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- [00:32]
A
Foreign.
- [00:36]
B
Ladies and gentlemen, what you are about to hear may be amazing, but it is not financial advice. It is for informational and educational purposes only. Nothing in this discussion should be considered investment advice or the offering of any security or other investment product. Please consult your own investment and tax advisors. And now I'll hand it over to the True north team for your regularly scheduled programming.
- [01:11]
C
Whoo.
- [01:12]
B
Welcome back, True north, the investment grade Bitcoin podcast, episode 59. We've got a new platform, we've got a new stream, but we've got the same crew. So we are excited to be here today. We've got a lot to talk about. Big week for strength. Stretch man. $1.1 billion raised on a perpetual preferred equity in a week. Enormous week. 1.5 billion raised by strategy this last week. 22,000 bitcoin acquired. We'll talk through it. We'll talk about the implications. We'll talk about the bond market and think through what all this means. We'll talk about trading volume, we'll talk about bank balance sheets. We'll get into bad bonds a little bit building on the preferred equity. How is this evolving? What can be made, what can be built with these things? And then lastly, we'll talk about efficiency of transactions and AI and how this entire ecosystem is evolving. So I think we got a great show for you tonight. Got a lot to talk about and things are bubbling. So without further ado, I will pass it over to Dan, Mike and Soleil. We'll just talk about what we're thinking about. I'm going to go over to you, Dan. We'll start with you. What's on your mind?
- [02:17]
D
Yeah. Hey, this is super exciting. I mean, I think we're seeing the Stretch thesis play out in real time. We're getting a lot of traction, a lot of engagement on our posts. We're seeing Stretch perform incredibly well. We're seeing a real bid on bitcoin. A billion dollars of Stretch last week, I think is a big, big deal. I'm massively, massively excited for the implications and the products being built on top of Stretch. I think it has better product market fit than bitcoin for corporations, even though I do believe bitcoin for corporations is the end goal right now. Stretch for corporations is the current goal. And I'm super excited about working in the space and seeing what people bring to the table.
- [02:51]
B
Beautiful. Mike, over to you. You're fired up on spaces, you're arguing with people, you're telling people what's up, what's going on.
- [02:59]
A
It's everything. Look, in every cycle there's a product that you have to determine if it's really a game changer and that we talk a lot about STRC and mstr. I've posted two huge articles this week. Close to a hundred thousand. It's over 100,000 views between both of them. Just wrote one today. Strategy breaks Bitcoin. I did a space on it. I had 3,000 people that came and went. Within an hour, almost 600 people were in their peak timeframes. I've been in lots of spaces trying to educate people about how STRC works, what it's doing to MSTR and the supply shock. And I'm ready to talk with you guys all pumped up about this.
- [03:40]
B
Right on, right on. Excellent. Over to you, Soleil. You're out last week, you're back here, you're all refreshed from vacation. I'm sure you probably didn't take much time off on thinking about this. What's going on?
- [03:50]
C
Hell yeah. I sent you guys that, that message when I was hiking Bear Canyon and said only bulls here. And I know people might get sick of me talking doing Tesla parallels, but I think Musk said something like prototypes are easy and production is hard, but the way that stretch is pumping, like production is in full swing. I mean it's just like it's flying off the shelves and I couldn't be more excited about it.
- [04:18]
B
Yeah, yeah. I continue to see this as digital labor.
- [04:22]
D
Right.
- [04:22]
B
Every one of these prep instruments, whether you hold it or whether they're selling it, it's, it's labor. Labor is happening in the risk taking and converting refining that crude commodity Bitcoin into a low volatility instrument, which is just totally fascinating. I've been a little quiet on X recently. We've got a lot going on behind the scenes. We're clearly building here with True North. We've got a new stream, new platform. Hope you guys like it. It's exciting. We're taking it to the next level. We are going to have a rebranded website out here within probably the next seven days as well. I look forward to, you know, pushing that out to the ecosystem. I think you guys will like it. A lot of good content and continuous research that's going to be funneling through there, which is fantastic. Obviously we've, we at strive. We've got a, a provincial preferred equity in the market as well. Approaching par. We came out to the market last week with a bunch of, bunch of different changes and updates to the instrument and guidance. So excited about how that's kind of getting accepted within the market and we're seeing that dynamic play out. Obviously bitcoin's seen a pretty significant bid to the upside, which is great. And you know, I keep coming back to this concept of the plumbing of the market. Like the architecture of the market is just so much different than it was in 2022, in the last, in the last bear market. Right. I think I saw, I don't know, saw somebody post, you know, like, oh, it looks exactly, like, exactly the same as the 2022 bear market. But then I overlaid the Fed funds rate next to it and it's like the 2022 bear market. As soon as the Russia Ukraine war broke out, interest rates also went from 0 to 5 and they ripped higher within 12 months just as the Fed came out and said inflation was transitory. You know, don't worry about this. And then they came out and ripped interest rates in front of everybody's faces at a fastest rate, at the fastest rate that they had since I think 1980. So completely unexpected and not a surprise that the risk market sold off significantly. And then obviously there was the fallout with ftx, Celsius, blockfi and all those other bad actors. But I mean you think about where we're at today, regulations change, you've got the ETFs that's changed. You keep following the ETFs. The are constant buyers coming in on the ETFs. You'd think with the price being down 40 or 50% there would be some outflows. But I think the amount of Bitcoin that BlackRock holds I think is about constant, which is a bit surprising. Right. That's signal. And you think about where we're at in the cycle. We're approaching 2027, 2028, we got a halving on the horizon. We like to think they don't matter anymore, but they really do. Right. They're going to matter for marketing too. And anybody going out and selling the best performing ETF in history is going to go front, run the halving, probably all of 2027 and you know, think about that as well. And that should coincide with the maturity of these pref instruments. Right. I think February was when they were launched in 2025, Stretch was launched in July of 2025. As they mature, get into year two, year three, these and the dividends continue to get paid, the interest in these instruments is going to grow, is likely to grow pretty significantly. So let's, I'm going to jump over to. We haven't done this in a couple weeks and I've got to jump into the balance sheet because we've got to hit on this. The balance sheet looks significantly different than it has in the past and we usually start every stream with this. For those of you that are new here, we talk about Bitcoin, we talk about Bitcoin securities, we talk about mstr, we talk about performance equity, we talk about capital structure. Our goal is to cover everything in the complex financial ecosystem of Bitcoin. So what you're looking at here on the screen, this is the strategy balance sheet. So as of. Oh, that's wrong. As of 3, 18, 26, 761,000 Bitcoin held. Bitcoin price prior to jumping on the stream was around 71,000 MSTR price 140. So strategy has about $54 billion in assets on the balance sheet. USD reserve 2.25 billion. The debt 8.2 billion. 10 billion in preferred stock. And why do I have two of these? Let's hide 1. 10 billion in preferred stock. So net capital, if you're just to back out the assets held on the balance sheet minus the debt, right, it's all convertible debt. But let's just assume it didn't convert. If it didn't convert, they would still have $48 billion of net capital on the balance sheet against a $10 billion of preferred stock and a billion dollar annual preferred dividend payment. So they can effectively just with a capital held on the balance sheet. If they had to sell it, which we don't anticipate, they will. If they had to sell it to pay off the dividends into perpetuity, they'd have 46 years of capital coverage just based on the Bitcoin on the balance sheet, let alone the USD reserve to buffer in between. And so you look at the leverage ratio, right? Like a lot of people still don't understand the leverage ratio and the design of this corporate balance sheet and, and strategies leverage ratio is incredibly small, 11%. You're looking at the debt relative to the assets on the balance sheet and then looking at total amplification being the notional value of the preferred plus the debt on the balance sheet. That's a 32% amplification ratio. Very. You start to think about relativities, right? Like grain. You talk about this a lot with homes, right? If you get it, if you put 20% down on a mortgage, you're actually, you know, you're, you're five to one levered, you're five to one leverage so the 500% leverage ratio, right. The relativity of your asset relative to your liability. So. So thinking about the design and scale is incredibly important. Now, why does this work? This works because you've got. You've got a significant pool of liquidity that's sitting behind a very relatively small, compared to the balance sheet, monthly dividend obligation, right? So this billion dollar is an annual dividend obligation. If you divide that by 12, the monthly dividend obligation is $90 million. Well, they've got $54 billion. Right. So you've got significant liquidity that's sitting behind this. You've got this enormous pool of liquidity that's sitting behind it. Bitcoin itself is liquid. Dollars themselves are liquid. So you have these expressions of bitcoin that are fascinating, right? You've got amplified Bitcoin being the common stock, and you've got digital credit being the low volatility instrument. And what they've done is they've taken this raw commodity and split it into two pieces where you've got a high volatility instrument and a low volatility instrument. Obviously, you've got several of the low volatility instruments, but those attractions, different pools of capital for different reasons. And that, that liquidity pool that's sitting behind the liabilities is what makes the other instruments liquid. That's what makes the preferred equity liquid. That's what makes the common stock liquid. And because the common stock is so liquid, they have the ability to access capital via the ATM to pay the dividends using capital raised on the common stock price, primarily because there are computers that are using the. The common stock as an expression of the underlying Bitcoin, which is moving pretty consistent. So I'm going to pause there. We haven't done this in a couple weeks. You guys have anything else to add on capital structure?
- [11:52]
D
I think it was a good overview, Jeff.
- [11:55]
A
I want to.
- [11:55]
D
I think.
- [11:56]
A
Go ahead.
- [11:56]
D
Go ahead, Grant, go ahead. No, I want to hear what you have to say.
- [11:59]
A
Yeah, sure. So I'm just going to tell you right now while we talk about this nonstop. I've been on, I don't know, 20 hours of spaces over the past week and a half. When you say amp, when I say amplification, I keep on repeating the same thing over and over again until this sinks into people. What I mean by that is that with the prefs, specifically, strc, those shares, they issue shares for the prefs. But that is those prefs are really, it's debt in the form of an equity wrapper, which is called Digital credit. So it's an equity wrapper. People think that it's just a dividend paying stock. So I had to educate people on how the pref works with the PAR value. Most people don't understand that part of it. The other thing is that the pref shares are not in Adso. Can you pull that up real fast? The strategy website?
