of the product is, is the, the biggest, most important thing for the company, period.

[B]

Yeah, I, I really like, oh, you want to jump? See you down.

[C]

See you then.

[B]

I like that response to that question. I think he said pretty bluntly we don't make, you know, dilutive decisions or something along those lines. Right?

[A]

Dilutive decisions. Like every decision is accretive credit accretive.

[B]

Yeah. So, so people who are, you know, the Twitter trolls or the, the journalists.

[A]

The delusion, I guess.

[B]

Yeah, yeah, yeah.

[A]

Delusion bears.

[B]

It's, it's not real. Like everything they're doing is, is accretive. Right. Like the, the incentive for them or for Sailor as the largest shareholder. Right. Like obviously it's to, to do the

[A]

most accretive thing possible and be consistent, reliable, transparent, understandable. Like you, you know, whether you're shorting the company or longing the company, you need to know, like this, this is what, like that's what he's going to do.

[B]

Yeah, yeah. These morons saying sailors diluting the shareholders. He is the largest shareholder, man. He's not diluting himself.

[A]

Yeah. His whole thing is like, I want more bitcoin exposure, period. Like, how do I do that? How do I create the most efficient vehicle to do that? I create digital credit, I sell digital credit and that amplifies my equity, My digital equity. Yeah, yeah. There's a lot of dilution bears out there. It's accretive. They're all accretive transactions. Like, you think about it again, like, look at the balance sheet. Balance sheet of the company in 2020 was they had $500 million. Now they've got 50, I don't know, $55 billion worth of Bitcoin. I think that's pretty accretive. So what, they sold a bunch of equity. Like they've got $55 billion. Like who, like, would you not, like, do you not want that? Do you not want to go from $500 million to managing $50 billion and probably like the largest company and the largest balance sheet the world's ever seen ten years from now? Like, no, that's a no brainer. Everybody wanted it.

[B]

I think one last thing, we should touch on before we wrap up was the conversations we heard in the banking realm, right, from Morgan Stanley and Citi. They came out and kind of confirmed what I think Saylor has been alluding to for a long time, but also recently, which is banks are building infrastructure. And actually they need to build this infrastructure because a lot of the capital, when it goes into the crypto ecosystem, it doesn't come back in. It's really a threat to their whole entire business model. In general, of course, I think the banks are put in a position of adapt or die. And what I think we've started to see is starting to adapt at their own speed, but in time.

[A]

Yeah, as soon as that capital leaves, it's gone. You got Jamie Dimon sitting on the news saying, like, oh, if you want to offer yield, go be a bank. And it's like, okay. Then Kraken gets announced that they're a bank. And the timing is just so crazy. But you're completely right. You've got to operate within this ecosystem and think through it, or else you're going to get left behind. So you got perspective.

[C]

Yeah. The guys that I interviewed, it was Anchorage. Anchorage was the first to have the charter. Right. And then Mike Belchie's Bitco also had ended up getting a charter as well. So they're making these things happen. And one of the questions that I had asked was like, Simon Dixon tried to get this done a long time ago. He had been kind of an insider in the financial system. And he's like, hey, I want to build a bitcoin bank. Like, no rehypothecation. And just like, hey, we take deposits and then we just. We don't, you know, do all this funny business. And they wouldn't give him the charter. He's like, they're like, no, you can, you can do that, but you have to work with another bank that's going to do the rehypothecation for you. And they just wouldn't do it. So the landscape is either changed or, you know, to allow these things to happen. But the, the. The whole economic system is kind of being. Their hand is being forced to adopt Bitcoin and make way for bitcoin.

[A]

Completely. I think I'm just pulling. Pulling up here. Yeah. Mike Belshi. Boom. He responded to Jamie. Jamie Dimon, share my screen here.

[C]

Oh, did he?

[A]

Yeah, he did. He said, right. So this is the Jamie diamond interview. This is why, how I saw it. So JP Morgan CEO Jamie Dimon pushes back on crypto firms, says stablecoin rewards are the same as bank interest. They said we did become a bank and we have all the same requirements, diamond lists. In addition to that, we have better liquidity than any bank, even better than JPM because we hold all assets in 100% reserve, no rehab occasion. And it's just an epic move. You got a publicly traded CEO that's blasting back on Jamie Dimon about banks providing or stable coins providing interest. It's, I mean this video is so cringe. If you haven't seen it, go watch it.

[B]

Yeah, it's, it's, it's pretty pathetic. Like I, I, they have to adopt it because otherwise like stretch in, in a tokenized version like buck and then just a stable coin and then Bitcoin, like what else do you need? That, that is a, that is an economy outside of the traditional financial system. That is, it's already big, it's already half a billion people, but it's, it's only going to get bigger over time and, and like the incentives to stick with the slow system are getting close to zero.

[A]

Yeah, like, like why, and especially you're gonna have, you know, older people are going to die off. Younger people are just natively computer. Right. They're natively working on iPhones and cell phones and digital digitally native and they just are going to want to do things differently and they're going to operate with the companies that they grew up with. Like I'm probably going to want to operate with Bitgo and River and you know, whatever other company that I'm used to interacting with. Because that legacy system, I mean I just got off of like my JP Morgan, like my Sapphire reserve credit card because they were paying me all these points and the points were getting debased and I couldn't use them and I'm like this is bullshit. And I just cashed them in for cash, cut up the credit card, deleted it and now I shifted over, I've got the Gemini card for now. But why would I not get all of the bitcoin backed credit cards or the bitcoin reward credit cards? And especially when the price of Bitcoin is down 40%, the rewards have doubled effectively. And it's like why, why not? Like if those products are available, like I have no reason to use any of those like legacy systems that are just dated and they're not keeping up with the times.

