Why Strategy Spent 25x More on STRC Than Bitcoin

Welcome to the Bitcoin Balance Sheet. Each Friday, we recap key insights from our podcast hosted by our very own Tyler Rowe.

Strategy spent 25x more on STRC than bitcoin last week, and our live panel says that's bullish. Chase Palmieri and Parker White told Tyler why STRC's gap to par comes down to the marginal seller, not the rate, and why a billion-dollar buyback is a rounding error next to hundreds of billions in planned digital credit. Then British HODL, a Strategy shareholder since 2020, told Tyler why bitcoin's next big buyer doesn't want any bitcoin, and where his $340,000 call stands.

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STRC's Buyback Is a Speed Bump, Not a Retreat

Strategy spent $192 million buying back STRC last week, 25x what it spent on bitcoin. Strive bought 3,311 BTC, bringing it to 32,773 BTC, and wrote its $100 par floor into its charter. On our livestream with Chase Palmieri and Parker White, one panelist said the rate isn't STRC's problem: SATA holds par even though Strive is more levered. The issue is the marginal seller. "You can't really fix that with a rate." Chase added that, per Chaitanya Jain, Strategy's head of investor relations, buyers from STRC's $72 bottom were waiting for $99.98 to exit.

The panel called the buyback a speed bump. If Strategy plans a couple hundred billion dollars of digital credit, a billion dollars now is "effectively a rounding error," like the 2022 Silvergate loan payoff. Another panelist went further: "I think we'll see $3 billion days on STRC through the ATM."

Listen and subscribe for the panel's full thoughts on a zero-volatility digital credit ETF and amplification vs. bitcoin per share.

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Bitcoin's Next Big Buyer Doesn't Want Bitcoin

British HODL, a Bitcoin investor who has held Strategy stock since 2020, told Tyler that bitcoin's next big bid comes from people who don't want bitcoin at all. Digital credit, he said, is the most efficient product to sell "because there's no education needed." Preferred buyers "don't understand Bitcoin"; they only ask whether the dividend will be paid. So income money in pensions, annuities and insurance that can't hold the coin can still buy a preferred that pays. Those fiduciaries move slowly, he said, but "they would rather take the longer time and then come in big."

He's still holding his $340,000 target, plus or minus 15%, based on a 2013 model, and sees $126,000 as a mid-cycle top, not the end of the run. "I think we're closer to it than we think." He said IBIT saw a net 2% redemption rate through a 50% drawdown, and that he has borrowed against his IBIT at central bank plus one, while Bitcoin-backed loans run 12 to 15%. And rates? With nominal GDP at 8% and rates at 5 to 6%, he thinks they've topped.

Listen and subscribe for British HODL's full thoughts on the "dark horse" in Strategy's capital stack and retiring $10 billion of MSTR common into a new preferred.

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