- [12:53]
B
Yeah, yeah, just go to the strategy
- [12:55]
A
website and this way it'll give a good visual for what I'm talking about. So if you, and I want you to go to where it says shares on the top. So if you look here and scroll down and you scroll through the list there, there's you strike is there because it's a convert. The convert. But if you notice stretch strd, they're not listed here. And when I say ads, oh, that's assumed diluted shares outstanding. So it's not included in the basic shares outstanding and it's not included in the ADSO assumed diluted shares outstanding. So the prefs amplify the bitcoin per share because those shares are not even though they're accretive. Accretive dilution is what we'd like to say that they buy more bitcoin, but it does not add to the share count that calculates eps bitcoin per share. So this, this metric on the bottom is bitcoin per share. For GAAP accounting purposes. Bitcoin per share and GAP accounting for EPS uses adso. But the prefs are not in this except for the one strike because that can convert to shares. So when I say this to most people, this did not take me three hours. They're like, dude, you lost me already. And I don't know how I can go any slower because if you have bitcoin on the top and shares on the bottom, if you buy more bitcoin on the top, but there's not more shares because it's, that's the amplification. And once people, I'm doing second grade, people like, oh, that's too complex. I'm like, I can't make this any simpler. We're not adding on the denominator, just on the, on the numerator.
- [14:39]
B
Yeah, it's adding, it's adding a senior preferred claim into the capital structure and. Right. That's a seniority within the capital structure.
- [14:48]
A
But let me chime in on that point. I want to address that. Sorry to cut you off. I want to address that point and then we go, we delve into the morass. Well, if bitcoin fails or goes to 8,000 for four years. And strategy has to refinance, and they can't refinance, so they go bankrupt. Grain. What do you say about that, guys? I'm just giving a heads up to everybody. If bitcoin drops to 8,000 bucks and stays there for a year, you don't have to worry about hearing from me, okay? I'm just telling you right now, I'm out. If bitcoin drops to eight grand and stays there for three months, I'm gone. You won't ever have to hear from me again. And so people are like, well, I want to know, theoretically, if this happens in five years, what happens? Let's get the next 18 months, right? And I don't want to hear about, well, if strategy is in, solve it. It's not a solvency problem. It's not a liquidity problem when you can raise $1.2 billion in one week, right? I don't. And people are like, well, I don't think people understand these words. And I'm trying to be so nice.
- [15:54]
B
Yeah, I think people, they get caught up on this access to the capital markets thing, which, which is pretty fascinating, right? Like that. It's so funny when you, when you put it in relativity, like, what happens if your access to the capital markets changes? Well, go look. You go look at the common stock. And the common stock is one of the top 20 traded stocks in the entire market, and it has been since October of 2024. Like, why is that? It's that way because the stock is a function of the underlying bitcoin. The price of the equity is a function of the underlying bitcoin. So if bitcoin just moves, there's liquidity on the stock, right? Like that's the most fascinating thing, right? And like, people are holding it for that reason because you could go in and out of it in size, right? Like strategy trades $3 billion a day, like two to $3 billion a day. That's not retail. Right? Like retail isn't trading $3 billion a day. That's institutional capital that's using it as a liquidity pool going in and out for several different reasons. High frequency trading, whatever it is, and it's because it's relative to bitcoin, which is also this incredibly large liquidity pool. So if, if the bitcoin lights stay on, the stock is going to move and it's going to be liquid in both directions. There's going to be interest in both directions. There's going to be, you know, people buying calls, people buying Puts there's going to be interest as long as Bitcoin moves. And so because of that, that interest in both directions allows for the atm, the access to the capital markets to continue to operate like they can always have that on to raise capital at different points in time. That's the most fascinating thing. And then you look at Stretch. I mean this instrument, it's insane. I've talked about this a little bit. The, the Stretch Preferred. Last week there was, there was a day it traded, I think it was 700 million in volume. The J.P. morgan preferred instrument trades 2 million in volume. Okay. Even have, I've got a Bank of America Preferred up here right now. I think today the bank of America Preferred traded $1.2 million in volume. Last week there was a day Strategies preferred traded 700x the bank of America preferred volume.
- [18:22]
A
Hey Jeff, can you go back to that other, the PDF you were just showing? Okay, so stretch, currently it's 1.975 billion left on the shelf offering, correct?
- [18:35]
B
Yeah. Okay.
- [18:37]
A
I knew you were going to bring this slide up. We didn't talk about the slide previously, did we?
- [18:41]
B
Yeah.
- [18:41]
A
Okay. Can I share my desktop?
- [18:44]
B
Sure.
- [18:45]
A
Okay, make sure. Okay, I'm ready. Let's see if I can do the new platform. Wish me luck.
- [18:50]
B
Let's see if it works.
- [18:52]
C
Big money.
- [18:53]
A
No way. No way this is going to work. Okay, now I'm going to click over here. Is, is. I think that's working, right?
- [19:02]
B
It works. We're live.
- [19:04]
A
Okay, so if you see here, I did a poll and the poll, what it's showing is the next ATM shelf offering for C will be 5 to 10 billion. 10 to 21, 21 to 30. 30 billion plus. So basically 50% of the people are saying it's going to be 21 billion plus and then the other 50% saying it's going to be below. Right. Is that, is that sharing?
- [19:32]
D
Yeah.
- [19:34]
A
So, and, and by the way, there was 3,000, well, 294 votes. So at 3,000, you know, 3, 900 views, I would have liked to have had more votes on it. What do you guys think the number is going to be?
- [19:48]
B
I, I think probably 21 billion. I don't know, 20 billion or, or 30 billion. A 10x from whatever it is right now just to scale, like, I mean they could just double it too. I mean it takes, it takes a day to file this thing.
- [20:04]
A
So I have a question. So Jeff, this is in light of your position, just, you know, is there an advantage to them just saying, look, let's say they want to do $40 billion. Would it be better for them to just do, to keep, to extend it by $10 billion like every six months. Is there an advantage to doing that? Or is it better to do one big number and then grind it down?
- [20:29]
B
So there's some like, psychological analysis that's been done around this, like how the market responds to ATM filings. And so like size can scare, can scare investors even if it's like unfounded. Right. The reason is there are computers that are scraping filings. Right. So if there's a scrape in filing and there's just an enormous number, and it's an enormous number relative, like to the market cap or the size of the instrument. Instrument, it might just be like, oh my God, I don't know what this is, but I have to short it. In the case of stretch, that would be fascinating because if you shorted stretch, you'd have to pay the dividend. So that would be a crazy dynamic. So I think there is a little bit of gamesmanship there. If you look at BitMiner, the ETH treasury company, it was fascinating. The same day that they launched an atm, they also launched a buyback. And they did that because of the psychology associated with it of like, you know, if they just came out with an atm, the stock probably would have sold off. But because they had a buyback as well, it was kind of like this net neutral from a, from a, you know, AI scraping tool methodology. So there's probably some gamesmanship. I mean for this instrument it's. I don't think it matters probably that much. I'm sure they're thinking about it. But I mean, shit, they raised 1.5 billion or 1.1 billion last week and they've got 1.9 billion left on it. So they probably need something where if they had, you know, really juicy week, they got capacity to do it. So I wouldn't be surprised if we see an update on that in pretty short order.
- [22:03]
D
Yeah, I agree. And, and to this, to this point, like this is kind of what my video was on this week. Like there's never been a, a public market security that's let. And this is what I kind of figured out. It's like they've never let the market set the interest rate on these, on these stable yielding securities. Right. So you got money market funds, those are set by the Fed essentially. I mean, you have the SOFA rate, you have the, you know, overnight repo rate in there and some money market funds, but generally short term Treasuries, those are set by the open market. So, okay, fine, but in terms of other funds, other preferred equities, usually they're benchmarked off the sofa rate. So like for example, there was a, I forget the exact example I use in my video, but it's, it was benchmarked 200 basis points over the sofa rate at all times. The attempt of this preferred equity, this preferred security, was to have a stable principle assuming the credit quality of the company didn't change and therefore the credit spread above the risk of above the sofa rate would always be the same and therefore the security would be stable. When credit spreads widen or tighten or market sentiment gets kind of knocked out of whack, there's no shot that this thing stays stable. And that's what we've seen in 2025. This security depeg, the one I'm referencing, I forget the name, I apologize. But Stretch is unique in that it lets the market for stretch price the actual stretch dividend rate, meaning you have this new, which is a completely new feature on any preferred equity ever, a pricing or a dividend change based on a vwap over the last trailing 30 days. And then you have the ATM selling price mechanism to cap the price and then plus that variable dividend to stabilize the price. And like. So again, the key unlock here is that historically you've never been able, there's never been a security that is using the open market trading around the security to keep it at par. So like, I think that's why we're seeing this crazy volume. And that's the massive unlock here. You know, this is very novel. Like people, I don't think people are grasping that yet. It's a new risk curve, a new return curve, a new risk free rate, a new risk rate.
