Welcome to Market Overtime. I'm Sam Bardis. Michael Saylor is back for his third appearance in the past year as Bitcoin attempts to recover from a volatile stretch and Strategy continues to reshape its approach to digital assets and capital markets. We will revisit some of his previous predictions, the latest developments at Strategy, and what could drive the next phase of Bitcoin adoption. Michael, welcome back.
Yeah, thanks for having me.
Bitcoin had a good summer. Is the crypto winter over?
You know, it bounced off the 200-day moving average, and so normally that's the baseline. And when it dips slightly below it, you know, that's sort of the end of the bear market. We've rallied about $20,000 beyond that. So yeah, we think we're at the beginning of the next bull run now.
And it's been great for you, obviously, with Bitcoin gaining about, what, 40% over Q3. I mean, you're back to $20 billion of a gain during that time. What does that bring your Bitcoin holdings to, and the value, and how sustainable is that?
We've got about 845,000 Bitcoin or so, and they're worth about, you know, on any given day, 70 to 72 billion. And then we've also got about $5 billion of cash. So the company's running with total reserve assets of $75 billion or more, generally.
Mhm. Okay. And just as far as how sustainable that is, I mean, you know, while we have got this recovery in motion, I mean, we're still, what, 30% below the record high. I mean, do you see a mismatch right now between the regulatory and kind of institutional tailwinds that you and I have discussed and the performance still right now of Bitcoin?
Yeah. I think that Bitcoin's had a couple of headwinds: restrictive foreign policy, restrictive monetary policy, restrictive trade policy, and there was the AI bubble that slurped a trillion dollars of capital. So that's what Bitcoin's been working against. But a lot of those things are normalized, and they're starting to be priced into the market. And so now we're looking at some fundamental tailwinds that are kicking in. Digital credit is coming to life. Companies like Strive, that are the number two digital credit issuer, they've raised more than a billion dollars of capital in the past few weeks. And bank credit is another tailwind that's kicking in right now. A lot of banks are custoing Bitcoin and beginning to create credit on top of it. And then we're getting very positive guidance from the regulators out of Treasury, the CFTC, and the SEC. That's very good for the digital asset space. And the tokenized economy is starting to kick in. And our securities are the most tokenized securities in the world right now. So everybody wants to move securities 24/7, 365, at the speed of light. And their favorite thing to move 24/7 is anything crypto-related, because if there's news on Saturday morning, Bitcoin's moving, and everything linked to Bitcoin is also moving, and it's tradable.
Okay. Which is obviously why you're proposing some of these daily dividends as well. You've got a potential vote coming up at the end of the month. What would that mean then for products like STRC, for instance?
You know, we have a lot of preferred stocks that paid quarterly, and we found that they would draw down the day after the dividend was paid. They paid $2.50, so they might fall $2.50. So that meant that they didn't trade a lot for 80% of the time, and then they trade the wrong way. And our STRC was paying twice-a-month dividends. What we've realized is that you can smooth the volatility, increase the liquidity if you pay daily. So we're really excited about this. We've got a shareholder vote coming up, and if that vote goes as we expect, then all of our credit instruments will go to dividends every calendar day. Those will be the first securities in the world that pay dividends every calendar day. It's never been done before, but we're doing it for two reasons. One, we think it's the right thing for the tradfi markets. I mean, even in traditional finance, you can see that if you have 365 dividend events a year, then you're not likely to see the same volatility around each one. And we know practically speaking, people like the idea of being paid every day. And then we're also doing it for the digital markets, the DeFi markets, because, you know, what's your incentive to buy something on a Saturday morning and sell it on a Sunday afternoon if there is no record period taking place on the weekend or on a holiday? So our securities are already the most tokenized securities in the US markets. STRC is a screaming home run. Everybody's tokenizing it, but we want to be ready for the 24/7, 365 tokenized digital future. And that means if we pay dividends every day, it'll strip the vol. It'll increase the liquidity. It creates all sorts of high-frequency trading opportunities and arbitrage opportunities, because you might buy the thing to capture a dividend in the US market, and then you might sell it and buy something in the UAE or Singapore or Hong Kong or Europe and capture something there, and then trade back into this. And those are not ideas that people thought about 20, 30 years ago. But I think every market is increasingly starting to come to grips with the fact that securities are global, asset trading is global. It's not going to stop on a holiday that's only recognized in the US. It's not going to stop on a weekend. And, you know, some places like the UAE, you know, Sunday's a working day, right? And they see the world differently than we do.
All right. Yeah. It's a 24-hour market. I mean, STRC, to your point, I mean, it dropped significantly over the summer. I mean, we did see it hit almost 70 bucks, right? And then it's gone back up, recovered $100 par value here. There are lots of ways, as we know, to invest in Bitcoin. But why STRC or why, you know, MSTR rather than, say, a spot ETF?
