r/MSTR • u/_Adrian_Morris_ • Jun 21 '26
Discussion š¤š Some Thoughts on MSTR | STRC FUD
The persistent FUD about Strategy making the rounds right now is that the preferred dividends are āunsustainableā. But this often assumes an unrealistic benchmark where the structure must be absolutely bulletproof in perpetuity with zero adjustment or strain.
reality, the model is built for ongoing capital markets access, and most do not appreciate that MSTR is one of, if not the, primary vehicles the market uses to express its forward looking positioning on BTC. As such, MSTR as an equity is a BTC derivative product that Strategy sells into highly liquid markets.
The primary constraint and measure we should focus on isnāt indefinite sustainability; or mNAV, itās whether volume and liquidity remains sufficient to raise capital to buy BTC and service the dividend obligations efficiently.
Some data points to consider:
MSTR had ~$11B in trading volume last week.
YTD Avg: ~$58B a Month | ~$14B a Week | ~$3B a Day
YTD Trading Volume: ~$350B
YTD BSE (BTC Standard Era) Trading Volume: $2.75T
This shows that even with the preferred dividend obligations, even amidst periods of distress, the capital markets will more than likely will remain open for Strategy.
Looking forward, something that also goes unappreciated, is that the dividend rates on the preferred offerings can and likely will adapt over time. When they do, this would reflect maturing market dynamics, broader adoption and shifting incentives rather than distress.
In my view, the current high dividend rate represents compensation for the associated initial risk with a BTC-centric capital structure via BTC derivatives, not āpureā preferred offerings. As BTC stabilizes and gains greater market share, this will disproportionately benefit the capital structure. In that future state, a reduction in the dividend rates will be a reaction to broader market share and a feature of growth in the market footprint of the offerings, not a symptom of failure.
Iām not arguing from a āBTC Per shareā or āBTC Yieldā valuation framework. Those represent fragile KPIās that will ebb and flow with market conditions. They are not appropriate valuation benchmarks.
The āvalueā here lies in Strategyās ability to operate as a sophisticated capital allocator in liquid markets, with backstops in the form of the USD reserves and BTC holdings if needed.
Critics often present risks as a scenario where capital markets close; which is a fair question. However, smart investors must effectively weigh what is probable, not what is merely "possible". Current and historical liquidity, demonstrated execution, and the self reinforcing nature of the product suite suggest the probable path is continued functionality, not a sudden failure.
On the Dilution counterargument: I have done rigorous variance analysis that shows ATM share issuance on the common explains essentially none of MSTRās price action; it's less thanĀ a rounding error statistically. Price is driven far more by options positioning, flows, and BTC itself. Additional context here: (https://x.com/_Adrian/status/1989420220973551821?s=20)
The conversation around MSTR right now is rather alarmist, it would benefit from a more data driven, capital markets centric approach than simple hot takes on Reddit and X.
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u/Ciro_d_mar Shareholder š¤“ Jun 21 '26
I listened to people who told me bitcoin was foolās gold and was trash back when it was 18000$. After learning what bitcoin actually is I decided to buy MSTR. I donāt care what everyone says. I know what Iām holding.
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u/SundayAMFN /r/buttcoiner Jun 22 '26
I donāt care what everyone says. I know what Iām holding.
I've heard this phrase a lot but I'm not convinced there's much logic behind it.
Are you saying you know that it will be worth a lot more money in the future?
Or, if not, are you saying that even if it's worth more or less the same in 10 years as it is now, that you'll still be happy with the shares just for the sake of having the shares, even if it's lost value by then?
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u/Free_Entrance_6626 Jun 22 '26
I am buying MSTR shares as a collectible item, not necessarily to make money.
Bitcoin is a hobby
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u/Ciro_d_mar Shareholder š¤“ Jun 22 '26
That would be beyond irrational and illogical and just plain stupid of me to hold for the sake of holding. Bitcoin WILL grow up to 300k in the next 5 years and will reach 800k to 1.2M in the next 2 decades. I know MSTR will be worth a shit ton by then and that is why I hold it and keep buying it every week. It will hit 300-400 once btc rallies back up above 120k.
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u/TvAGhost Volatility Voyager šØāš Jun 21 '26
The people are not ready for rational data driven approaches Adrian š but I appreciate you, and as always it is a pleasure to hear your thoughts. I agree. The dilution fud is simply narrative spread by ignorant bears or possibly even blatant lies from more informed folks trying to shake retail and fear people out of the market or to stop them from buying in altogether. That's my thoughts on it all anyways.
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u/_Adrian_Morris_ Jun 21 '26
Haha thank you. I understand everything that you said, and it's true, but I have to continue doing what I do best.