- [24:15]
B
The design of the instrument is so incredibly elegant, right? Like, you know, I was explaining to somebody at Strategy World and they're like, oh, that's pretty simple. And I said, it's not simple, it's elegant, it's well designed. And so what I pull up here on the screen, so I think you all can see this. Now this is bank of America. And we can kind of dive into this a little bit. And to your point, this hits on it, right? So this is bank of America. You can see here, this table below presents a summary of perpetual preferred stock outstanding as of March 10, 2026. Okay, so last week, and the first thing that jumps out at me, I hate this website for so many reasons. One, look at all of the trash on here. Like these are all perpetual Preferred securities. They're trading in the market. To Dan's point. You look at the top of them, you know, premium. This is the dividend rate. 7 greater of 3 month CME term, SOFR plus 61 bips or 4%. You can look at all of them. Some of them are pegged, they're flat. If they're pegged in flat, the price floats. Very similar to Strife or Stride or any of the other fixed ones. So it's pretty, pretty fascinating when you look at these. But there's a couple things that jump out at me at this is one, I have no idea how much is outstanding. I have no idea where this sits in the risk. Like where does this sit in your corporate structure? How much debt do you have? Is this secure? How do I even think about risk on this thing? It says dividend type. Almost all of these are non cumulative dividends. So if they just decided to turn them off, like they could just turn them off. Some of them are callable, they've got dividend payment dates. Looks like almost all of them are quarterly. You look through the interest rates here, you know, seven and a half, seven and a quarter percent, 6%. And it's hard to look at this and not see how strategy instruments absolutely obliterate every single one of these for, for multiple reasons. They're transparent, it pays monthly dividends, flat, high liquidity, cumulative dividends. And it's just very transparent. Right. They don't have like an entire page with several of these different instruments, you know, all competing for the same capital. So it's just, it's really fascinating when you start to look at these. I mean, this is just bank of America. And so I plugged this into AI and I was looking at apparently the sum of all of these. There's about $25 billion of this stuff outstanding, which is fascinating. And some of these were issued a long time ago, but they're still trading like 1997, 2006. And I just don't know who holds this stuff. Stuff, right. Like there's $26 billion of this outstanding. Who holds this? Why do they hold it? Is there, is there a pretty good risk profile on it? Do they understand what the risk profile is or is this thing just sitting there and they're holding it for the maturity? So, yeah, I mean, I mean it's, it's an interesting place to be. And you start to look at the, the balance sheet like, okay, what if, can they support this? And I pulled up the bank of America balance sheet, total assets 3.4 billion or 3.4 trillion. Excuse me, sorry. And then total liabilities, 3.1 trillion. And you look at the relativities, you're like, okay, maybe I could support this for quite a while. But I don't know what the debt structure looks like, what debt sits behind this, what's the actual capital structure? Really difficult to quantify. Quantify. And I wouldn't be surprised if there was a point in stress where these banks can just shut down the, the dividends on these instruments and they're non cumulative. They could just turn them off. Kudos to whoever designed these structures because this was just free money. This is like free money that was just given to the bank and, and they can just take it and do with it what they want. So kudos to whoever designed these.
- [28:13]
A
Yeah. So let me very easy explanation why this exists. These are all designed to fit into what the rating agencies look for once these instruments were designed. 5, 10, 20, 15, 20, 30 years, whatever it is, in order to get a rating, they follow the same formula. And so as long as these are. Does it show you any here what the rate, what the ratings are?
- [28:36]
B
No, and I don't think they're, I don't think they're rated because they're perpetuals.
- [28:41]
A
Oh, so they're unrated.
- [28:43]
B
Yeah. And, and some of these are so interesting. Like you click into them. This was some of the older ones, the series L convertible. No, some of the older ones are like Merrill Lynch Series 1 Pre Financial Crisis roll up. Pretty fascinating. So they just like over overtook the instruments. I don't know. It's really interesting. I think the analysis is fun to do. I think it's fun to compare to like the strategy website, right. You look at the, the credit profile, you're like okay, here's the super transparent, here's, here's the risk. Here's the debt that sits on their balance sheet. Here's the preferred stock that sits in their balance sheet. Here's. If you make an assumption on Bitcoin price and volatility, here's what the risk profile and the credit rating looks like. Oh, if you want more information, just pop over to each instrument. Like what is the implied volatility? What is all of this data? And it's updated every what, 10 or 15 seconds throughout the day. So you could calculate it whenever you want. That along with the other points that you brought up, Dan, is why, hey, it's liquid, right? Like you can, a computer is interested in this. Like it can understand it, it can communicate, it can see like what the risk profile is and the fact that they've got the V WAP on the bottom end. So you know if the interest rate is going to go up relative to the volume weighted average price over the 30 day time period, there's incentive to just always keep holding it. Right. So even if it drops down, like if the price of STRC drops, there's incentive to buy it and hold it back to par, knowing that there's going to be future people that are coming in the door in the next 30 days to buy the instrument again because they want to be in for the interest rate for that month. So you know that capital is going to come in the door. What's the worst case scenario? The worst case scenario is you get. If you're an ARB trader and you design a computer infrastructure, the worst case scenario is you hold an instrument for a longer horizon than you maybe initially thought and you get paid 11 and a half percent annualized in that time horizon. It's like where with, with a very interesting credit profile, very interesting risk profile that's 4.4x over over collateralized by the bitcoin and the balance sheet. Like that's, that's cool. That's a cool instrument.
- [31:09]
C
Yeah. I want to ask the same questions that the bears ask about strategy. Right. So they say, okay, strategy is buying Bitcoin and what if Bitcoin goes down? Okay, well what does bank of America, how are they making money? They're not buying bitcoin. So what are they making money with to pay these damn things? And can that be disrupted? So what if their source of income goes down? Then what?
- [31:33]
B
Right? What if they get over levered? You have no transparency into their leverage ratio.
- [31:38]
C
And it's not like banks have ever needed a bailout before, you know what I mean? Like they're, they're constantly. Exactly. Rehypothecating and overextending themselves. And we talked about this just being built on air, but it's like built on less than air. It's like rehypothecated air.
- [31:54]
B
Yes. So this begs the question. Go ahead.
- [31:58]
D
Yeah, it begs the question. It's like okay, so what is the terminal outcome here? It's all like one I think they're going to sell 10 billion a stretch in short order. Two, there's going to be so much demand over a long period of time that stretches dividend rate will probably go down 10, 9, 8% while maintaining its par. So how do you make money there? I think it actually introduces a big opportunity for the other preferred Equities. Because if you think if you're that bullish on stretch and it as a credit worthy instrument compared to all these other preferred equities, naturally, if the yield on stretch starts to decline, the, the yield on strife will. It will be an arbitrage opportunity and so the yield on strife will decline and the price go higher. Something to think about, I think.
- [32:46]
B
Yeah. So Dan, you posted about this the other day. You're like, why isn't the price of stride moving? And I thought that was an interesting question. And I think that the answer is the relative risk profile of stride stayed about the same because they just issued a billion dollars of stretch that sat senior to stride. And as they issue more stretch, technically, I mean, it's sitting senior relative to it ultimately. Right. I agree with you. I think the understanding of the risk profile of this is it's just going to take a long time. Like I think we're all just so early. We're the ones that are hyper focused and fixated on it. I think it's just going to take a while. And then you think about the relative interest rate. Like why would, why would stride price higher at a lower interest rate than whatever stretches? And maybe that's the signal. Maybe if stride starts pricing lower on an interest rate relativity, maybe that's the signal to lower the interest rate.
- [33:41]
D
I'm not 100 sure that's a really good point actually. I like that kind of idea.
- [33:44]
B
But that brings up so many questions. And this is where I wanted to take this. Right. Over the last couple weeks, tons of noise on stretch. I think everybody's figuring it out. We've been talking about this for months and the next. And you hit on a good point here, Dan. What's next? Like, all right, how does this infiltrate? Like, if this is going, this is doing a billion dollars in a week during the record date. Like, what does this look like down the road? And I think in order to do that, you gotta, you gotta look at the rest of the market. You gotta look at the tam, right? What is the total addressable market and what, what does that look like? I started thinking about this a little bit last week and I got a. Not going to lie. I got a bit of anxiety thinking about it because the second and third order effects of being right about this and being right about digital credit and being right about the risk profile of these instruments is that there could be a massive RE rating of credit across the entire industry. And we're talking like hundreds of trillions of dollars of credit. And it Might go slow, it might go fast, I have no idea. And I kind of have a thesis on how it, how it happens. So I'm going to walk you through it a little bit here because I think it's pretty fascinating. So I was looking at, I was looking at private credit, right? So what do we know? There's been a lot of noise about cracks in the private credit market. And so the why, right? Why have there been cracks in the private credit market? Been cracks in the private credit market? Because AI is coming in and disrupting some of these business models. Private, private credit, super opaque. It's grown a lot in the last couple of years. And there are starting to be some concerns about the credit quality of the private credit. Now what do we know about that reasoning? That reasoning is you got AI disruption and a lot of cash flows are at risk. Well, that same concept, while it applies to private credit, also applies to public credit. So it applies to investment grade bonds, it applies to junk bonds. And I think the biggest focus in my opinion is the fringe. Like what are the bonds that are triple B now? So triple B is investment grade. If you drop below triple B, you're double B, you technically go to junk. Who holds all the triple B bonds and what happens if they get RE rated? And that's where I think the biggest cross crux of RE rating in this entire kind of landscape kind of fits. I'm thinking about the big short, right? You see the Jenga Tower and you pull one and then the whole thing falls down and it's really the triple B investment grade corporate bonds. And so I was doing some analysis with perplexity here and I was looking at who owns the BBB bonds. I just want to know who owns these things. Insurance companies, especially life insurers, are the single largest institutional owner of US Corporate Bonds. In 2017, they held about 38% of corporate bonds. Okay, that's interesting. Then I started looking into, okay, what happens if there's a RE rating of corporate bonds that they go from triple B down to double B. Let's just say the S and P. If there's, if there's a crack in the private credit market, maybe something they had previously rated goes out of business. They're like, okay, that's, I gotta change my rating methodology. Now if you have something that's junk that goes out of business and you weren't anticipating it, you're like, okay, maybe I was, maybe I was expecting that. But as soon as you have one investment grade instrument default that results in, you have to go rethink it. Like what do you mean? I had an investment grade instrument that defaulted. What is the reason? Is there additional instruments in the credit market that may default because of that same concept? And so you think about the S and P, right? We clearly have seen that they're behind on capital structure in how they've rated strategy and the capital that sits on their balance sheet. They've given them zero credit for the capital that sits on the balance sheet. And so then you think about, they're probably behind their methodology, they probably are behind on thinking about AI risk. And I think, I think that is a risk to the system. So I wanted to look like what would happen, right, like if you have a big swath of instruments go from investment grade to junk like overnight because of a change in rating, what happens? Like from a, from a capital standpoint. And so I was doing some analysis here for insurance companies, right? Insurance companies have capital requirements. So those capital requirements, like for certain instruments that you hold, you have to hold additional capital so you can leverage against it on your balance sheet. This is required from rating agencies and regulators. There's state regulators and there's a rating agency kind of globally am best that overlooks all this stuff. So if your portfolio, which we identified as about 38% bonds, if it moves from triple B to double B, it could easily double or quadruple the risk based capital factor, increasing the required capital per dollar of bond by that same multiple. Okay, that's big. All right, so that, that means effectively the amount of business that they could write, it may drop by 10, 20, 30, 40% almost overnight or instantly because they're technically would be over leveraged based on the bonds that they hold on the balance sheet. So now you're faced with a couple options. You can offload those bonds, right? You probably have some investment mandate that hey, I can only hold investment grade bonds in my portfolio for like risk. So you got to go sell off your investment grade bonds. But who's the buyer on the other side? Like who's the liquidity that wants to buy your investment grade bond that was just downgraded from investment grade to junk? And especially if there's an alternative that's liquid paying 11.5% monthly in this marketplace, right? So like in these bonds, to put this in perspective are they're like 7% bonds, 8% bonds. And so I wanted to dive into it. So I went even further and I looked at BBB bonds. So I looked at a etf. I wanted to see there was an investment Grade ETF that holds triple B bonds. So I downloaded the holdings and I looked at what it was. I was like, what are the instruments in here and what's the maturity on them? How much risk is in here? What's the weight of these things? Just starting to wrap my head around what's at risk. And so this is the list of instruments and I sorted it by maturity. As you can see, there's a lot of energy companies. I think those energy companies are probably fine. Thinking about, like, where I, where AI is going and you know, demand for electricity, all of those things. But I started to notice that there were a few other companies in here that started to raise some flags. We've got a Reinsurance Group of America, which is funny. And then I saw Athene holdings and Apollo. So these are fascinating. Like, what is a theme? What is Apollo? And these are, these are 20. These are bonds that, that expire. They mature in the year 2055. So these are illiquid bonds that mature in 2055. Friendly reminder, it's 2026. So these are way out in the tail. So then you look at Athene holdings and Apollo and some of these other institutions. Now, what is Athene? What is Apollo? These are companies that are creating annuities that are capitalized on private credit. Pause for effect here. The companies that are issuing investment grade bonds that are rated triple B are capitalized on private credit. Boom. Right. Like, like that seems like an issue. That seems like an issue. If we think that there are cracks in the private credit market, like maybe, maybe, maybe that's overblown. Right? Like maybe the cracks in the private credit market. Maybe it's just a couple, but I think there's going to be disruption here. And you could think about the capital structure like, okay, what's going to get re rated? The things that are susceptible to AI risk and what's susceptible to AI risk? It's these opaque instruments, software as a service, everything that's.
