JT

Don't trust. Verify.

[JT @JeschildTan]

@dailygoat 💯🎯

[Nicolas Cole 🚢👻 @Nicolascole77]

All this $STRC & $MSTR FUD just shows what an asymmetric trade this company continues to be.

So many flawed opinions from uneducated people:

1. "@saylor said he'd never sell the bitcoin. He sold some bitcoin. That means the entire system is going to collapse."

No, he sold bitcoin because the credit agencies valued his $50B of bitcoin at $0 because they treated it as a 100% illiquid asset. He didn't sell because he had to. He sold to prove "nah, it's liquid." And he needs this step to happen, and to get approval from the credit agencies, in order to achieve the next leg of growth.

Credit approval = wave of new capital.

2. "STRC was supposed to be stable."

So, just to get this straight, what you want is:

- No volatility (0%)
- But double-digit passive revenue (11.5%+)
- Backed by billions and billions of dollars
- But if you sell even "a few" of those dollars to prove the dollars are a liquid instrument, then the other $49.9B should be considered worthless

This is actually what MSTR is trying to build. It's just not going to happen in the legacy finance industry overnight. And the only way it will happen is when STRC becomes investment-grade digital credit.

Which, going back to the first point, is why they had to sell 32 bitcoin. To prove, to the credit agencies, it is in fact a liquid asset.

3. "MSTR is a failure that is going to be forced to unwind because they're over-leveraged."

No, they're not.

You are more leveraged on your mortgage than they are on their dividend obligations relative to their balance sheet assets—by a wide margin.

Sure, some moves on the chessboard might be more-or-less accretive than others. But you have to see the forest from the trees.

This is a company that turned $500M of assets into $50B + of assets in 5 years.

Do you care, or do you remember, which of those transactions in the past were "more-or-less accretive?" Of course you don't. All you know is, they 100x'd their balance sheet, and 100x'd their stock price.

~

I have been interested in investing since I was 23 years old. I'm 36 now. And $MSTR is really the first time I've gotten to live the feeling of an asymmetric trade. I imagine this is how people felt buying Facebook or Amazon in the 2010s.

You know the game has already been won.

And you know the future is inevitable.

You just have to sit and wait a decade through the masses kicking and screaming and insisting you're wrong before you can celebrate being right.

[Adam Livingston @AdamBLiv]

As per usual, the noise about Strategy is deafening right now.

Many people who have zero idea what they are talking about are calling for an imminent death spiral, likely influenced by low IQ doomer slop articles that were written for clickbait engagement purposes.

Let's be objective about how things stand right now by looking at the entirety of the capital structure and compare it to the BTC bottom in 2022.

2022:

Bitcoin price: $15,760
MSTR BTC reserve: 132,500 BTC
Net senior claims on balance sheet: $2.356 billion
Senior claims in BTC: 149,503 BTC
Basic shares: 115.48m
Common equity Bitcoin exposure: -14,700 sats/share

Now:

Bitcoin price: $63,511
MSTR BTC reserve: 846,842 BTC
Net senior claims: $21.1 billion
Senior claims in BTC: 332,226 BTC
Basic shares: 356.32m
CEBE: 144,400 sats/share

At the 2022 bottom, BTC-only CEBE was NEGATIVE.

Yes, the residual for MSTR holders was NEGATIVE, and the stock never went to $0. It traded between $10-$20 near the bottom as the market was pricing in future potential.

The fiat senior claims were larger than the Bitcoin reserve when measured in BTC.

Today, even with the giant preferred stack, CEBE is roughly +144k sats per basic share.

Gross BPS went from about 114.7k sats to 237.7k sats, while senior-claim drag went from 129.5k sats/share to 93.2k sats/share.

So Strategy went from “common equity is underwater on a pure BTC residual basis” to “common still has a six-figure sats residual after debt and preferred.”

It was WAY WORSE four years ago.

If Strategy survived 2022, they're going to survive 2026.

[JT @JeschildTan]

@dailygoat @chooserich A better analysis provided here:
https://t.co/egyHgL2qoQ

[Jesse Myers @Croesus_BTC]

STRC down to $82.6 today. Here's my read:

1. Strategy is fine. If everything stays as is, they can pay STRC dividends for 32 years. If BTC appreciates at ~2% CAGR, they can pay dividends indefinitely.