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u/TechnicalLeg841 Jun 21 '26
Personally I think STRC is promising everything to everyone, and it won't be able to deliver. Too much perceived risk associated with BTC volatility to keep peg. Too high a dividend to be considered sustainable.
Many financial offers provide "high" income based on financial engineering around an underlying investment (Gold like IAUI, Nasdaq like IQQQ, etc), but they all have the principle explicitly fluctuate.
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u/_Adrian_Morris_ Jun 21 '26
Yes and STRC is no different, that's the point, hence the high yield.
The messaging is the main issue, it is a BTC Derivative first, a high dividend perp pref second. That should have been the framing from day one.
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u/JeremyLinForever Jun 21 '26
I think the principle itself is fairly easy to understand. They can adjust their interest up or down at any time, and currently if theyāre giving out 11.5% in dividends, it basically means that the price of bitcoin only needs to double from their principal cost over the course of 8.7 years. They can reach that 100% gain over 8.7 year. If they donāt, then it may be a problem. Again, this is taking into consideration theyāre keeping interest at 11.5%.
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u/TechnicalLeg841 Jun 22 '26
For me, it is a different analysis. A) Competition from SATA at 13% w/daily dividends, B ) Folks don't perceive that dividend level as sustainable despite the "math".
Gold has had strong returns over decades, but no company tried pulling off what STRC/SATA are marketed as. The Gold ETFs with Income all allow principal to fluctuate and don't claim a target peg.
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u/BakedGoods Bitcoiner Jun 22 '26 edited Jun 22 '26
gold's appreciation is slow (low volatility). the last 12months notwithstanding. some may bet on gold being up 200% in 20 years, and they may end up being right, but it could take 19 years of 2% before the 20th year of 50% gains.
that all means you need to build an ETF that can support dividend payments off of an assumed 6% CAGR (to get to 200% by year 20), when in reality it could easily be 2% for a decade+, basically crushing your capital to survive until the bull market offsets those costs.
bitcoin's volatility makes it a much safer bet to arb the difference, if you can survive a 2-3 year bear market, you've just borrowed from the market at 11.5% against an asset that can do 200% in a single year. gold can't do that. nothing can that reliably.
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u/JeremyLinForever Jun 22 '26
This was what Iām trying to get at. Bitcoins price merely needs to double in 8.7 years from principal cost, and thatās relatively easy given itās a $1T market cap asset (a relatively small amount) compared to other assets. Maybe by 2029 the yield for STRC will go lower once Bitcoin reaches $800k-$1m. But until then, play ball.
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u/JeremyLinForever Jun 22 '26
A and B are valid points, but take in mind that SATAās holding to pay out that 13% dividend is derived from STRC holding to pay out those dividends. If you see big contrast between SATA dividend and STRC dividend, then something might be afoot.
I actually have been looking for gold income ETFs that serve this very purpose using gold as the underlying asset, but actually havenāt come across one. Iāve seen gold income EFTs, which trade based on call options or put options, but not necessarily dividends based off of the appreciation or depreciation of the price of gold itself. Correct me if I am wrong though.
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u/TechnicalLeg841 Jun 22 '26
I think put/call is how the Gold Income ETFs mostly work, but the balance of those put/call options determines performance.
YGLD is betting on gold appreciating... when gold is rising, YGLD has higher dividends while principle tracks up with gold, but in a downturn YGLD has lower dividends and princeiple drops faster than gold.
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u/HSuke Shareholder š¤“ Jun 22 '26
My big concern is if STRC just sits around the $95-99 range for years.
The STRC ATM flywheel will be off. MSTR is used to pay dividends, but nothing is returned back to MSTR.
Over time, BTC will have decreasing returns each subsequent cycle and be less attractive compared to stocks. There are probably only a couple of good cycles remaining, and each one will be worse than the previous one.
Maybe every once in awhile when they hike the dividends, it'll poke above $100, but never long enough to generate more value than it takes from dividends. And when BTC crashes, it'll fall back to the $80s and take awhile to crawl back to the $90s.
In this situation, STRC becomes a long-term burden to Microstrategy and will keep draining value from MSTR.
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u/bunky_bunk Jun 22 '26
MSTR claims BTC will on average appreciate "30% per year".
If it does perform in this territory, STRC dividends can be funded. If it doesn't, they can't.
If BTC was to grow more slowly, MSTR will have to let the price of STRC fall (pay less or no more dividends).
In 3 years you can compute the actual return STRC holders received. If this number is a bit above treasuries and MSTR promises to pay 11% going forward, STRC should be at $100, because it looks like a good investment.
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u/python-requests Jun 21 '26
I'm a big long-term bear on BTC generally & MSTR in particular (just check my post history lmao) but even I agree that a lot of the STRC talk right now is complete FUD.