- [42:36]
A
So, Jeff, can I chime in real fast here?
- [42:38]
B
Go ahead.
- [42:39]
A
So this is one instrument has all of these different items in it.
- [42:43]
B
Yeah, this is a triple B rated etf. Not a ton of, not a ton of assets under management, because this is an etf. But the reason there's not a ton of assets under management is because these illiquid instruments are held directly in custody by like insurance companies, banks and pension funds.
- [43:04]
A
Right. So how many total instruments are inside this one wrapper?
- [43:08]
B
I can tell you about a thousand.
- [43:13]
A
What was that?
- [43:15]
B
About a thousand.
- [43:16]
A
A thousand?
- [43:17]
B
Yeah.
- [43:17]
A
I mean, I mean, think about. I was like. So I'm like looking at this, it's like they're 0.1% and then they go down a point zero. So there's a thousand. This is designed not to move. And so what they did is if you put enough crap in one basket, as long as you could just pay whatever the yield is 7%, whatever it is on this overall instrument, nobody cares what's in it. This goes back to the whole big short movie, right? It's the same thing. And it has a triple B, triple B1 rating. That's what it is. Column D. Yeah.
- [43:54]
B
These are all just triple B rated. Yeah. That's the ticker of this. Yeah, Triple B I is the ticker.
- [44:01]
A
Oh, that's a ticker. Sorry. So. So. And this is not rated overall, so
- [44:07]
B
I don't think so. No, each one of these individual instruments is probably rated or. No, each one of these instruments is rated triple B investment grade.
- [44:15]
A
Oh, okay.
- [44:16]
B
I just.
- [44:17]
A
Again, Again.
- [44:22]
B
Yes, yes.
- [44:25]
A
So can I get people excited about what I, what I did? Because I'm going to take a different. I, I think that, I think that Dan and you and are not bullish enough. And I want to take this back to msdr. Sdr.
- [44:39]
B
Hold on, let me, let me pause. Sure. Hold on, hold on, hold on. Let me pause right there for a second. This is incredibly bullish, right? All of these instruments, these pay like 6 or 7% investment grade. And I'm talking about a re rating of the entire investment grade bond portfolio, at least everything that's susceptible to AI and backed by private credit, which in my mind, if there's a capital flight away from credit, that's what drives enormous demand in these instruments. And it may not be right away, right? Like I might be forecasting this like two or three years from now. It could happen in six months. I have no idea. The question is, when everybody leaves these instruments where, like, who buys the crap? Right? The insurance companies hold the crap right now, and the question is who buys it when they want to exit because they can't hold it for their mandates and their business literally fails. If I have to hold it, who buys it? And the answer is probably the U.S. government, right? That that's who buys the crap. If there's financial stress like in the credit markets, that's probably who buys the crap. And so if they're buying the crap, because this is like a large systemic problem also because of rating agencies, once again, if the government's buying the crap, inflation goes to the moon. Asset prices rip. Bitcoin rips. Credit quality of the digital credit instruments probably goes significantly higher. Demand for liquidity in those instruments probably goes significantly higher. And that's the bullish thesis here. This is it. The credit market, the risk in the credit market getting mispriced is the bullish thesis. For both sides of the trade, the asset and the credit instrument, there should be demand on both. That's the bullish thesis. I'm bullish enough, trust me. Like, when I, when I figured this out, I had a hard try. I had a hard time sleeping. Like, that's the bullish thesis. A little scary, but bullish. Okay, go ahead, Grain. So make people more bullish. Let's see what you got.
- [47:02]
A
So let me, let me share here. So I'll share a window. I'm amazed I got this working. So let's go to MSTR analysis. So, wow, that's actually phenomenally clear. So what I did here is I looked at the ATMs that included STRC inside of it, and there's two tables here. The only difference is one is year to date, the bottom one starting on January 5th, and the other ones from the start, but not including the IPO. So it's. It came out at $80, it had to break 100, and then it started. So the interesting part that you see looking at this, and so the last row is the same on both of them, or except for the first two in November. This is the percentage of MSTR versus strc. And what happened is it made this. Made this massive shift from 25%, it was doing 70, 70, 30, and then it went from 25 to 75% MSTR to STRC. And that's where it pick $1.18 billion and doing it. And the MSTR was a very small amount. And so this is a fundamental shift. Now from a data perspective. If we, if I go give you, for instance, let me pick a good one here. Not this one. Let me see.
- [48:27]
B
Yeah, so they had a good yield last week. Yeah. Like, what was it, a 3% yield this last week. Yeah. On the capital raise because they were relatively light on the MSTR common atm, which like, they were able to do that and maintain again, the same leverage ratio because the underlying Bitcoin was growing. So, like they've got this kind of amplification management, I think, strategy, in my opinion, going on.
- [48:51]
A
Right. And so when I look at. So these are rather small data sets. I've worked with data sets, 50, 100 million cells. So this is relatively incredibly simple to do this is the historical information. And then what I did is I wrote an article on Monday and grafted out into Q4, 2027. And people are like, well, what happens in 2030? Don't care. I want people to understand with a sense of urgency that if you get the next 18 months right, what happens after that doesn't matter. So if bitcoin goes to 3, 4, $500,000, and somebody says to me, hey, Mike, my real name says, tell me about bitcoin. I'm like, and Bitcoin's $500,000. I'll be like, I think you should go buy some stretch. I'm hold onto that for three, four months and then come back to me because you're no longer early when bitcoin gets to 500,000. And so how does. So I put this data here and you're like, well, it's a table. It's boring. How do people read this? So when I wrote the article, Let me go here, I picked a very catchy title, Strategy breaks Bitcoin. And if you scroll, I'll scroll here. Here's the same chart I just showed you. And then we have this one. And now what you see here is that what I wanted to Show Starting in Q1 of 2024, strategies buys per quarter versus the mine, Bitcoin, okay? And what happens is there's a number that I put in here so people can read it. So in the fourth quarter of 2024, Bitcoin went from 60 to 95,000. As the price of bitcoin goes up, strategy's ability to buy bitcoin goes up. Completely counterintuitive. Everybody says, oh, it's a law of big numbers. If bitcoin goes, it's a black hole, right? They're completely. It's the data shows, right? So to Q1, 2026, this is all historical information. So they were able to 5.1x the mine supply. That happened. So what does that mean? It means that 4x the mine supply, this was 200,000 is 195,000 bitcoins that they bought in one quarter. That was equal to what they did in the first three years. They bought it in one quarter. So now what happens is the only reason why this is lower in the fourth quarter of 2025 is because strategy acquired two and a quarter billion dollars in cash. And that's the only reason why the orange line is not above the blue line. But if you continue at the historical rate of 16%, that's the average of adding bitcoin quarter over quarter. This is the historical average here. It says the conservative at 16%. They get to 2.15 million. Bitcoin they will acquire in this one quarter. When it gets up to 2 million, they will acquire more than 300,000 bitcoin in one quarter. And that will be 7.7x times the amount of mined bitcoin. Now, let's be very clear. That's assuming that all the miners sell every single quarter, a hundred percent of the mine bitcoin, which is not true. And I want people to realize, let's assume strategy in one week, right? Because we've seen this before. They buy 20,000 bitcoins, right? What's the chance that 20,000 multimillionaires will wake up on a Monday and be like, oh, I'm going to buy a bitcoin this week.
- [52:21]
B
One bitcoin.
- [52:22]
A
One bitcoin for 20,000 multimillionaires in one week. How often do you think that 20,000 people wake up on a Monday and go, I'm just going to go buy this? 0. They don't. Around the world, if somebody says to me, 20,000 millionaires decide to buy. And then if somebody says, well, it did happen, I go, does it happen the week after? No, no, it doesn't. So when you look at these numbers now, what I'm trying to say is that this is before the having. And so if I. In my article that I did, and. And if you scroll down here I go, this is the reflexive 24%. And again, you know, there's this thing called stretch. I don't know if you guys heard about it. And instead of when I did my article on Monday, like in the olden days, because today's Wednesday, I said, you know what, it's kind of. I don't want to model like a 2M nav, but assume that because they're buying amplification, instead of it being 16%, what happens if it goes up by another 50%? So now the acquisition rate is 24%.
