ChainThink news, on March 14, Strategy founder Michael Saylor posted that a simple theory of digital credit is:
Acquire substantial appreciated capital (BTC).
Credit (STRC) secured by equity-based collateral.
Monetize a portion of the appreciation—directly or through derivatives (MSTR)—to fund dividends.
Credit investors exchange volatility, risk, duration, and performance for equity investors. Credit (STRC) receives cash flow and stability, while equity (MSTR) experiences amplified value performance and volatility.
ChainThink Note: Strategy, as the largest cryptocurrency treasury holder, owns 738,731 BTC with a total cost of approximately $56.04 billion. MSTR is the publicly traded equity of Strategy on U.S. stock exchanges, with a current total market capitalization of $46.6 billion. STRC is a floating-rate perpetual preferred stock issued by Strategy, positioned as a short-term, high-yield credit product, priced near $100, with a current annual dividend yield of approximately 11%, paid monthly in cash and adjusted monthly.
The strategy raises funds by continuously issuing STRC to purchase BTC, aiming to inflate its market capitalization by exploiting the common perception that the total value of BTC holdings should be lower than MSTR’s market cap, while continuing to issue STRC in hopes of achieving a self-reinforcing upward spiral. Internalized leverage amplifies the volatility of MSTR’s stock price relative to BTC, making it effectively a leveraged way to invest in Bitcoin.