Peter Duan

Cheap stock beats cheap Bitcoin. When the stock trades below 1 mNAV, buybacks beats buying Bitcoin itself. So who has taking advantage of this discount so far? Metaplanet: ¥19.3B ($122.5M) OranjeBTC: R$37.8M ($7.3M)

REMINDER: If you hold $STRC, your dividend will now start accruing on weekends (starting this Sunday).

Backstopping customers with its own balance sheet is the right call. From my TradFi days, the firms that came out of a crisis stronger were the ones that absorbed the loss instead of passing it to clients. That said, the distinction worth repeating today is counterparty risk (an exchange) vs. protocol risk (Bitcoin). Only one of those broke (hint: it's not Bitcoin).

Is this how we get our US Strategic Bitcoin Reserve?

The clear next use for Digital Credit is the tokenized economy.

Strongest slide in MSTR's Q3 deck.

Top 3 questions that I hope MSTR management team addresses during today's earnings call: 1) How do you balance buying back STRC when you have to keep enough float and liquidity for institutions to build real positions? 2) With the focus on driving more institutional adoption, what are the operational and financial levers you are going to use to do so? 3) As a $60B large cap stock, every strategy pivot sends a new message. How do you keep shareholders aligned when MSTR has to shift strategies constantly as the industry evolves? Any others you would like to add?

The Fed just held rates at 3.75-4.00%. This morning, PCE (the Fed's preferred inflation index) came in at 3.6%. In other words, money markets barely beats inflation at ~0.4%. Meanwhile, STRC pays 12% and SATA pays 13.2%. That is HUGE gap of ~8.4% and ~9.6%. Digital Credit was never meant to compete with Bitcoin. It was meant to compete with money market funds.

“Even with the significant spike in $SATA short interest reported on 10/15, which was shortly after the announcement of $SATS, $SATA remains not much below $99, without a single dollar of buybacks. We’ve generally leaned towards increasing the interest rate over buybacks, but have also demonstrated multiple times that patience (doing nothing) can do the trick as well, as these are very attractive products.” - Matt Cole (CEO of Strive) This was buried in Matt’s recent reply to an $ASST shareholder worried the “honeymoon phase” is over. Here’s what I like about it: 1. $SATA is holding near par WITHOUT buybacks It’s trading around $98 today. Strive doesn’t have to sacrifice $ASST shareholders to push $SATA back to par. 2. Raising the rate beats buybacks The math is roughly the same. The difference is who benefits. A buyback rewards the holder who sells and leaves. A rate increase rewards the holder who stays. Incentives stay aligned with long-term holders. 3. Doing nothing IS strategic Letting Bitcoin do the heavy lifting instead of extra financial engineering does three things: a) The market decides how attractive these instruments really are. b) The effective yield is already very attractive. Push it too high and the yield starts to signal distress instead of strength. c) Management isn’t chasing the optics of “doing something.” When Total Return is the North Star, they let performance speak for them.

STRC buybacks are working... yet they’re also creating a real problem. Here’s what analysts should press $MSTR management on tomorrow (Q3 call, 5 PM ET)👇

Bitcoin has historically been viewed as a high beta "risk-on" investment. That view will change shortly. Why? Because "risk-off" = "capital preservation". In a world where fiat will be increasingly debased, what would hold economic value better than Bitcoin?

MSTR shareholders just overwhelmingly approved daily dividends this morning for STRC (with STRF, STRK and STRD following in January). While STRC's dividend rate stays at 12%, it has significant impact on its share price. Previously, STRC tends to drop by about its $0.50 dividend on each ex dividend date (which occurs twice a month). Daily record dates shrink that step to a few cents, which makes Strategy's $100 par value objective much easier to hold. The test after Nov 1 is whether STRC buybacks (currently ~$200M a week over the last 3 weeks) can shrink. Watch for 2 things: 1) STRC back at par. 2) Buybacks shrinking. If both happens at once, that means the Bitcoin Accumulation Machine is back on. Look out! 🚀

A Bitcoin Treasury Company is like a perp without liquidation risk. Here's why 👇

When you are a sub-$10 Billion market cap company working on the bleeding edge of your industry, it would behoove of you to take your retail shareholders’ feedback seriously. Some of these shareholders are your earliest investors and therefore follow the industry and your company closely. The best ones ask critical questions not to be an antagonistic but rather to be your thinking partners for whenever institutions do even ask similar hard questions.

The #1 praise I see Strive receive is how consistently and clearly they communicate with shareholders. I have yet to see another public company whose executives show up every week to share their thinking. This creates a qualitative flywheel that compounds into real quantitative results: #1: Trust is Established Whether in good times or bad, the same executives show up to explain their thought process. Because the Bitcoin Treasury space evolves so quickly (and is also volatile), their presence creates an ironclad layer of trust with their primarily retail shareholder base. #2: Content Compounds Because Strive actively invests in shareholder education through their media arm (@tnorth), institutional investors consistently look to their content to guidance. When you don't need to look too hard to hear what management is thinking, you also don't create unnecessary negative narratives when the stock price isn't doing too well. #3: Mindset = Market Share Outside of MSTR, every Bitcoin Treasury Company (BTCTC) is below $10 Billion market cap. As a result, these BTCTCs do not have the luxury to focus on institutional investors. Instead, they rely heavily upon their retail shareholder base. Why? Because a loyal retail shareholder base will not only keep your stock during bear markets but actively promote your company every chance they get. In other words, they are both your capital source AND your unofficial Investor Relations channel. Which other BTCTC does this well, and which one needs to start improving ASAP?

Fidelity's brokerage team should talk to the Fidelity Digital Assets team about Digital Credit...

Due to the early stages of Bitcoin Treasury company adoption, it's nearly impossible to balance pivoting strategy with sufficient investor communication. For example, during the latest bear market, MSTR's received feedback from the rating agencies and institutional investors on the importance of having a larger cash buffer. From a Bitcoiner's perspective, holding cash is antithetical to accumulating Bitcoin because we view Bitcoin as the ultimate form of money. However, from MSTR's management perspective, it makes sense to appease the rating agencies because a higher credit rating means more buyers of its preferreds. Because selling more preferreds is more accretive than selling the common shares, the trade-off is worth the temporary misunderstanding between shareholders and management. In other words, taking a step back to ultimately go further is the right move. That said, I agree with you that it's important to invest in consistent shareholder communication (i.e. Investor Relations) so that the communication gap closes faster.

Here is the clearest win-win trade sitting between two of the largest Bitcoin treasury players: Strive holds $50 million of Strategy’s STRC inside its dividend reserves. Meanwhile Strategy is sitting on more than $5 billion of cash and marketable securities that are earn ~4% in money markets. If Strategy bought a modest $250 million position in Strive’s SATA and/or SATS, the yield pickup would be roughly $23 to $29 million per year. That incremental income directly helps Strategy service its own preferred stack while keeping the difference to buy more Bitcoin. Meanwhile, Strive gains a blue-chip institutional buyer that tightens spreads and supports future issuance. Do you think this trade will eventually go down? If not, why?