- [53:32]
B
They're acquiring 24% more Bitcoin every week, Every.
- [53:37]
A
Every quarter. Because right now, right now, the historical is 16% over. Over five years. It's already been done. The historical is already. That's already been done. That's not in dispute.
- [53:49]
B
So the question is probably diminishing, though. Like, it's. It's probably a diminishing relativity as, as. As the price goes higher.
- [53:59]
A
So, Jeff, thank you for saying that. What I wanted. This is a test. I sandbagged it. What I did Was I intentionally left the prices low. And what happens is that's the hockey stick strategy will have a very. Will have a harder time. Because when strategy goes to an OTC desk and says, Hey, I need to source 20,000 bitcoins, and there are 150,000 each, they're like, dude, you need $3 billion worth of bitcoin. And it'll be like, yeah, bro, I just raised it. And like, you know, we don't have 3 billion. We got 2 billion. And why don't you put a billion dollars and leave it in cash? At some point, the price is going to. Is going to stick, goes higher, because they cannot source the block of. Of 30,000 bitcoins in one week. And you're like, right. I mean, just. Just think about it, right? They want. Right? They want.
- [54:50]
B
Yeah, yeah. I mean, look, the. The trading desks on these things are. Are pretty crazy. Like, you. You go, you. You reach out to them and you say, I want to buy. I want to buy bitcoin. And then they're in the market buying bitcoin. They. You tell them the pace, and it comes out the other side, and you move it to custody. And you're like, oh, my God, there it is. It's like, I think you're right. I mean, 20,000 Bitcoin, I need. I need to go buy a billion dollars of this stuff. I mean, the thing is, it's pretty liquid, right? It's. It's trading, I don't know, 30 to 60 to $100 billion a day. So, like, it's moving. It's clearly moving. And there's a. There's a point. Like, I. I personally think the bottom's in. I think the bottom's in this instrument.
- [55:36]
D
Bottoms in.
- [55:37]
B
The bottoms in. Like, this instrument, it's got product market fit, right? Like, the interest in this instrument. And I mean, look, we put $50 million a stretch on our balance sheet because we see it as a moderate duration capital instrument. I mean, it completely changes how you can think about duration, liability on a balance sheet.
- [56:03]
A
Yeah. So, Jeff, let me just wrap up on this, and I'll be done with
- [56:06]
B
my section, Modern Capital.
- [56:08]
A
Yeah, I'll wrap up on this. So once you have the data, then you could resort it. So I want people to realize something. We got this question that's been coming around for the past five years or since 2022. What happens to strategy in a bear market? I'm going to give everybody a heads up. We're currently in a bear market. Yeah, My definition of a bear market in any asset is when it's down 50% from its all time high on the index. You're in a bear market when it's down 20%. But Bitcoin World, if it's down 50%, you're in a bear market. What I did was I sorted the data. This is in linear. You got to love how it goes off the charts. It's a little, little tweak I do there when I create these charts. But the number two quarter for acquiring bitcoin, and it's not over yet, is Q1, 2026 at 88,568 bitcoins. So the number two quarter for them buying bitcoin is not when bitcoin was high in Q1 of 2025 or Q3 of 2025. Right. That's when Bitcoin was, sorry, in Q3 of 2024, they only acquired 25,900.
- [57:22]
B
Right.
- [57:23]
A
So what I'm trying to say is that in the middle of a bear market, bitcoin is down 45, 50% from its all time high. They have the second best quarter ever for acquiring bitcoin and in the bull market, the record is double that number. So they're the buyer of last resort and they're the buyer at the top. I want to quote, you know, Saylor, you know, and Laura Shin said, you know, at some point people want to sell this asset in order to, you know, you know, or she said something to the fact, you know, you're going to keep on buying. Sailor goes, yeah, Laura, I'm going to keep on buying the top forever. This just shows him strategy's ability to buy is when the price goes up because that's when the M Nav goes positive. Completely counterintuitive. And so if anybody comes to me and says, you know, grain, I don't like what you're saying, I'm going to say to you, you know what, I get it. Do you have any math or any historical data or anything to back up your opinion? And if they say no, no, I don't. I'm like, that's cool. Because you know what, maybe I'm just going to.
- [58:27]
D
No, I think you're right, Grain. I think, and I think this chart is like massively important because that Q126 number is like huge, right? I think for a couple reasons. One, we're seeing positive M Navs right now with strategy at the bottom of a bear market, which I think is remarkable. Jeff, like, we could talk about this in a second, I think, but you know, strategy was trading at a discount during the last bear market aggressively because of the capital structure that was implemented. Right. There was secured notes on the balance sheet, and ultimately, you know, one of their lenders or. Yeah, one of their. We'll talk about in a second. But there's secure notes in the balance sheet. There was convertible notes in the balance sheet, all hindering the credit quality of the equity during 25. What strategy got right, what they built during the entire year was, okay, let's create instruments that insulate us from the credit risk of a bitcoin drawdown, okay? Now their equity is trading materially better than it did last bear market, and that's enabled them to acquire such a significant portion of their bitcoin stack during a bitcoin drawdown.
- [59:25]
B
Right?
- [59:25]
D
Because there aren't actually systemic risks strategy like there were in 2020. Not that there were massively systemic risks, but it was a lot riskier than it is now. So I think that's really the interesting point here.
- [59:38]
C
And Mike, I thought I was bullish enough, but you might be right. And are you basically saying because we used to do the catalysts, right? We had the whole list of catalysts, and the only one that we didn't get was S and P500. But it looks like we're able to start stacking catalysts again. And you're basically saying you've got this short window of time to get in before the hockey stick. Is that what I'm hearing?
- [59:59]
A
Yeah. And my view is, I think this time is different. And they're like, do you have the data to back it up? I'm like, yeah, I have lots of data to back. And I make these great charts. The Sharpe ratio, again, off the charts here, right? You know, Strategy, Sharpe ratio, 5.37.
- [60:17]
B
Right.
- [60:17]
A
And. And these are the other ones. The bank of America, the KKR, the 4. And the other ones are down here. And it's like, okay, well, I. I don't see how we can have all these positive indicators. I'm trying to find the one that showed, oh, this one. This is the one would cause me to change my mind. In this one, you see the mind Bitcoin and then. And percent of supply. This was the first slide that I. This, I did this like in the old days. This was done on which day?
- [60:47]
B
Yesterday.
- [60:49]
A
Yesterday, March 17th. Yeah, I was yesterday. Okay, Right. So I made this chart and I'm looking at it and I'm thinking, huh, this one's cool. Cause it has the halving and from start to finish, and here's the 2022 bear market right here in the bottom. And strategy could barely do any of these ATMs. But now when you look at it, given that we're in a bear market, I mean, I guess I should roll, I should overlay the price of bitcoin over this. But I just took off the old stuff. It's not that I didn't do the calculation. I did do it, and now and then I added because they did percentages. And I think better people better with multiples than percentages. So. So then I looked at it right now. And again, the only reason why this orange line here is lower than the blue line is, is because they acquired $2.25 billion in cash. Otherwise, strategy is sopping up way more than the mined bitcoin. And we know that 100% of the mined bitcoin is not being market sold or OTC sold every quarter. If it is, somebody can correct me. And so when I look at this, I think the inflection point hits basically in the next two quarters. And the biggest catalyst is a narrative that strategy acquires a million bitcoins. And there's going to be countdown parties. I'm going to predict the future. There's going to be a website or three websites with a countdown to 1 million bitcoins. It'll start at 800,000 and everybody be what's. And we'll what's the date? It's like we had the date of the having. Now we're going to have the date when strategy hits a million bitcoins. And what I think is going to happen, everything that you said, Jeff, about your thesis about the ratings, that's all correct. What I think is going to happen is Stretch is going to get to 10, 15, $20 billion, right? It'll probably get to Stretch if it goes about right. There's no reason why stretch can't break 10 to $12 billion in total by the end of this year. Pull a solid triple. They'll buy some MSTR, they'll raise more than $25 billion this year. They raised $23 billion last year. That's the conservative case. And if they hit the million bitcoins, the positive narrative kicks in. We get some good geopolitical stuff. I think we're going to hockey stick up. And people are going to be like, what was the warning that this was going to happen? I'm like, well, I had to make the spreadsheet and my advantage with AI, it's not that I'm super smart. My advantage is this, is that I am capable of putting the rows and columns in into a data set like this. And then when I interact with AI, it's bounded because it knows exactly how I think. When you talk to an AI, it's llc, it learns you. Now if you're not. If you don't use the words convexity, liquidity, reflexivity correctly to an LLM, it infers it. But when I make the Excel spreadsheet, there's no inference. It's automatically able to interpret what I did and determine if it's mathematically correct. So my output becomes how do I make the cool looking chart? It's no longer so. So that's why my output with AI is better. It's not because I'm smarter, it's because I make the spreadsheet first, the bound. It's structured data. Go ahead, Jeff.
- [64:06]
B
Garbage in, garbage out, garbage in, garbage out.
- [64:08]
A
And that's why I think, Jeff, you and Dan. And when you make these spreadsheets and put it in the output you guys get, it's like, oh my God, I can't sleep at night.
- [64:19]
B
Yeah, it's the, the, the AI tools feel like a cheat code. Like I feel like I'm playing a video game. And it's not fair. It, it's pretty incredible the how powerful these are. But I think you hit on a good point there. It's like the novelty every, everybody interacting with every AI LLM that conversation is novel, right. You might not think it is. You might think that everybody else is thinking about the same, thinking about things the same way you are, but really it's novel. And I think that's why we're seeing this kind of explosion of articles written by AI, which I'm kind of here for, honestly. There's been a lot of people saying AI slop. And yeah, there's a lot of AI slop out there, but these advanced models are so unique. You can, you can write a piece of material that's the result of your thinking and your brain. And it's, it's made better with AI, it's made more readable with AI, but like it's still novel. Like you decided to put it somewhere. And I think people are just kind of like blown away at almost how easy it is. Right. I'm blown away by how easy it is every single day. So. Totally. But grain, back to this. If I were to summarize your entire analysis. They have, they have multiple instruments now in the past. Right, right. In the past they had cat, they, they were Raising capital when the price is going up. But when the price went down, it was tough to raise capital. Like raising capital in the common stock when the price went down is difficult. But now they've got an instrument that they can raise capital. That's a function of the credit quality. It's a function of how much money that they have on the balance sheet. Hey, that's like, that's completely different.
