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- [00:01]
A
Let's start with the real first story, which is Strategy sells bitcoin again, this time in size. So strategy sold 3,588 bitcoin as disclosed for $216 million in cash. Roughly that's its biggest tranche yet, capping some previous selling to fund the preferred dividends. So one of the things that we're looking at is with the MNAV premium gone, the question becomes is selling Bitcoin to cover the dividends the routine? Is it still an accumulator or is this now a recurring seller in the current bitcoin environment? So the facts as we've said, were they broke their multi year no sell streak with the 32 bitcoin sale and now have followed on a month later with a much larger sale. The holdings as of July 5th are 843,775 Bitcoin in reserves, $2.55 billion of US dollar reserves and a cost basis of $75,700 a coin significantly above the 60k range where coins are currently traded. MNAV fell below 1 for the first time on June 27th to 99 cents. It has since recovered some tom that is per CoinDesk and mnav.com those numbers vary a little depending on how you compute them. Directionally correct. STRC had traded as low as 7457. I saw it back up around the 90s today before the show started. The dividend was raised 50 basis points to 12%. So certainly it has improved. It is not fully back to the $100 appointment are. And the new framework is authorizing selling of up to 1.25 billion of Bitcoin. The monetization program plus a repurchase program. STRC first. So I want to start here before we get into like deeper bull and bear cases. Chris, I know you're like an investment banking guy, Rahm. You've done a lot of investing. What do you think of the structural mechanics here? Like Saylor clearly is now pivoted to selling Bitcoin off the balance sheet versus issuing even more mstr. What is that telling you as a starting point?
- [02:31]
B
I'll go for it, man.
- [02:33]
C
Well, two ways to fund the debt obligations. I can either issue common stock, which is dilutive and would hurt mstr. That would send MSTR going down. Or they can sell Bitcoin and if they do sell bitcoin, then they get this narrative violation. We mentioned last week that MSTR could be prone to a short covering rally. You're seeing that on the news. What's more constructive is you're seeing STRC and STRF start to close the gap versus par in the last few days. That's notable. They need to get that to par value. That's critical. If they can do that then they can take a deep breath. They still have challenges ahead but if they can't close that gap, that's going to be an issue. I still view this as a trading asset prone to these violent short covering rallies. I think it's in the midst of one right now. I'd also want to look at the dates of their sales of bitcoin versus the announcement date. Because if they were able to sell bitcoin and bitcoin supported the sale and digested it and also rallied over the last few days, that's pretty encouraging. I don't know if anyone's looked at that data.
- [03:50]
A
I mean you're sort of piling into what the bull case is. Right? Which is to say so Dan, Crypto microstrategy with NAV at 1.09 and STRC on its way back. People will see everything around 1M NAV as a good value buy. BTC actually went up during selling this week. A couple of others have noted the same thing, right. Like Josh Mandel, Pete Rizzo. That they have sold it behaves like, you know, essentially a buyback of these things. The bear read on the converse part though ROM is that the premium is dead and bitcoin is still not going to up. It is now a bitcoin seller. Rollin and Peter Schiff both said that. So like this kind of cuts both ways without bitcoin going significantly up. Right. Like I mean my understanding and correct me if I'm wrong, they have significant diverg dividend coverage right now. Sailor can sit on his hands for a decent amount of time and do nothing but the problem is when you get to the point where that cash runs out paying the preferreds, even if the preferreds have recovered a decent amount. If bitcoin's not moving, aren't we right back where we started just a year later?
- [05:06]
C
Yeah. My guess is that you had fast moving traders step in to buy the dip when you saw that volume capitulation and a lot of puking last week. That's fast money. I don't think that's enduring long term buying. They probably will sell that and get a quick flip.
- [05:25]
B
So I'll chime in. I was in London last week, quite a week by the way. Went to I was at the Robin Hood event which we should talk about that. Which was pretty, pretty amazing. But prior to that I went to the Goldman event, then I went to a second event that I'm not supposed to talk about, but I had a chance to, to see sailor speak twice. And you know, he got up on stage and he was very, very focused on defending and protecting a dividend on the preferreds. He tried to imbue the listeners with confidence in his commitment to bitcoin. And so he's trying to navigate this three body problem. And I think his actions today made it very clear that he's protecting the dividend and hoping that that brings confidence back into the system. The unfortunate thing for me is that we're stuck. The crypto narrative right now seems to be stuck on this micro strategy like thing. And unfortunately for many of us, strategy is not crypto. Crypto is not strategy. But we're all stuck there because it feels like to move forward, we have to navigate this until we move on to the next opportunity or challenge. It reminds me of back in the day, guys. I think we may have talked about this when we like every day you turn on the Bloomberg and all I talked about was pigs, like every single day. And eventually the market broke. Work through that when there are sovereign challenges in Europe. So I'm ready for us to move past this now. I'm hopefully encouraged because to your point, maybe it was some short covering, but bitcoin has shown a nice degree of resiliency today and as this announcement broke, it's been relatively resilient. We've had some other maybe positive tailwinds. I don't know if this had anything to do with it, but the announcement of Trump saying that he likes crypto on the launch of the Trump accounts today. So I'm just looking forward to the point where we stop focusing on the three body problem. I would love to not talk about this anymore. We have to because the market's stuck on it. Bitcoin is still a huge amount of crypto and to many people we still forget crypto is bitcoin and bitcoin is crypto and therefore strategy is crypto. I'm ready for us to break that and get back focusing on fundamentals.
- [07:39]
A
If you like this segment, please like subscribe and tune in every Monday at 4:30pm Eastern Time time. I'm Austin Campbell, the host of Bips and Bips, along with my friends Rahm Alawalia and Chris Perkins and our slate of exceptional guests. Every week we're going to discuss macro, crypto and the collision of worlds, covering topics that move markets and shape the financial landscape.
- [08:02]
D
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