[B]

Yeah. And then you add like AI agents into that and, and the speed at which they will transact and, and the volume and traditional systems aren't designed for that. We're going into A fundamentally new world.

[A]

I think one of the coolest parts about the preferred equity is it's using existing traditional finance wrappers. Okay. I can understand banks pushing back on stable coins. You're like, I can't track this. Or it's difficult to track. It's on its own blockchain somewhere else. It might be based in the Cayman Islands or something like that and. Sounds sketchy. It's probably sketchy for even politicians to try to understand because they, like, can't wrap their head around it. But then you look at like Stretch and SATA and the other preps, it's like, this is publicly traded. It's an equity. It sits in a brokerage. Like, you could get it on Robinhood or any other brokerage account. And like, all it takes is reframing, reframing, like how you think about, like, where that money sits. And all of a sudden you're like, if my bank account is an app that I have on my phone and it's just tracks some numbers that sit there, who cares where it sits?

[B]

You know, like, if it's in Robinhood or.

[A]

Yeah, yeah, who cares? Who cares where it sits? Like, well, I can wait. Okay, this is, this is a digital world, right? Like, historically, if you had to go to a bank or something, like, you might feel differently. Like, to go get money, you actually had to go somewhere to go, like, get it out. But now, like, I, I don't, I don't need to go anywhere. Like, I can move my money and it can just sit on an app and sit somewhere. Like, why not have it where I can have, like, be earning capital on it and I don't have to do anything weird or new or novel, like, it's just the existing system. So, yeah, man, I mean, it's cool. Super cool. Okay, final thoughts. We gotta wrap it up. We'll pass it around. Soleil. Final thoughts.

[C]

Yeah, so I, I always get encouraged when the, when the, the control system starts to bend the knee. But then my paranoid crypto anarchist starts to kick in a little bit. And sometimes when it seems like the control system system is capitulating it, it's really just kind of trying to transition from the, the proof of war military industrial complex and money debasement financial industrial complex to a technical industrial complex. So they're going to be introducing AI stable coins, CBDCs, social credit scores, all that junk. And it's less of a system collapse and it seems like it's a little bit more of a controlled demolition, if you get my meaning. And to A sense sometimes it gives me a little bit of a false sense that progress is being made when the old system falls. But it's kind of all according to plan and so they're trying to replace the old control system with the new. And only bitcoin exists outside of all control systems. So the only thing we really have to do is stack sats and cold storage, run nodes, join decentralized mining pool and none of the, the paper bitcoin FUD really matters. Just stack sats.

[A]

Stack sats always be.

[B]

Yeah, I'll second that. I think what stretch is an amazing innovation for short term money, right? If you're a bitcoiner, if you believe in bitcoin, this is an actual tool that we can use that's going to be helpful in our lives. I think same thing with mstr. I think it's an amazing trade but of course it doesn't have the properties of bitcoin. So as we're having these conversations, keep in mind the wide range of risks and tail events and bitcoin there is no second best. But I am super excited about what is being created here and how it's going to progress bitcoin to the next level.

[A]

Yeah, I completely agree with both of you guys. Stacking sats hard. The coolest part is you're aligned with Saylor. You're stacking sats. You're like, great, now a company is going to go orange, pill the credit market and bring more energy into this market, which is good for expand like it's good for anybody that's holding cold storage bitcoin and you want to hold this long term as a capital asset. There will likely be a point in time where the price of bitcoin is as such, you might be willing to part with your bitcoin because MSTR is shoving as much capital as humanly possible into it or you're thinking about building a business on top of it. So you want to run your own flow flywheel and try to help convert the world onto a bitcoin standard of, of truth money. So yeah, I mean I'm, I'm incredibly bowled up here. It's a big day in the bitcoin market. I think I'm, I'm watching volume every day, I'm watching these instruments trade every minute and how they're trading and how they're moving. I think the equities are incredible, incredibly exciting. And yeah, this is, everybody's spending a lot of energy to build out the digital credit ecosystem and there's no better place to be working in right now, in my opinion. So figuring out how you can incorporate digital credit into your company, your corporation, your life is energy worth spending. Yeah.

[B]

I think that was the biggest takeaway from Strategy World was go out into your community and you now have this tool. Show people this tool. It will improve their life. It will improve the bitcoin network.

[A]

It's like showing people. It's like showing people the wheel. Showing people bitcoin is like showing them fire, right? Like, you show them fire and you're like, wow, that's crazy cool. And you're like, wait, this could kill me. And then. But, like, STRC is like the wheel. You're like, okay, yeah, yeah, yeah. You know, like, it's not going to kill you, but your life's going to be a lot easier if you use it.

[B]

STRC is like a space heater to fire, right? It gives you the warmth, but none of, like, the. The, you know, burning fire, smoke, all that. It's just. Just the warmth.

[A]

It's just, you know, you could turn it on and it keeps you warm,

[C]

but it's like, no carbon monoxide poisoning.

[A]

Yeah. None of the other benefits of the fire. So, yeah. So thank you, everybody for being here. Please, like, and subscribe on the YouTube channel. It helps us. Helps amplify the message and get it out further and appreciate the time. And we will see you all next week. I think I will be on the road, but, yeah, we'll catch you next week. Adios.