- [66:08]
A
Jeff, I got a great. Hey Dan, I got a great idea. You should pitch strategy that they should invent a pref that has a built in conversion option to the number of shares. When it does a 10x. When that pref exists, let me know because I think that people are gonna love that one. And, and that way they have like three scenarios like mstr. Yeah. And that would be strike. And I think that's where we get to, you know, it's kind of like the three little bears, you know, mama, you know, dad, mama and baby, you know.
- [66:41]
B
Well, the fascinating. And Dan, you probably, you probably really like strike right now. And I kind of do as well. I think it's interesting like you think about again, capital construction like strike is less liquid than stretch. There's less interest in it right now than stretch, but it's still more liquid than a lot of other things. So there's still some liquidity there and it's still a very interesting product. So when you think about again, capital construction, you want your least liquid instruments closest to your liabilities and you want to go further out the risk curve for your longer data liabilities. Again, this is like capital construction theory. And so if you've got like moderate duration liabilities, you may want to hold, I don't know, stretch because it's the most liquid and it's a high yield. But as you go further out the risk curve, obviously you've got bitcoin at the very end. It's like, never sell my bitcoin. It's so deep into my capital structure, I hope I never have to touch it. Like that's, that's the concept, right. But I could put things in front of it to protect it so I never have to touch it. This is again, insurance companies think this way. But so then you start to think about all the press, right? Like you know, our instruments a little bit further out on the yield, on the yield curve relative to stretch. So you could think about those next to each other and then you could think about strike and stride and then go a little bit further out the yield curve for additional alpha as a function of whatever Your liability profile is in the future. And that's like, that's a modern, that's a modern balance sheet. I, I, I think the future of constructing a corporate balance sheet, that's what it looks like. You have digital credit instruments on your balance sheet because they're relatively more liquid than other moderate duration instruments that you can have in your balance sheet. You think about a company, most companies, when they need money, they need money within 12 to 18 months. Most companies, insurance companies I think are an anomaly, right? Most like, a lot of them have longer tail, but most companies need money for between one to 18 months. If you need capital between one to 18 months, there's just not a great instrument aside from T bills where you can hold moderate duration capital. And these things start to, your brain starts to think a little bit differently about holding it for moderate duration capital. Just think back to when I was trying to build, build some capital to buy a house. I had like a savings account that I was like, ah man, I don't really want to put it in the S&P 500 because if there's volatility there, I want to be able to like know I can afford a certain type of house and like put 20% down. And like I, I was desperate for a vehicle that gave me higher yield than putting it in a savings account and I just couldn't find it. And like here we are today. And I think these products offer a really good, very interesting alternative. So that's, that's pretty much all I've got, I guess building on the press. Let's talk about that. Right. And so that's, that's one, that's one topic maybe. Over to you, Soleil.
- [69:56]
C
Yeah, so I was, I finally got around to reading Jeff Boost Price of Tomorrow and he was quoting Jeff Bezos. And Bezos said that people always ask him what changes are coming in the next 10 years. And he said the more important question is what's not going to change? Because you can build a business strategy around things that are stable in time. And I was like, holy crap. I immediately just, you know, okay, that's Bitcoin. And you know, not when you think about its volatility in price necessarily, but its permanence. Like it'll be here long after I'm dead. So you know, it's the, it's what makes diamond handling even possible in the first place. So you know, timing is very important and if you're too early or too late with a business, it's, it's pretty much lethal. But when You've stacked sats. You can just wait for the bull market. Like it's, it's something that you can build upon and an entire network can grow from it.
- [70:53]
B
Totally.
- [70:54]
D
No, I think you're right. I think you're right. The durability of businesses is coming to question and I don't, still don't understand why the S p isn't down 50 here. But you know, we're seeing with SAS stocks and uncertain cash flows. And I, I think moving forward that's, that's going to be a bigger and bigger theme and I think strategy will be the clear winner. Winner there.
- [71:15]
B
Yeah.
- [71:17]
C
What's another comparison would be like to Amazon. And so I know people say it stretches the iPhone moment, but Booth also mentioned in that book that Sears had the original basically mail order catalog, but they invested in their brick and mortar stores. And then when Amazon digitalized the mail order, they basically put Sears out of business. And so Amazon sells its products direct to customers with the push of a button. And Sailor is selling stretch direct to customers in the market instead of hiring, you know, investment bankers and hedge funds to arb the damn things. And they can just push the button and sell the fixed income anytime they want. And to your point earlier, Dan, about the, you know, being able to adjust it with the, with the dividend rate, it's like they know that they will never pay more than a quarter of a percent over the, like the, the bare minimum, right. They all they have to do is say, okay, how do we price this product? Okay, well the market is going to tell me. I just raise it a quarter of a percent and it's at par. Like there's, you're not going to be like overpaying from distributors. And how much is it going to cost to get materials for my widget? It's, it's like dematerialized access to capital.
- [72:40]
D
It's an insane unlock. Yeah, you're totally right.
- [72:43]
B
The ATM is fascinating evolution of this instrument. Like it's scalable, they don't need any other people. Right. The same capital activity can scale with no additional people added to the capital team, which is mind blowing. Right? Like you think about, I mean, strategy's got what, I don't know, 1500 employees, their capital teams, what, 20 maybe. And really the people making the decisions, there's like, there's like four of them, right? There's like four or five people that are actually, you know, doing the day to day stuff. And that team's been like, I think relatively the same for the last Four years and relatively unchanged. So, yeah, it's pretty mind blowing. It can scale drastically without much change in people.
- [73:40]
C
Yeah. And one last analogy for Amazon, right? So Amazon's pretty good with their return policy, but you can actually use Stretch for as long as you want and return it for a full refund. If it's trading at par, you get exactly what you paid for it back. They'll just take it back off your hands and you can hold it how
- [74:02]
B
much dividends you want and get it, and get a full, and get a full refund.
- [74:07]
C
Used merchandise, you get. Full. Full refund.
- [74:09]
B
Yeah, you hot. You harness the thing that you wanted, which is the income, you can return it for a full refund. Yeah, I mean, obviously there's volatility in, in that, but like what we were talking about earlier, there's arbitrage opportunities for the, for the price when it goes down because you know that there's, you know, pressure at any given point at different points in time during the month to push it back higher. Yeah, it'll be fascinating to see like, how, how lumpy this stuff is too. Like the what, what's Stretch finished the day at what, like 99, 75 or something like that? 9,957. Okay, so it's down, it's down 40, you know, 43 cents.
- [75:05]
D
Yeah, people were kind of freaking out about the price dropping a little bit, which is interesting because, like, theoretically it should drop by the dividend rate on the ex dividend date and it didn't. So, like, clearly there's more buyers and sellers still in the market even after the ex dividend date. So hopefully that lets people sleep easy at night.
- [75:23]
C
Yeah, I was thinking about that too, because I was expecting that to happen. But then when I really started thinking about it, there's no reason for Stretch's price to drop after the ex dividend date because usually when you're investing in a dividend stock, they're paying that dividend from the underlying from that company itself, but they're paying the dividend not from Stretch, but they're paying the dividend from strategy. So what would almost make more sense for strategy to dip on the ex dividend date because they're the ones that are losing the money. There's no reason for Stretch to dip at all in my mind. So I think this, you know, even the expectation of a dip may go away over some period of time.
- [76:06]
B
Let me. The computer, think about the computer, right? The computer comes in. No human, got no brain. You tell it, hey, buy it at 100. If you can, if you can hold it on the ex dividend date or if you could get out of it after you qualify for the dividend for less than the dividend, do it. It's like. Yes, that's the simple trigger. Buy it. If you can get out of it for less than the delta, you can have a non brain computer run that calculation.
- [76:40]
D
Yeah. So theoretically people should be. Because there's a time cost of money. I think you're right Soleil and I agree with what you're saying. But there's also a time value of money. So like theoretically I still think people are going to be selling on the ex divide.
- [76:55]
C
Yeah, that makes, it makes sense. And I know people personally that are, you know, dividend hopping. They're, they're collecting that one and then a rotating even into SATA and back and forth and kind of double dip in there.
- [77:09]
B
Yeah. The trading dynamics are really fascinating but the inverse is also true. Right. You can think as you approach the record date, there's also pressure coming in. So again, if you're thinking about being a capital manager and how do I want to. If I bought it at Parenthood, at what, like should I sell it? In order to sell it at par in the future, I probably need to focus on the week of the record date when there's going to be the most demand as people and computers are coming in to get the interest rate to get out at par as well. Like there's probably like a one month window that you got to think I'm not going to get the, I may not get the dividend this week because I may have to hold it and wait for parents right. At the record date in order to get my primary capital back out. So yeah, I think the methodology and the gamesmanship around it, the game theory is it's evolving. Right. This is a. What is this? Not even nine months old. Not even nine months old. But I agree with you. I think the concept of thinking about the price of strategy going down relative to the dividend. But again, jacking $90 million on a 50 billion dollar stock like when bitcoin's moving as well. That's probably. Yeah.
- [78:30]
C
And even tying back in, into what you were saying earlier Mike about the incoming hockey stick. So the next having is 2028.
- [78:40]
B
Yeah.
- [78:40]
C
Right. And stretch will be three years seasoned in 2028 as well. That's an interesting coincidence. I think we might have to put those catalysts on our list.
