At a certain point, Strategy investors might start asking themselves what the difference is between STRC and just buying bitcoin (BTC) on a credit card.
Michael Saylor has called STRC his company’s “greatest feat of financial engineering to date,” but its costs keep getting worse. Indeed, its dividend obligations have increased 27% since July, worsening every month since issuance.
Saylor is sticking to the belief that BTC will somehow rally 30% a year for at least a decade to pay for everything, even though the last year it appreciated that much was 2021. Fixated on that number as an imaginary cushion, Saylor has casually hiked STRC’s monthly interest rates toward something that looks more like paying off a credit card than responsibly raising capital for long-term investing.
STRC is a perpetual dividend-paying preferred stock and the company’s self-proclaimed “iPhone moment.”
When the company sells STRC to investors, it funds BTC purchases for Strategy in exchange for monthly dividend payments at an interest rate about 60% the rate of the average US credit card.
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Sounds like cope to me.
STRC can stop or reduce payments at anytime. It’s backed by BTC and cash they have on the balance sheet and they can still sell a share of their stock at the latest trading price which is $132.82.
In his digital credit keynote he knows if BTC doesn’t grown STRC is dead but if BTC doesn’t grow even hard core maxis will HFSP because the fixed supply is a key value proposition in this fiat hellscape we find ourselves in.
The market still hasn’t figured out how to price goods and services in bitcoin that would demand people to accept it for key goods and services like food, water, and energy.
Also the rate is on par with CCC rated bonds, or margin from big brokers like Fidelity... Credit Card rates are 20% minimum without a short duration promotion
If they bump it again to 12%, that makes it 1% per mo, which has significant marketing value
My credit card rate is 12.9% and it's not promotional.
I dunno, I've been burned by high-yield dividend stocks before, but I'm holding.
-Tom
Yeah this is the normal fear people have but most products that pay a yield fail. Or are insolvent. Go look at Ford some poor pension fund is holding ford paper and getting crushed by inflation.
Just know every month you hold STRC you are dunking on all those who hold treasuries, junk bonds, dividend stocks, money market funds, high yield savings, and it’s not even close.
Money is a winner take all confidence game the more STRC gets confidence and if bitcoin goes on a hellish pump then watch out! Confidence will grow and more cash will pile into STRC feeding the beast strategy is.
Why I don’t get why people get mad. Just go with the flow and if it blows up just make sure you got your cold storage UTXOS
😬
When you put it that way, it sounds bad.
However, the total Bitcoin supply remains capped at 21 million, and the amount of debt being added on to the USA balance sheet, and sold to the rest of the world as money, appears to be infinite. So the world reserve currency will definitely be decreasing in purchasing power due to ever growing supply. Bitcoin continues to grow as a network, so there is a good chance that overall market demand for it will pickup again.
And I don't suppose Saylor predicted that a war with Iran was on the table, with the effect of oil disruption permeating into every area of our lives
How that effects the BTC price will be borne out in the coming weeks
Maybe a short term vol event that pales into insignificance in the future
My concern isn't rates, but a term that has recently entered the war chat, force majeure.