2. Why the sell-off? This appears to be a liquidation cascade.

Over the last 6 months, the narrative became that STRC volatility was reducing, and price began to spend all its time in $99-100 range.

This invites leverage. If you expect the price to always be north of $95, you can take on 20x leverage with your portfolio to buy more STRC and dramatically increase the yield on your portfolio.

This works great, until it doesn't.

STRC is designed as a free-market asset. When attention shifted to SATA and STRC price flagged, it may have raised the attention of opportunistic short-selling hedge funds.

By shorting aggressively, they could push the price down and start triggering margin calls and liquidations from folks who aggressively levered up their STRC positions.

The price action today is a clear liquidation cascade, rapidly pushing prices lower, in turn triggering additional liquidations.

3.
What happens now? The market will heal itself.

Opportunistic hedge funds will recognize that this is a firesale and the fundamentals are unchanged for STRC and step in as buyers. Shorts will close, becoming buyers. Individuals are getting a tremendous entry price for long-term holding STRC shares.

Buyers at this level will get ~13.7% effective yield. If STRC trades back to $100 and they sell, they get an easy +18% return.

4.
What will Strategy do?

Strategy will likely increase the dividend rate on June 30 - maybe to 11.75% but possibly to 12%. Buyers at the current price level then would get 14.2% effective yield from that point forward.

Strategy may also step in to buy STRC shares back. They could do this by issuing new shares of MSTR (currently at 1.14 mNAV) or by taking on traditional debt and deploying those funds to buy discounted STRC shares on the market.

If/when STRC trades back to $100, Strategy could then re-issue those STRC shares. The ~$15 delta per share could be used to buy BTC as pure accretion to MSTR holders, with no net change to amplification.

No doubt that Saylor has already at least considered this, and it wouldn't surprise me if they're currently doing this.

5.
In summary...

The market is freaked out that this depeg is like Terra/Luna... but this is not an asset like that. Strategy's balance sheet determines whether STRC continues to receive dividend payments... and Strategy's balance sheet is completely unchanged.

This is a leverage wipeout.

From this, the market will learn that Digital Credit is mostly very low volatility. But because it is a free market asset, the longer that a Digital Credit instrument trades within a tight range to par... the more leverage will inevitably pile up as people get greedy.

And that creates the conditions for a leverage wipeout depeg. Following that, the instrument will make its way back to par value as the market heals itself and recognizes that the dividend payments will continue uninterrupted because the issuer's balance sheet is unaffected.

[JT @JeschildTan]

As expected, Israel fucked it up again. Such "peace deal" will never work until you eradicate the root cause of destabilizer!

[Brian Allen @allenanalysis]

BREAKING: Iran Suspends Entire 60-Day Negotiation Process With the U.S.

Iran has halted its entire 60-day negotiation framework with the United States after accusing Washington of violating the very first clause of the recently signed MOU.

According to Fars and Al-Mayadeen, Iranian officials argue Israeli strikes in southern Lebanon less than 24 hours after the agreement was electronically signed constituted a direct breach of U.S. obligations under the deal.

Iran’s delegation was reportedly preparing to depart for Switzerland for the first round of talks when Tehran abruptly canceled the trip. Iranian officials now say they will not fulfill their own commitments until they are fully assured Israeli attacks on Lebanon have stopped and the U.S. has adhered to the agreement’s first-clause requirements.

The first round of U.S.-Iran talks is now effectively off the table.

Follow @AllenAnalysis to stay ahead of the curve.

[Jesse Myers @Croesus_BTC]

STRC down to $82.6 today. Here's my read:

1. Strategy is fine. If everything stays as is, they can pay STRC dividends for 32 years. If BTC appreciates at ~2% CAGR, they can pay dividends indefinitely.

2. Why the sell-off? This appears to be a liquidation cascade.

Over the last 6 months, the narrative became that STRC volatility was reducing, and price began to spend all its time in $99-100 range.

This invites leverage. If you expect the price to always be north of $95, you can take on 20x leverage with your portfolio to buy more STRC and dramatically increase the yield on your portfolio.

This works great, until it doesn't.