- [78:53]
A
You see, I think that three years seasoned. Look, I've been in this for eight and a half years. So what I'm saying is when eventually you're going to pick a term, people are like, oh, I'm going to hold bitcoin. Let's say you're 30 years old. You're going to hold it for 30 years. I'm not even 60 yet and I'm old. Right. And so what I'm trying to tell you to hold something for 30 years to wait to cash out. Look, if you don't have much, I totally get it. And you're only 30 years old. Totally get it. That, that's a great idea. But my time horizon is again, if we hit this hockey stick and somebody's going to say, you know, strategy. Let's say my projection is correct and there is a hockey stick. Bitcoin re rates over the course of three weeks. Sorry, three weeks, three months, and it doubles. Let's say it gets to 150 and strategy breaks a million Bitcoin and they're at 1.2 million Bitcoin, and you're going into a positive 20, 27 year. Then people are like, oh, is it gonna. And, and, and, and then bitcoin runs up to 300,000 over the course of time. Three months. And they say, oh, when's it going to, when's it going to dip back down again? You know, what about the have? No, you're going to be closer to the having, not farther away. Right. We're two years out from the having. And so what's going to happen is in one more year from now, I'm trying to impart to people this, a sense of urgency. Again, if somebody comes to me and Bitcoin's 3 to $500,000 and they're like, oh, tell me about bitcoin. Should I buy it now? And it's $500,000. And strategy has 3 million bitcoins or two and a half million bitcoins. And, and they've no. And it's been around for 18 or 19 years. What am I going to say? I'm not going to say you're early. That's why I'm trying to say this right now. When somebody asked me about bitcoin, is there anything I could say to change your mind about bitcoin? No. And I'm like, okay, cool, let's go talk about cars or motorcycles or dinner or whatever. It's not going to be about bitcoin. So I want that sense of urgency. And I've been saying that on people, on spaces is, hey, we're so we're early because we haven't hit the inflection point. After the inflection point, there's no longer. Well, it's at a million. It's going to go to 10 million. When's that going to happen? I don't know. Let's get the next 18 months. Right. And that's why my projections only go out to Q4, 20, 27. Because with the press and Jeff, you know this. And same thing with Dan, when you model things, we don't have enough data points on any of the prefs right, to say consistently what's going to happen. I've got a total of 9 prep strc ATMs now when they reset and they say, hey, we're going to do $21 billion worth of STRC, I have an idea what the Runway is going to be. But I can tell you over the next, whatever the next two, three months or by the end of the, by June, after the first two full quarters, I will have a really good idea what happens. But by then we could be at 900,000 bitcoins. Think about it. If we're at 760,000 bitcoins right now, let's assume he acquires another 11,000, hits 100,000 for the quarter, and then he acquires another 10%. It's going to put him at 860,000 bitcoins. He's line of sight at eight hundred and sixty. One quarter away from a million bitcoins through the summer, and that ends in September. People are going to be like, oh, we're still early. Well, this dude acquired him, started five and a half years ago and got a million bitcoins. I want people to realize right now, if it's September and strategy has a million bitcoins, the next we're going to have. We're going to have countdown. I'm telling you right now. I know. I'll predict the future. We're going to have a countdown clock just like we did for triple Q inclusion. S&P 500. We're going to have a countdown. What data strategy hit a million bitcoins.
- [83:06]
B
Dan, if you'd like to make a question. That's a good question. No. November. November.
- [83:11]
A
And so everybody's going to be guessing on what there's probably going to be market, market, you know, things on this. And there'll be countdown timers for when the strategy. That's the narrative. The narrative is not s, P500 inclusion.
- [83:23]
B
I mean, it will be there, right? If it's. It will come. That will Right. Like if they're, if they're accumulating a ton of bitcoin down here and it just goes back above what, I don't know, 94, 000. You're talking about like enormous gains on the balance sheet that have never been seen before. Like if, if they accumulate a million Bitcoin at $250,000, that's $250 billion of capital.
- [83:49]
A
And that's assuming a 1M NAV.
- [83:52]
B
Yeah, I'm just talking capital. I'm not even talking market cap.
- [83:55]
A
Right, you're just talking, not even talking market capital.
- [83:56]
B
We're just talking capital. Like what? Liquid capital? Yeah, yeah, right. Okay. Who's got the largest liquid treasury in the planet? It's Berkshire. They've got $300 billion in cash. Like you're pushing up against Berkshire. Berkshire is a what, a trillion dollar company? 900 billion dollar company right now at the moment.
- [84:15]
A
Right.
- [84:16]
B
300 billion of that is in cash. So it's like a third of their valuation is the cash that they hold on the balance sheet.
- [84:22]
A
So Jeff, how long did it take Berkshire to get to that number? How many years? I don't know.
- [84:27]
B
40, 60, 40, 50.
- [84:30]
A
60 years. And strategy will have done it in six. It'll be six years this August. So I think. You know what, wait if Saylor's watching this. Hey, Michael Saylor, I'm going to give you an idea. I think that you should. I did not get invited to your hundred thousand dollar bitcoin party a year and a half ago. I would. Look, I would appreciate if you would have Strategy accumulates a million bitcoins and wherever you have it, I would like to get invited to that. That's my idea. I would like to go to that party with a bunch of other strategy folks and that's a great idea. I think it's a great idea for you to have a party and tell me what you want me to bring and I'll bring it with me. True north party at the Strategy Million bitcoin party. What event is coming up in September where we could have a party for the million bitcoins?
- [85:25]
B
Is there something in September?
- [85:27]
A
I don't know.
- [85:28]
B
I don't know. We're pretty focused on all of these tradfi conferences. So we're going down the list of like, okay, what are all these tradfi conferences so lost on like non trad conferences?
- [85:41]
A
Yeah. Let me give you a crazy idea. You know, strategy could be a 1 1/2 million bitcoins by the next strategy world. I could Tell you can they bring
- [85:51]
C
the million bitcoin to the party? I want to take selfies with it. Go ahead, Jeff.
- [85:56]
B
Sorry, I'm just going to take the under on a million and a half by next strategy world.
- [86:00]
A
Oh, let me, I'll pull up my chart and tell you what day when they hit. When they hit a million and a half on the price.
- [86:07]
B
Price has to go vertical.
- [86:09]
D
Yeah, I think price of bitcoin has to give it will the price under
- [86:15]
C
on a million and a half. You said it.
- [86:17]
A
It's. I, I have. It goes to one and a half million in Q2, 20, 27. See, guys, I, I, you see how we changed the shifted here? That's the hockey stick. That's when the price goes right. Look, I'm, I want to tell you
- [86:29]
B
guys, like, I can't. You can't, you can't be buying, you can't be buying $50 billion of Bitcoin. And like, it's just right.
- [86:39]
A
That's what I'm saying. I would rather that the price goes vertical than he gets 3 million bitcoin. Now, sailor might have a different idea, but my view is, I think that you guys are right, that this hockey stick is going to happen and I would prefer the price to go vertical. And I think it's going to come somewhere around, I don't know, 1.1, one and a quarter million Bitcoin. If we have, if the election isn't crazy. If we don't bomb another country. Don't fire off a nuke. Don't have a worldwide pandemic.
- [87:06]
B
He's had a crude.
- [87:09]
A
Don't get the evergreen caught sideways in the Suez Canal. Don't have the straight or Hormuz closed off. Don't have oil over $100 a barrel. I don't think we're going to get a reduced interest rate. But anyway, people can wish for that. But I'm just trying to say, as long as no real disasters happen, this inflection point is going to happen. And the only question is when, not if. And I would like to be at Strategy World next year and the stock price is north of $1,000. You guys can quote me on that.
- [87:42]
B
It's hard not to be bullish here. I'm all bowled up. I feel like the bottom's in. I mean, obviously a lot of geopolitical tension. We got to work our way through here. But yeah, it's a fascinating, fascinating moment in time. We're going to look back at this, right? We're at the birth of digital credit like, 30 years from now, we're going to look back at this and be like, holy crap, we were there. This fundamentally changed how society gathered around a different form of capital.
- [88:17]
D
I agree with that.
- [88:20]
B
Let's be real in this tiny time period. But the reality is capital moves on geological time. Right.
- [88:30]
A
So 20 years from now, Dan, Hillary will not even be 50. You're gonna barely be 50, right? No.
- [88:39]
B
Right? Yeah.
- [88:40]
A
Yeah. And you guys are gonna be like, hey, what? Under that old guy grain back then? You're like, oh, he's still alive. He just drives around in cars, but he gave up motorcycles. And you're like, really? Yeah, that. Does he show up anymore? Nah, we just kind of call him on the phone whenever, and he tells us to call him immediately because he wants to run some idea past me. And. And then he hangs up on you. Right. And I think that's how this plays out. This is going to be a club. It's going to be just like Berkshire Hathaway. There's British huddle said this. Some guys don't like them. You know what? And Fred Krueger said, this sailor's got 5 million followers. That is the whole universe right now of people that are interested in bitcoin. There's only 5 million people in the whole world that maybe give a crap about it, that have an understanding of it. And somebody tells me, no, there's more. No, there isn't. It's a small subset of people, man.
- [89:33]
B
I. I would say probably a quarter of those might be bots.
- [89:36]
A
I don't know.
- [89:37]
B
Maybe. Maybe 10.
- [89:38]
A
Right? It's like, how many lost bitcoins are there?
- [89:41]
B
Another quarter. Probably hate him, you know, but they follow him because, like, he's on all the podcasts. And then the people that. Then there's probably a quarter that are like, we're hardcore bitcoiners. But you got to follow what Michael Saylor does. All right, so then you've got maybe 25% that are interested in MSTR. And of the 25% that are interested in MSTR, how many understand the prep model? It's probably a fraction of that. And then you go even further. It's rare air up here.
- [90:11]
A
Yeah. So I want to tell everybody that's listening, how many people on. On it right now?
- [90:15]
B
Oh, I have no idea. We got this new stream. I can't tell.
- [90:18]
A
Yeah, let's go take a look at the new stream. And so I want to say we have 13,000 views. I want to tell everybody that that's watched this. You're in the most exclusive club in the whole world. Right. And you could say, maybe there's the Nvidia Club or the Amazon Club or people that buy those stocks. This one's the most exclusive club in the world. It's the smallest number. It's the most volatile stock, mstr, based on Bitcoin. There's this thing called stretch. You're in that group. If you go talk to your friends, family, whatever, they're going to think you're nuts and just say, look, we watch these guys, they do calculations, they figure this stuff out. We don't know if they're right. But if they are right, and they seem to have been pretty right so far, you know, this. This club is going to just be the club you want to be in. And. And I just want to say that, you know, everybody listening, it's it. Unless all the math is wrong. And I was talking about with somebody else this morning. I said, is it possible we're delusional? And he's like, unlikely. The only question is time. Is it? Is it?
- [91:28]
D
Yeah.
