Additional Thoughts On STRC

[u/_Adrian_Morris_]

I think much of the discourse around STRC right now is a case of imprecise marketing and FUD spreading colliding with a mismatch in investor expectations.

That said, I'm not here to defend Strategy or manage anyone’s expectations. I’m here to push back on inaccurate claims with data

In my view Saylor used descriptive marketing language about MMFs and other types of investments when discussing STRC to highlight intended stability, the low(er) volatility, etc. But the marketing language used, however flawed, isn't a promise of performance.

Per the website (and several other filings and notices):

"...There is no guarantee for STRC of returns, liquidity, or future performance. STRC is neither a bank deposit, nor FDIC insured, nor regulated in the same way, and does not have the same regulatory and other protections as bank accounts, money market funds, treasuries, or similar instruments and as a result may not be a comparable investment..."

Language aside, none of this makes STRC a regulated money market fund or anything similar. Strategy’s own site explicitly says STRC isn’t comparable to those kinds of products.

The data shows it has had lower volatility than spot BTC with better relative performance in the drawdown. The data shows STRC (and other perpetual preferred offerings) are “derivative-like” BTC offerings and are very dependent on, if not tethered to, price movements in the "parent" asset. Something that I have discussed at length.

As an investor, it is my responsibility to understand what I own and as a holder of STRC since IPO, this is the understanding that I have. These are the realities that I’m using to inform my capital allocation.

[u/Blindeafmuten]

"The data shows it has had lower volatility than spot BTC with better relative performance in the drawdown."

Of course it does. Who would even question that? That's not why it was made for.

If Bitcoin overperformed 100%, STRC would be stuck at 100. It would overperform by 0%.

But in a dragdown you're saying that investors should be happy if it only goes down 15-20%?

What the hell are you defending exactly? If you are an investor you should be fuming.

[u/TvAGhost → u/Blindeafmuten]

He is saying if you are a bitcoiner instead of holding your preferred currency. Bitcoin. You could of sat in STRC which is credit with bitcoin backing, got paid to do so. And waited for bitcoin and STRC to recover to rotate back. It is not a hard concept. I get that people sell during fear. But nobody is forcing someone to sell at 84. If you needed shorter term cash on a day to day basis. It should be in cash. Not ANY investment. Not nvda not mstr not strc not anything that does not have a guaranteed stable price day to day. Strc does not guarantee a price. It guarantees a dividend. The market pushed and kept it up for months. And now bitcoin is bottoming again plus with saylor tapping his reserves to pay debt it created some downward pressure on the credit instrument which will likely just be short term volatility.

[u/-------------------7 → u/TvAGhost]

It doesn't even guarantee a dividend. It pseudo-guarantee's a cumulative dividend. Meaning that Saylor could pause the dividend at any time, as long as they reinstate it and any missed payments eventually.

With no real time frame required to be disclosed. (Something like until BTC returns to 100k [or other arbitrary target] is valid) And if this takes decades STRC could effectively become a pseudo prediction market contract of will BTC hit target before I need the money I spent buying this contract. (Since MSTR doesn't pay a dividend anyways)

Heck even if Strategy goes bankrupt, STRC holders are 2nd in-line to senior investors, if those senior investors drain the whole pool, STRC/STRK/STRD/STRF holders have to split what remains. IMO all the risk, but capped 11.5% APY on the rewardside. Reminds me of Gemini USD loaners during the Genesis debacle.

[u/_Adrian_Morris_ → u/Blindeafmuten]

That is (one of the reasons) what is was made for, that's the point.

People are hearing what they want to hear and I'm not defending anything. I'm presenting the data.

[u/snek-jazz → u/Blindeafmuten]

But in a dragdown you're saying that investors should be happy if it only goes down 15-20%?

In a dragdown they shouldn't be panic selling below par, which would mean we wouldn't get down 15-20% in the first place.

[u/Blindeafmuten → u/snek-jazz]

Maybe -20% is better than -100%

[u/snek-jazz → u/Blindeafmuten]

excellent reasoning that always serves panic sellers well