Market Anarchy: Knots/BIP-110

Unless @Apple's decision to terminate @craigraw's Apple Developer account is reversed by June 30, all new installs of Sparrow will fail, and development on macOS will end. If you value Sparrow, a repost would help. @AppleSupport

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MarketAnarchy21 retweeted

Craig Raw 🐦

@craigraw

3 days ago

My attempt to protect users from scam apps on the @AppStore has gotten my Apple Developer account flagged for termination - ironically, for "dishonest activity". Unless it's reversed by June 30, all new installs of Sparrow Wallet will fail, and development on macOS will end. The context: since 2023, more than a dozen fake "Sparrow" apps have appeared on the App Store, as recently as April this year. Users have contacted me after losing their savings, in some cases their life savings, to these impersonators. I'm the developer of the real Sparrow Wallet, a desktop app, and I hold the registered US trademarks for the name and logo. I have publicly warned @Apple and the community about these fake apps from early 2024, but they keep appearing. The app @Apple flagged was a placeholder that was never published. Its only purpose was to warn users that Sparrow is desktop-only and that other "Sparrow" apps aren't mine. This approach may have been misguided, but there was nothing dishonest about it. I'm confident this is an automated misclassification that Apple would reverse on review - but I may be terminated before a human ever looks at my appeal. The cost would fall on @Apple's own users: blocked installs and no updates for a tool people rely on, which opens the door for more fakes. If you value Sparrow, a repost would help. @AppleSupport

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alhafidh

@csrcenterind

CSR Consultant, Online Marketing, investor Digiu AI

MarketAnarchy21 retweeted

Jesse Myers

@Croesus_BTC

7 days ago

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.

Croesus_BTC's tweet photo. 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.

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Market Anarchy: Knots/BIP-110 @MarketAnarchy21

12 days ago

@globeandmail Bitcoin will still be here 200 years from now, the Globe will not

Market Anarchy: Knots/BIP-110 @MarketAnarchy21

15 days ago

@AdamBLiv Hi Adam, Big fan of your content, I own several Strategy securities including STRC. I’m not a retiree but I do need a rainy day fund. STRC for emergencies. STRK for yield and capital appreciation. MSTR for my growth engine. Bitcoin cold storage as my doomsday hedge.

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Market Anarchy: Knots/BIP-110 @MarketAnarchy21

15 days ago

@OldStirling You are absolutely owed an explanation as a human being, not this vague ChatGPT written worthless text.

Market Anarchy: Knots/BIP-110 @MarketAnarchy21

15 days ago

@SheepleAnalytic @RudyHavenstein Surely this is a joke

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Market Anarchy: Knots/BIP-110 @MarketAnarchy21

16 days ago

@ZynxBTC Wonderfully said. The pits of the bear market are where legends are made.

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Market Anarchy: Knots/BIP-110 @MarketAnarchy21

19 days ago

@MajorianBTC @d0mesticblend So many “influencers” are tied up with the Bitcoin Conference (TM) industrial complex.

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Market Anarchy: Knots/BIP-110 @MarketAnarchy21

19 days ago

I help a lot, but after a certain age she can’t learn new skills. She’s used a brokerage account for the last 30 years so that’s familiar, but still has trouble printing to PDF or posting a picture on Facebook. I haven’t even mentioned continually losing track of passwords. This is all manageable but any BTC keys will be lost within a week.

Market Anarchy: Knots/BIP-110 @MarketAnarchy21

19 days ago

@mattkratter @BitcoinBombadil @ap2pkh4u @SimplyBitcoin I’m a fan of your content, but have to disagree here. My 72 year old mother can’t and never will self custody BTC. It’s guaranteed to get lost. She does hold some Bitcoin on an exchange, there are trade-offs with both. This is coming from a maxi who DCA’s into my cold wallet.