STRC is designed as a free-market asset. When attention shifted to SATA and STRC price flagged, it may have raised the attention of opportunistic short-selling hedge funds.

By shorting aggressively, they could push the price down and start triggering margin calls and liquidations from folks who aggressively levered up their STRC positions.

The price action today is a clear liquidation cascade, rapidly pushing prices lower, in turn triggering additional liquidations.

3.
What happens now? The market will heal itself.

Opportunistic hedge funds will recognize that this is a firesale and the fundamentals are unchanged for STRC and step in as buyers. Shorts will close, becoming buyers. Individuals are getting a tremendous entry price for long-term holding STRC shares.

Buyers at this level will get ~13.7% effective yield. If STRC trades back to $100 and they sell, they get an easy +18% return.

4.
What will Strategy do?

Strategy will likely increase the dividend rate on June 30 - maybe to 11.75% but possibly to 12%. Buyers at the current price level then would get 14.2% effective yield from that point forward.

Strategy may also step in to buy STRC shares back. They could do this by issuing new shares of MSTR (currently at 1.14 mNAV) or by taking on traditional debt and deploying those funds to buy discounted STRC shares on the market.

If/when STRC trades back to $100, Strategy could then re-issue those STRC shares. The ~$15 delta per share could be used to buy BTC as pure accretion to MSTR holders, with no net change to amplification.

No doubt that Saylor has already at least considered this, and it wouldn't surprise me if they're currently doing this.

5.
In summary...

The market is freaked out that this depeg is like Terra/Luna... but this is not an asset like that. Strategy's balance sheet determines whether STRC continues to receive dividend payments... and Strategy's balance sheet is completely unchanged.

This is a leverage wipeout.

From this, the market will learn that Digital Credit is mostly very low volatility. But because it is a free market asset, the longer that a Digital Credit instrument trades within a tight range to par... the more leverage will inevitably pile up as people get greedy.

And that creates the conditions for a leverage wipeout depeg. Following that, the instrument will make its way back to par value as the market heals itself and recognizes that the dividend payments will continue uninterrupted because the issuer's balance sheet is unaffected.

[JT @JeschildTan]

@ImBreckWorsham Me too... same same here.

[JT @JeschildTan]

@CoreyWriting Best deal maker in the world.

[JT @JeschildTan]

@sonicboomer0011 @CoreyWriting

[JT @JeschildTan]

Yes! This war has increased the awareness to decrease dependency on hydrocarbons and increase solar infrastructure investments! Complacency is deadly.

[HealthRanger @HealthRanger]

I support Trump pursuing peace with Iran. The alternative is endless war, widespread human suffering and global famine in 2027 and beyond.

Trump was foolish the start the war. But he's wise to end it.

Lets hope he carries through.

In the mean time, I'm still investing in solar infrastructure because now I don't trust the supply chain of hydrocarbons at all.

[JT @JeschildTan]

@dailygoat @shax_btc Agreed. They inherit better genes from more educated parents 😆, are fed with more nutritious food, exposed to more external stimulus, and have parents who are more open-minded and receptive to inquisitive questioning.

[JT @JeschildTan]

@MartinDandach Total failure! Absolute incompetence! Complete clownery!

[JT @JeschildTan]

@Zac_labs British real estate tycoon Lord Harold Samuel: "location, location, location"

Me: "Timing! Timing! Timing!"

[JT @JeschildTan]

@MichaelTLester I'm so fortunate that my government is not this corrupt and incompetent. 🤷‍♂️

[JT @JeschildTan]

@Individual1917 @MBAeconomics1 @usmint Until this date... maybe? 🤷‍♂️

[JT @JeschildTan]

@deadassnft @MBAeconomics1 @usmint Until this date... maybe? 🤷‍♂️

[JT @JeschildTan]

@sustainablock @_InfoGram_

[SilverTrade @silvertrade]

🚨LBMA WEIGHS ADDING GOLD PRICES IN CHINESE YUAN, SINGAPORE DOLLARS, & JAPANESE YEN⚠️

The LBMA & COMEX are trying to prevent the inevitable...

[Willem Middelkoop @wmiddelkoop]

It’s Official

Gold Price Discovery Mechanism moved East

[JT @JeschildTan]

@dailygoat I hope so too... for 12 to 18 months maybe...