i think strc probably pumps the fuck out of the coin but has more risk than people admit, especially long term, and hopefully it does not blow up in all our faces
seems like a lot of things could go ...
I think the key feature to the preferred instrument is the interest rate can adjust.
If Bitcoin's price tanks, the effective collateral sitting behind the preferred also tanks, but the interest obligations can also tank.
At the end of the day, if Bitcoin tanks, preferred investors get screwed, in that they then take all the downside associated with Bitcoin's volatility (in the form of little to no yield) but only get a fraction of the upside to Bitcoin when it runs higher, because they just get the interest payment.
Institutions are smart enough to see this. So the money flowing into the preferred is super bullish for bitcoin. It says that investors want bitcoin exposure so badly, that they are willing to take all the downside for limited upside -- just because, for whatever reason, they cant hold it directly.
It is quite incredible, really. There is such distortion in trad-fi. And Saylor is unapologetically taking advantage of it all.
If Bitcoin's price tanks, the effective collateral sitting behind the preferred also tanks, but the interest obligations can also tank.
At the end of the day, if Bitcoin tanks, preferred investors get screwed, in that they then take all the downside associated with Bitcoin's volatility (in the form of little to no yield) but only get a fraction of the upside to Bitcoin when it runs higher, because they just get the interest payment.
Institutions are smart enough to see this. So the money flowing into the preferred is super bullish for bitcoin. It says that investors want bitcoin exposure so badly, that they are willing to take all the downside for limited upside -- just because, for whatever reason, they cant hold it directly.
It is quite incredible, really. There is such distortion in trad-fi. And Saylor is unapologetically taking advantage of it all.
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