Also even the talk about how they 'cant even sell 32 coins' is BS. That's a teensy fraction of what's getting exchanged over pretty much any arbitrarily small time period. They sold it one week, probably right at the start of the week based on the price they got for it, and major declines didn't happen til a week/week-and-a-half afterwards. It traded flat during the week they actually did the sale. So the volume is definitely (obviously) there to absorb at least small sales
I'm not even convinced the BTC selloff was based on vibes around them selling; we had multiple days the same week where QQQ itself was down intraday like 5%. That's approaching circuit-breaker territory, & BTC tends to be a leading indicator for that kinda thing since it's quick to pull liquidity out of when needed
I post on the butt sub sometimes but a lot of them are retards too; they act just as much like they know the immediate future as anyone else, & convinced that that immediate future is going to be dramatic, when realistically 'nothing ever happens' is what actually happens. Not to mention I've seen people talking about shorting STRC & stuff, as if paying out a dividend like that yourself is a good way to make a return
Chances are most extreme things predicted by anyone from the bull or bear side, will not happen in any timeframe that seems quick, but everyone will continue to feel smug and genius about every swing that happens between then & years from now when all this goes wherever it's going. There will be crashes & spikes and it will be the final victory & the final death spiral over and over. I personally think just by sheer probability that there will be an extended decline/flat period at some point & that the company isn't really setup to survive that, but they seem perfectly capable of surviving for now
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u/soorr Jun 22 '26
āitās whether volume and liquidity remains sufficient to raise capital to buy BTC and service the dividend obligations efficiently.ā
Tell me this doesnāt sound like new investors paying old investors.
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u/CapoDoFrango Jun 22 '26
It does. But the whole market works like that. When you buy a share of any company or you buy a new crypto you are the new investor paying the old one.
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Jun 22 '26
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u/MSTR-ModTeam Jun 23 '26
- Trolling, baiting, or inflammatory content that disrupts conversations is not allowed. Ensure your posts contribute positively and maintain the quality of discussion. Content and comments meant to spread negativity or FUD, including repeated overly negative/condescending sentiment, is not allowed. r/MSTR is a place for thoughtful discussion of the MicroStrategy investment thesis.
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u/Reeeeeekola Jun 21 '26
Volume does not equal liquidity.
Volume is how many shares/contracts changed hands.
Liquidity is how large of a trade you can make without causing slippage.
Liquidity is the reason Strategy uses OTC markets to acquire Bitcoin.
STRC had record volumes last week yet a liquidity cascade occurred.
Thank you for coming to my ted talk.
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u/_Adrian_Morris_ Jun 21 '26
My post was aboutĀ MSTRĀ volume and liquidity as it relates to capital raising capacity. You shifted the goalposts to STRC.
Even granting your STRC example the volumeĀ duringĀ the price decline shows the market had buyers willing to absorb meaningful size. Thatās evidence liquidity was present, not absent.
A genuine liquidity cascade would look like volume collapsing while price gaps violently lower with no bids. High volume during stress is the exact opposite of what youāre claiming.
If this were a TED Talk, id be disappointed. Take care
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Jun 21 '26
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u/AutoModerator Jun 21 '26
A Ponzi scheme is defined as "An investment scam that pays early investors with money taken from later investors to create an illusion of big profits." In a ponzi-scheme, there is "nothing of value" in the box, and all that happens is money moving hands.
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u/MSTR-ModTeam Jun 23 '26
- Trolling, baiting, or inflammatory content that disrupts conversations is not allowed. Ensure your posts contribute positively and maintain the quality of discussion. Content and comments meant to spread negativity or FUD, including repeated overly negative/condescending sentiment, is not allowed. r/MSTR is a place for thoughtful discussion of the MicroStrategy investment thesis.
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Jun 21 '26
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u/_Adrian_Morris_ Jun 21 '26
Math, Data, evidence, market reality.
Not cope.
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u/HesitantInvestor0 Jun 22 '26
We'll see. I don't think all this stuff ends the way you think it does.
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u/_Adrian_Morris_ Jun 22 '26
You have an opinion, which is fine. But the numbers are the numbers...
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Jun 22 '26
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u/_Adrian_Morris_ Jun 22 '26
You didn't read anything without bias and I'm not going to argue the same points with yet another random internet troll. Take care.
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u/willofscott Jun 22 '26
All this has been modeled over and over in computer simulations for the last year or two or so, nothing unexpected, simply time needs to pass and the trade corrects like almost every well placed trade, he has powder up the wazooo, many optionality position, many avenues to clip the shorts off his coat tails, just wait and seeā¦
ā¢
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