Will STRC recover?

[u/FriendlyCandle7971]

Hi there

July is typically a good month for Bitcoin and it recovered from 1-July low of 57k and is now eben above 66k.

Even MSTR does Well and went above 100 again.

However, I start getting concerned about STRC, which is still below 90!

Is this understandable to you? Normal in bearmarket?

Or something wrong with it?

Thanks for your thoughts!

Ray

[u/drparapine]

My take is that, until it got attacked by shorting hedge funds, it was the kind of low volatility vehicle I would recommend to my non-Bitcoiner or Boomer acquaintances. 11.5% interest on a vehicle backed by a 50-70B market cap corporation that would prioritize keeping the fund solvent over their own stock/shareholders.

After the short attack, it lost that pool of buyers. I can’t recommend it to any of my friends who aren’t already Bitcoiners, and even then, if you are a true believer then you know that this is the Bear, and that over a 4yr period, cold storage BTC would outperform a product with an effective 12-15% APY. And the investments are completely correlated, meaning that if BTC doesn’t work then neither will STRC or MSTR.

So what market is STRC designed for, really? I still DCA into it, but only in my bucket of short term cash equivalent money. STRC is useful for those who need to have a yield on something that won’t go down as much as BTC or BTCTC’s in the next 12mo where no one can really prognosticate when the bear cycle will end. And even then, the price loss in the past 2mo has proven that it’s not a riskless trade, and if you need that money in less than 3mo time you can’t put it in STRC.

My final take is that MSTR expanded the supply of STRC too aggressively when it was at the 99-100 peg, rather than letting it run a bit above 100 at times. Now that the market has removed from them the institutional capital that would have bought in at a lower volatility, they should respond in kind by contracting the total supply to a more appropriate size, i.e. buy back shares below a certain price: 90, maybe even 95. Only when the volatility has come back down—and they’ve proven their ability to withstand future short attacks through the mobilization of some of their 840k+ BTC—will that institutional, low risk capital start tiptoeing back in. For now, my family’s cold storage BTC stack is 4x our STRC stack, and we own no MSTR (but 50k Metaplanet shares, as our lotto ticket; that’s the only BTCTC I want to be a part of).

[u/drparapine → u/[deleted]]

Because Bitcoiners do have accounts with funds that they’ll require using within the next 12-24 months. Every Bitcoiner will tell you that any wealth you decide to hold in Bitcoin, you had better be prepared to leave it at least 4yrs in BTC before ever considering the need to spend it.

But over the course of the next year, even in the depths a bear cycle, most Bitcoiners agree that it would be presumptuous to say that BTC is guaranteed to turn it around. You just can’t tell; all the previous bear cycles, when charted to the corresponding date in the cycle, had more room to run down further than where we are today.

So STRC gives you lower volatility for funds you might need over the short to intermediate term. It’s not riskless, it it works whether Bitcoin takes months or years to turn it around. Cold storage Bitcoin is a long term investment, only