u/Curious-Rip-5834

[removed]

I didn’t realize STRC had its own sub. I’ve been posting for several weeks on this but cliff notes….

Back early 1st week of June there was a massive shift in interest rate futures. Went from pricing EOY cuts to hikes. Yields across all fixed income products spiked dramatically regardless of credit quality or duration.

I picked up top A quality perpetuals with 6% coupons well under par that previously hadn’t traded there in a year.

You also recall SATA and STRC trading prices tanked ~10% very abruptly during this window.

Well we now have our new pegged yields relative to uber stacked BTC preferreds which I had extrapolated to be 13% based on revised interest rate cycle outlook.

Given this revelation STRC’s trading price was over priced. That ~11% yield not gonna cut it. Saylor only raising by 25 bps not enough and there is a time duration lag in which he can act on only a monthly basis.

So leave it to the market to complete price discovery and now here we sit @$89 handle with that ~13% yield.

One thing very important; today EOD I noticed some gigantic size sell-side blocks just dumping and hulk smashing any bids. Here is what I believe is causing this ………

There is notional easily > 1/2 billion STRC wrapped on various DeFi platforms which then gets leveraged in high yield strategies at a ratio of 7X. These positions are absolutely getting liquidated at these levels.

Until Saylor boosts the payout by 50 bps we are staying here.

However one aspect to pay close attention to was the sell-side size blocks that came through EOD…….

There is over 1/2 billion of STRC wrapped on DeFI which is then looped at 7X leverage. Those positions are absolutely getting liquidated here.

I’ve traded fixed duration debt and preferred securities for over a decade. Been through many interest rate cycles and regardless of how good the credit issuer quality is, the underlying price always changes for a variety of reasons.

Succinctly put, right now it appears that for top level stacked spot BTC preferred perpetuals, you can site mNAV, Bitcoin per share MSTR ratio, getting rate hikes instead of cuts EOY due to hot economic #s etc………the sweet spot with respect to yield is ~13%.

STRC doesn’t have to go to par regardless of distro frequency. Just look at SATA now recooped from resent lower lows at 13%.

The once per month mechanism in place for STRC to pin to par is clearly not efficient enough with respect to time or size i.e. 25 bps.

So the market will discover for you and right now has locked in a yield of 12.53% for STRC.

Nothing has fundamentally changed here in my view so instead of complaining, just going to add some here.

STRF also repricing now @$92 handle or 8% under par. Cheers.

Anyone have context here ?

BTC looking to test YTD lows here. The one good aspect of no circuit breaker trading is we’ll find out soon enough.

Both MSTR and MSTY hard to pass up a little nibble down here.

Almost afraid to pose this question as it gives me terrible flashbacks to StrongBlock, Wonderland and whole bunch of other DeFi platform disasters a few year back now.

I was GPU mining at the peak hysteria of Ethereum when fees were absolutely bonkers. To send $10K spot whatever, if it was on Ethereum chain you’d need to pay hundreds of dollars in gas fees.

But where I’m going with this is, on DeFi you could set up the most insane staking loops with your crypto/tokens. Each time your effective equity diminishes but in aggregate you could get 8-1 effective leverage.

Just curious if anyone is doing this on any platforms that have STRC wrappers ? I’m reading chatter of 4-1 effective leverage on STRC or annualized yields in 45% range.

Issued preferred stocks currently represents well over $1T in the global marketplace. They are nothing new and have been around for two centuries.

JPMorgan, Public Storage, Morgan Stanley and countless other publicly traded companies have brilliantly utilized these hybrid securities to grow incredible equity value for common stock holders.

There is still a ton of capital on the outside in this fixed income space that is untapped and can’t buy an IBIT etc.

Enter STRC. I noticed in that last distribution period, STRC traded par or better for 14 days before the ex date.

Billions of $$$ were raised and spot BTC was purchased without having to tap common for the cash source.

What really jumps out at me is in particular that one 15M share volume day. A large entity was buying in significant size.

I noticed also some mutual funds have now been accumulating STRC such as iShares preferred and income securities and the VanEck preferred ETF. These funds could never have BTC exposure in form of IBIT, GBTC etc.

Institutional ownership has now creeped up over 16% of STRC. There is still a ton of upside here in this ownership bucket. Clearly these fund managers are now catching on to this opportunity.

Saylor is as well by moving STRC distributions to twice monthly. This will rapidly speed up the time table and bring in much more money, faster and more efficiently.

Saylor needs to move STRC to different exchange and go to weekly distribution model. STRC would essentially be pinned at par and this would enable him to buy BTC at will, never needing any other cash source.

The accretive effect this would have on the spot BTC ratio to common MSTR would be absolutely bananas.

The fact that Saylor is acting so quickly on this to pivot to twice monthly and realizing the opportunity is really outstanding.

For the last three ex div lead in windows the volume and buying has gotten more intense. Let’s see what happens in May. Cheers.