Andre Altbürger

Living between curiosity & conviction 🔍 | Guided by my cat’s wisdom 🐾 Investing in crypto + the future 🌐

[The Pets 𝕏 @ThePetsX]

he's a celebrity

[Crypto Rover @cryptorover]

🩸 WARNING: $BTC just printed the BIGGEST Short-Term Holder capitulation in its entire history.

The realized loss ratio just hit a new ALL-TIME LOW.

Deeper than COVID.
Deeper than the May 2021 crash.
Deeper than FTX.
Deeper than the tariff lows.

[K A L E O @CryptoKaleo]

Strategy's $STRC problem:

Saylor has used the issuance of STRC to fund billions of dollars of Bitcoin purchases for the better part of the last year.

The pitch?

STRC sits above common shares with a $100 stated liquidation preference and have an attractive dividend of 11.5%, which gets bumped up gradually when the shares are trading below $99 avg.

It naturally incentivizes buyers because the liquidation preference is economically supported by Strategy's ~844K Bitcoin on the balance sheet after debt and senior preferred claims, and the effective yield rises as the STRC price falls (e.g. at $92 STRC the effective yield is 12.5%).

So, what's the problem?

Their total debt + preferred senior to common claims are roughly ~$22.2B. Most of which isn't a problem ~currently~ (but there are billions of dollars worth of notes that become puttable in 2027-2028... and if MSTR is below conversion economics or refinancing markets are closed, those become hard cash obligations).

Their preferred dividends are currently ~$1.7B annually. And they only have ~$900M cash on hand... so the runway math doesn't look great.

So where does the money come from?

The yield has to come from somewhere.

Their revenue from the software company alone is only ~$500M/yr. That doesn't come anywhere close to what's needed.

They realistically have two options for raising capital:

1) Sell more MSTR...

They currently have ~$26B common ATM capacity available to them, but the issue is they're currently trading at an mNAV well below 1 already. Tapping into this is incredibly dilutive for common shareholders.

2) Sell more Bitcoin...

Saylor already effectively broke the trust he's established for years to "Never sell Bitcoin" when he made a 32 BTC sale last week.

The sale was tiny, but it gave the market a concrete reason to price the possibility of future BTC sales.

But the primary purpose of STRC is to raise more capital to buy more Bitcoin, right?

So in order to buy more Bitcoin, they have to sell Bitcoin.

But we saw what the market did after a small 32 BTC sale. BTC took a massive hit in anticipation that there could be more sales... The machine is breaking.

Strategy can defer dividend payments though if they want, right?

Yes, but unpaid STRC dividends accumulate and then compound monthly. So this isn't a long-term viable option. Deferring STRC dividends preserves cash, but turns STRC from a cash-yield product into distressed preferred equity.

And if the payments aren't being made to STRC, will any investor have confidence to buy it at a discount?

And if STRC is carrying a massive discount, it effectively eliminates it as an option for Strategy to use to continue funding new BTC purchases...

e.g. if STRC is $70, they'd be selling $100 of future liabilities for $70 of current credit. Not a great trade.

Reminder that STRC's $100 is not a redemption peg. Holders cannot simply demand $100 back in normal conditions. The price is maintained by confidence, yield support and Strategy's desire to preserve the funding channel.

If this dynamic persists, the largest corporate buyer of Bitcoin could shift from accumulating to liquidity management via selling or make the common shareholders of MSTR carry the burden by diluting them substantially (for as long as that can last).

I could see this collapse happening fairly swiftly.

It doesn't mean that MSTR necessarily dies off or is forced to immediately sell all of their Bitcoin (that door could be opened early though with something like a change of control of the company, delisting, etc.)...

Not sure what the solution is, but one thing is certain:

I would not want to be holding $MSTR right now.

The risk is not that STRC instantly becomes worthless. The risk is that once STRC trades like distressed preferred equity, Strategy loses a major funding channel while its dividend burden and note put wall remain.

The flywheel effect and the fear from what we've seen with previous major collapses (e.g. Luna / UST, FTX, 10/10, etc.) could lead to something similar here.

This doesn't mean I'm bearish on Bitcoin. I actually think it'll create an insane buying opportunity.

MSTR isn't Bitcoin.

If it does fail, plenty of people will try to claim BTC failed along with it. We've seen it happen plenty of times with plenty of other names. Every time the people digging Bitcoin's grave were wrong. This time isn't any different.

[Andre Altbürger @andre198229]

@cb_doge 80% brilliant is still a pretty strong endorsement from Trump.

[Andre Altbürger @andre198229]

@Vivek4real_ The real challenge isn't buying Bitcoin. It's holding it through a decade-long thesis.

[Andre Altbürger @andre198229]

@Vivek4real_ People want a dip until the dip actually arrives.

[Andre Altbürger @andre198229]

@CredibleCrypto Buying range lows feels terrible. That's usually why the opportunity exists.

[Andre Altbürger @andre198229]

@CryptoMichNL Conviction is easy at all-time highs. Holding now is the real test.

[Andre Altbürger @andre198229]

@CryptoNewton $54k-$55k is the line in the sand. Lose that and things get ugly fast.

[Andre Altbürger @andre198229]

@CredibleCrypto Conviction gets tested at the lows, not the highs.

[Andre Altbürger @andre198229]

@CryptoTony__ Every cycle has a villain. This cycle picked the sitting president.

[Andre Altbürger @andre198229]

@Jeremybtc Everyone wanted $60k until they got $60k.

[Andre Altbürger @andre198229]

@AshCrypto This is where panic peaks and patience gets tested.

[The Pets 𝕏 @ThePetsX]

He looks so comfy 🥹

[Ash Crypto @AshCrypto]

BREAKING :🇺🇸BlackRock ETF sells $342,340,000 in Bitcoin.

[The Pets 𝕏 @ThePetsX]

That's a full grown man

[Crypto Rover @cryptorover]

SMART MONEY IS SELLING $BTC.

🇺🇸 BlackRock sells another $342,340,000 in Bitcoin.

Relentless selling pressure for Bitcoin.

[The Pets 𝕏 @ThePetsX]

Energy transfer

[Vivek Sen @Vivek4real_]

BINANCE FOUNDER CZ SAID, “EVERY DIP, SOME PEOPLE THINK IT'S THE END OF TIME. TIME CONTINUES.”

BUY THE BITCOIN DIP ✊

[Crypto Rover @cryptorover]

🚨 BITCOIN IS CRASHING.

Bitcoin just dumped to $61,300 for the first time since 6th February, hitting a new 100-day low.

BTC is now down 25% in just the last 24 days.