You know, the way to think about capital allocation is if you need your money back, all of your principal back in the next four months, you probably just want to put it in a money market, right? Because it's very stable NAV. It's a safe thing. You know, next Tuesday you'll get the cash that you put in today back. If you don't need the capital for four months and maybe you want it back, you want to invest it for four months to four years and you'd like it to be mostly stable, you're probably a credit investor and you would buy something like STRC, because even if it falls off of par, you've got the representation of the company. We will spend billions of dollars to bring it back to par. And I might not be able to get it back to par in three weeks or two weeks, but probably in four months I will get it back to par, and you can expect us to use all of the billions of dollars of our capital to do it. On the other hand, if you don't need the money for four years or more, if you're a long-term investor, you're either a capital investor or an equity investor. If you're a capital investor, so you're choosing between buying the S&P index or gold or a diversified portfolio of something or Bitcoin, those are all kind of assets without a counterparty, right? And if you don't want to trust a counterparty and you just want to buy an index on the crypto economy or an index on the greater economy, you buy SPY or you buy BTC. On the other hand, if you believe in Bitcoin specifically, in digital credit, and you want to own a company that creates digital credit, or you want amplified Bitcoin returns, you buy a digital equity like MSTR, where you're getting 1.2 or 1.5 times the Bitcoin performance and you can outperform Bitcoin. And also, if you believe that digital credit is a great idea, you buy the institution that's creating the digital credit. And so I would say, you know, a simple way to look at it is, you know, the volatility of STRC is like below 10. It's like eight right now. It's less than the S&P vol, and you get like a 10 to 12% dividend yield right now, 12%. The volatility of Bitcoin, it's like 38, right? And you're getting 38 ARR. So it's almost like a 40-vol, 40-ARR asset. On the other hand, the volatility of our common stock, MSTR, is 80. So you're getting double the vol. You know, we've been providing a 50, I think a 52% return over that six years. So you can get very high returns. You're going to get on the rocket ship, right? The roller coaster. You're going to pull a lot of G's. So the real issue is, do you want to get on the rocket, because that's a digital equity? Do you want to get on the fighter jet? That's probably Bitcoin. Do you want to get on the passenger jet? That's probably STRC. And they're all just different ways to get to your destination depending upon your risk tolerance and your volatility tolerance. And of course, your time horizon makes a big difference. Do you need the money back next Tuesday?
Sure. Okay. So it depends on what kind of investor you are and how much G-force you can stomach, to your point, I suppose. Let's talk about your strategy. Obviously, you resumed your accumulation of Bitcoin. I mean, the pace of those purchases, though, Michael, has slowed down compared to previous years. Why is that?
Well, you know, we've added like 160,000 Bitcoin this year. So yes, it's actually quite a lot of Bitcoin, right? We're the biggest buyer of Bitcoin in the world. But, you know, there is the law of large numbers that if you're starting from a billion-dollar base, you only need a billion dollars of capital to double. When you're starting from an $80 billion base, you need $80 billion of capital to double. So our company is growing rapidly. We think we can grow 20, 30% a year from here, which is very respectable. But, you know, companies like Strive, which is also a digital credit company in the Bitcoin space, they started from a billion-dollar base and they were able to grow 100% in a matter of a couple of quarters. So, you know, it's like, do you want the smaller, super-fast-growing vehicle, or do you want the monster company that's going to grind up 20 or 30% from an $80 billion number? And both of those are very legitimate investment ideas.
But I guess back to your accumulation, and I understand your point. When you did sell, I mean, which was obviously what the markets perceived to be a sort of change in tune from the 'never sell' kind of mantra, you did have a big impact on the market, particularly over the summer. I mean, people saw Michael Saylor selling, and I'm just wondering what you think of your kind of outsized influence right now on the market. I mean, how do you condition these markets right now, if this has very much, and you and I discussed this in May, become now part of the strategy?
You know, we're a very important part of, we're almost like the central bank of the crypto economy. A very important player, the best-capitalized company in the entire digital asset space. But our company has really evolved in many dimensions over the past four months. If you roll the clock back six months, people didn't think we would ever buy our common stock. They thought we'd only sell it. They didn't think we'd ever sell Bitcoin. They thought we would only buy it, right? They didn't think we'd ever buy our credit back. They thought we would only sell it. And it's very important for us to evolve to a company that can swap any asset to any asset, going long and short on any given day. So today we have a billion-dollar buyback program to buy back our common, so we could sell or buy MSTR on any given day. We have a multi-billion-dollar program to buy back our credit, so we can buy or sell any of our credit instruments on any given day. We've already put in place a billion-dollar-plus BTC monetization program, and we've shown the market that we can raise large sums of capital by selling BTC. So we will generally be a net buyer of BTC because our capital is expanding, but we also are able to sell it in order to fund our dividends and back our credit when we need to. Right? So think of a company that is buying and selling in the credit markets, the equity markets, and the Bitcoin capital markets on any given day. And sometimes the credit market sentiment is negative and the capital market sentiment is positive, and sometimes we swap the other direction. So if we were unable or unwilling to, say, sell Bitcoin, we couldn't support the credit. The credit would be weaker, and the credit spreads would blow out and be much more expensive, and that would undermine liquidity and support for the credit. If we were unwilling to buy the credit, that would also undermine liquidity and support for the credit. And if we're unwilling to buy our common stock back, that undermines support of the common. So the thing to keep in mind about the company is we've got $75 billion of capital, but if we paid off all of our liabilities at face value, we still have $55 billion of net equity. Okay? And so the company's got a huge amount of capital that we can use to support Bitcoin, right? Support MSTR and support STRC. And we've just shown the market we're willing to use it. And I think that's one of the reasons why Bitcoin's rallied. That's one of the reasons why our equity rallied, and that's one of the reasons why STRC has rallied. If you look at all three charts over the past three months, they're all up. And so the market had a very narrow view of what we're able to do, and they thought our options were limited six months ago. And that's not good, right, for the market. Now the market knows that we'll do the rational thing, the right thing for Bitcoin, the right thing for the credit, the right thing for the equity whenever we need to. And we have billions of dollars of firepower to do it. We are the 800-pound gorilla in the space. Like, we're going to sell STRC above 100, we're going to buy it below 100. And we have so much capital, we could buy it all. Right? And so anybody that's trading against us, you know, is probably making a mistake, and now the market understands that. That's one of the reasons why liquidity is growing. That's one of the reasons why volatility in the instruments are falling. And so that is a rite of passage for the company. It wasn't pleasant. It was a bit painful, right? But I'm glad we went through it.