- [91:29]
A
Six
- [91:31]
B
months.
- [91:32]
A
Yeah. And I don't think this is. And I'll tell you right now, and people are like, well, what happens if Bitcoin's $25,000? I was on a space. Well, what happens If Bitcoin is $25,000 in Q4, 2027, and my projection is wrong? I said, I'm not going to be on the space anymore. I know I already said it once in this call, but If Bitcoin's at $25,000 in Q4, 2027, you don't have to listen to my scratchy voice.
- [91:57]
B
Yeah. The hard thing is, is, like, the math. The math is hard to, you know, refute. Like, it's all backed by math. Bitcoin's backed by math. Like, it's bound in physics. And then you've got. Okay, now I've got a credit instrument that's bound in physics. And now you've also got the SEC coming out and saying, oh, yeah, you know how that quarterly reporting that you rely on, we're actually thinking about removing the quarterly reporting required. And we're actually going to go less. Like you need. You need to report less maybe twice a year. And meanwhile, you have this other. You've got strategy. And our company, we're. We're filing like, we're filing information all the time. And it. I mean, strategy is doing it every single week. So you have up to date information. It's like you wanted to know what it is. Here you go. Like, like that is that, that breeds the liquidity, right? You are able to calculate information, you're able to absorb information in very short order. And that's like, if you, if you remove like some reporting requirements, like these illiquid instruments are just going to get even more illiquid. You just have no idea what's happening. And you have no idea yet. You may have to like reprice your entire portfolio. Like what, like twice a year? You're like, I can't even wrap my head around like the uncertainty element in another three months of like a world that's changing every single week. Right. Grant, you said earlier today, it's like, oh, that those, the old days. That was on Monday.
- [93:26]
A
Keep on saying to Pete, you know, yeah, look, I don't, I know if Strategy or pretty much any bitcoin treasury company will have positive EPS on any given quarter. Why do I know that? Because I know the ending price of Bitcoin in the last quarter, which I believe was 87,000, that started this quarter. So if the price of bitcoin is above 87,000, then strategy is going to have positive EPS and you just multiply out the difference by the number of bitcoin that they hold. So we already know this. And so Strategy is able to report their earnings, right, within like a week after every quarter ends, the closing the books for them has become incredibly easy. So those are the updates. The other positive news happened was that Bitcoin by the CFTC and the SEC did a joint announcement that they decided to work together, which is pretty ridiculous, right, that it's taken this long to do this and a whole bunch of securities were labeled to be a commodity. Now I will put a dig on this. How XRP could be labeled a commodity is beyond me. But the fact that bitcoin is a commodity and that's both jointly said by the CFTC and the sec, for me that's good enough. And so that was a big event and it had a whole listing of all these other cryptos that were labeled commodities. So that was a big deal. I think that got lost in the news. And the other thing was STRC now has two agents that can process the ATMs or more than two agents. So I think that the market makers right now on STRC are going full bore. And I think that, you know, and I've said this on a bunch, they
- [95:06]
B
have somebody that could go after hours and, and pre market hours, which is just like, I mean that's a lot of, that's a lot of trading and you can, you can be on the. Yeah, you can be on the bid. Yeah.
- [95:17]
A
Pre market and I think we said this last week, but I keep on rethinking about what Saylor said when we saw him down in Las Vegas. And now that I think about it, he has to have multiple large buyers that are buying STRC again. It's not all of a sudden a bunch of millionaires wake up and they go oh, I'm going to go buy a million dollars worth of STRC or $100,000 worth of STRC today. It's no. Their institutions are buying this to put this into these large pools of capital. So I can't get any more bullish. I'm going to wrap up now. You guys could stay on. But I just wanted to say, look, I appreciate everything that we've done. Everybody that's listening, I'm going to keep on posting and talking about this. Reach out with any questions and a part of this group. Congratulations guys. Jeff, the new platform is great. To the team that put this together. Congratulations.
- [96:06]
B
Yeah, we've got a lot of energy put into the behind the scenes in order to get this to where it is today. Yeah, it's not, it's not easy. We've got a whole production crew and we've been working pretty hard on it. So a lot to come.
- [96:18]
A
I appreciate that. Take care guys. Have a good night. Yep.
- [96:22]
C
Night Mike.
- [96:22]
B
Later Green. I will go. Yeah, I guess final thoughts and maybe I will, I will start with my last piece of math because grain brought the earnings up which I think is fascinating. Right. The just say the quarter ended here today, March 18th. It's obviously we got 12 days left and the price of Bitcoin is 71,000. If Bitcoin goes back up to all time highs, 126,000 in Q2. Let's just say it closes Q2 at 126,000. Complete speculation. That delta that'd be $54,000 difference in the price of Bitcoin multiplied by 761,000 Bitcoin which is how many bitcoin that strategy holds right now. That would be a 41 billion dollar quarter positive earnings like that, that hits. That hits headlines right? Like obviously they've had some loss but it's just like it is volatility like that. The earnings reports even if you have losses and gains like that is volatility in and of itself as well. So it'll just be fascinating to see how this continues to evolve. I mean credit quality, it looks really good here. Balance sheet looks healthy.
- [97:30]
D
I. I'm pulled up.
- [97:31]
B
I've been selling a billion dollars a week when the market's on. On strc. That's fascinating. They'll pass it over to you. Soleil. Final thoughts. What are you thinking about?
- [97:41]
C
Yeah, so before I do my final thought, I'll ask a. A question real quick. So I'll. I'll ask you. Jeff, I. I feel like you probably sat in the front row in math class. So let me ask you this. If you wanted to dig a hole in the yard to plant flowers, is it faster to do that with your bare hands or with a shovel?
- [98:00]
B
Shovel. Absolutely.
- [98:02]
C
That's your final answer. Okay. Wrong. It's a trick question. You're born butt ass naked, right? All you have is your bare hands. If you want a shovel, you have to go and make one with your bare hands, which means you got to go and fashion a stick. You got to learn blacksmithing to make the end of the shovel. You got to connect them together. By then, I've already made like 200 holes in the ground with my bare hands, right? So the reason I'm bringing this up is because of that question that was asked of Sailor at the Q and A, and it was like, what about this stuff that you're doing that has negative BPs, right? Negative Bitcoin per share. And so that's kind of the answer, right? The, the creating the shovel is negative bps, but once you have the shovel, you're going to be digging more quickly, right? And you're going to catch up and surpass the person that's digging with their hands. And that was basically his answer. It was like, look, we're going to take some actions that will have negative BPS consequences in the short term, but in the long term, it's going to improve the credit quality for Stretch and the other preferreds, and we're going to be able to buy more bitcoin later. So I think that kind of explains it pretty well. And hopefully the negative BPS questions can they can stop with that nonsense?
- [99:20]
B
It's, it's all about the credit quality. Like, what is the value of mstr? The value of MSTR is a function of the interest in the credit product, right? Like, to your, to your point, like, they. The credit quality is the. Is the shovel. Like, you build the credit quality in the. You build the credit quality in the balance sheet, and the more, the more you can dig. If the credit quality is improved, the more you can dig. And I think that's also why we see them kind of like scale the balance sheet, when they are selling the instrument as well that they can, the credit quality improves. They're getting the capital in the door on strc. They're going to buy Bitcoin with it. They're scaling, they're selling, they have the ability to sell MSTR on the ATM as well. And they are putting that capital on the balance sheet that improves, that keeps the amplification relatively similar and that allows them to kind of continue to scale. That, that improves the liquidity. The more shares that are outstanding on STRC improves the liquidity profile of those, honestly, both, it improves the liquidity profile of both MSTR and strc. So they're very symbiotic, they work together and they kind of need each other.
- [100:29]
C
But you got to remember that the cost of doing business includes creating the tools to do your job. And I learned that in Saifuddin. His, he's got a YouTube series, Principles of Economics. So check that out. It's never too, never too late to learn a little something.
- [100:46]
B
I like that. Yeah, you got to create the tools. And the tool in this instance is credit. Is credit.
- [100:53]
A
Right.
- [100:54]
B
The tool is credit quality.
- [100:56]
C
Exactly.
- [100:56]
B
Got to create the tool. Dan, over to you. Final thoughts.
- [101:02]
D
Yeah, I think there's a big buyer on the other side of Stretch that we're not seeing. And I think ultimately it's going to be a real unlock for people looking for short term money and excited about taking on leverage. And the interesting thing about leverage, and I keep talking about this is like, what is M2 money supply or just paper money? It is in fact leverage.
- [101:24]
B
Right.
- [101:24]
D
Because we live in a fractional reserve banking system. So all paper money is essentially created off reserves that don't back one to one. The paper assets that are issued in the form of numbers on a bank, in a bank account. So I think the ultimate fate of Stretch is this like this crazy carry trade where borrowed money is invested into STRC in kind of a bottomless fashion via institutions, banks, hedge funds with access to institutional capital, et cetera, et cetera, that just, you know, water runs downhill and ultimately low yield will meet high yield, especially when that low yield is given out for free in the form of US dollars. So I think it's a big idea.
- [102:08]
B
Yeah, we're, we're on the verge of the biggest idea in all of finance. Right. Like the world is changing very fast. Kind of leads me to my final thought. And my final thought is the US debt just passed $39 trillion. I think five years ago it was 25 trillion. That just continues to expand very rapidly. Debt to GDP continues to rise. Nothing stops the strain. I think the world is changing very quickly. We're seeing it with AI. There is disruption on the horizon, not just in the private credit market, but I would also keep an eye on the public credit market. The rating agency aspect and the fragility of the bonds in the public domain that are right on the fringe, I think is where a lot of the crux of a credit problem in the market will happen. So I keep an eye on just investment grade corporate credit that's triple B rated and subject to AI disruption. I think that may result in significant capital reconstruction within the entire market. And I think that capital is going to be looking for a home, the future. So there's a lot there. It's a, it's a little bit spine tingly when you start to piece it all together, but it's. Let's keep an eye on it. Cool. All right, well, thank you everybody for joining episode 59 of True North. And we will, we will see you next week. Big shout out to the entire Strive team, everybody that's working on behind the scenes. We've, we've got some edits to do and we'll, we'll get back to the grind. We'll see you next week.
- [103:47]
C
Yeah, they did a great job. Good night, everybody.