MSTR Today: Macro Trends You Can't Ignore

0:00Welcome to MSTR today in the Treasury Titans. It is Thursday, it is September 24th, it is JLD and nothing in this video is financial advice. Hope you have a great Thursday. Bitcoin's taken a little bit of a breather, but man, this video with Michael Seller and Jim Kramer are absolutely hysterical. You have to take a listen. Coin just keeps going up. How is this possible? I sold all my Bitcoin at the bottom to buy the SpaceX IPO and I'm down another 50%. I thought Seller murdered Bitcoin. Did someone call me? Michael, what are you doing in my studio? I'm sorry for your loss, Jim. It's still early to buy back your Bitcoin. But I already lost all my money, Michael. I can't even pay the rent for this studio next month. No worries, Jim. I'm buying this show. Okay, let's also educate the bears. Today we talk about digital capital and digital credit.

1:00Does anyone know what digital capital is? Good. And does anyone know what digital credit is? Okay. So today we, oh man, these videos continue to entertain enemies and listen, we have a good update from Zade. I want to get into about Q3 and how it ends on September 30th. Net Bitcoin accumulation currently sits at zero. We have six days to change that number and I'm sure we will. This has largely been a quarter about rebuilding the base. The Bitcoin holdings are literally at 846,000. There's been zero Bitcoin net change strategy sold 5,553 Bitcoin during Q3 and since buyback exactly 5,553, the Bitcoin per share is down 7.72%, which of course no MSR shareholder wants to see, but it's been a bear market. Things had to happen.

2:01The fortress is stronger. We move forward. USD liquidity 3.75 billion. Now it's at 6.09 billion. So almost a double and net leverage 5.4% went down to 0.85% by the end of this quarter. Where we're at right now, that's an 84% drop. So the rebuilding has come at a cost of shareholders with Bitcoin per share declining significantly as delusion outpaced the increase in Bitcoin stack, but the balance sheet has strengthened materially with a net leverage down near zero. While USD liquidity has increased by more than two billions in the last earnings call, I think stretch entering its next phase will stand as a much stronger instrument when it's ready to raise capital again. My expectation is that if strategy decides to leave MSR untapped as it has over the past two weeks and utilize USD cash to accumulate aggressively over the next few trading days, net leverage could move slightly higher, but could also meaningfully improve the quarter's Bitcoin accumulation.

3:01The interesting part is what management chooses to do with the optionality they have at hand with the USD cash available. The team does like to end each quarter with a bank and I don't think you through it will be any difference. The next few days are going to be fun mission strategy. And by the way, that's what I love most about strategy is every day is fun. Every Sunday, every Monday, every time Bitcoin moves up or down, MSR is fun. And British Hottles says the entire last two years in Bitcoin will go down in my mind as dumb money rotation. British has been very vocal about this for the last two years that dumb money has been selling. Smart money has been buying. And now dumb money is on the sidelines and smart money owns the Bitcoin. Adam says, good morning to everyone, except the people who begged for cheaper Bitcoin and are now terrified because Bitcoin got cheaper. Anthony says, AI agents significantly increased

4:01the total addressable market for Bitcoin, stable coins, and tokenization. And if you don't think AI agents are going to want Bitcoin, we are not the same, my friends. Really great post by BlackRock, their latest resource paper explores the growing connection between AI and digital assets and explains why broad AI adoption may drive new demand, utility and applications across the digital asset economy. When BlackRock comes out and they are declaring things like you're seeing here, all I can say is powerful, powerful times are ahead. Ben and workma says, it might just be me, but it seems like the 10 year and 30 year might be trying to tell us something. What are they trying to tell us? Well, let's dive into what's right about now. Bitcoin knew says that US 10 year bond yields are going vertical, best in is in panic mode. They will be forced to print to buy the treasuries and keep a lid on rates.

5:01Got Bitcoin? This is terrifying to best it right here. Mark says, Scott Bessence has lost control as the CBE OE interest rate continues to rise uncontrollably. And great post by the co-BC letter, breaking M2 money supply jumped $124 billion in August to a record $23 trillion. This marks the 28th consecutive monthly increase totaling $2.61 trillion year-to-year, M2 grew 5.7%. It's largest year-to-year increase since June of 2022. This marks a sharp acceleration from the 2 plus percent year-to-year growth seen in August of 2024. Meanwhile, since the 2020 pandemic, M2 money supply has surged $7.85 trillion, equivalent to $1.1 trillion on average per year, or 6.5% annualized growth. US money creation is picking up speed. And it's going fast. We had a little bit of a drawdown for a hot meta in 2021,

6:04and then it's been going nothing but up until the right since then. Let's get into how Chris says that as T is a fast follower. What does that mean? One of the biggest advantages is that is been able to learn from many of the lessons that MSTRA was forced to discover the hard way as a consequence of being the first and pioneering the digital credit industry. The team at strife had the benefit of observing the entire process and adopting what worked and discarding what didn't, hence the exceptionally clean balance sheet, the deliberate focus on a single product in SATA, and a capital structure built around perpetual preferred equity rather than convertible debts. I do not have a position, but as someone who has a lot of respect for Jeff, Ben and Matt is being beautiful to watch. And as somebody who has a position, that's me, I'm raising my hand, it has been beautiful to watch in experience. AirMAI says after five days of rest, MetaPlan is up 20% despite the brutal last not brutal,

7:05but just despite the drawdown over the past couple days of Bitcoin into the 83s, all the way from 87 and changed just really 48 hours ago. So that's the thing is that MetaPlanets has had some bad press recently, as we've covered here with the fact that the incentive structure seemed quite misaligned. They made definitely some very strong moves to correct that, but some very strong moves a lot of people believe still need to be made, so time will tell on that. But here's the thing, this is just another example of when you think you know what's going to happen as an investor, you're probably thinking like everybody else is thinking, and then usually the opposite happens. And if you're not positioned correctly, which is just positions in general, you miss moves like these, and it can be absolutely brutal. We have a great clip from Michael Seller coming up now

8:05where he joined Bitcoin Conner for a fireside chat at the Bitcoin policies Freedom Tech at the DC Summit, coming up as soon as we get back from thinking our sponsor. Quick pause, because this might matter more than your next Bitcoin move. Your personal data is being bought and sold online right now, emails, phone numbers, home addresses, even family connections, all floating across hundreds of data broker databases, and this is exactly where highly targeted scams, fishing attacks, and identity theft begin. That's why I use incogni. Incogni acts as your personal privacy advocates, they handle the complex legal legwork of demanding that these data brokers delete your information, and they manage the entire request process on a recurring schedule to ensure your data stays off the market when it tries to reappear over time. And here's the kicker. If you offer their unlimited plan, you get access to their custom removal feature if your sensitive information pops up on a specific site the falls outside standard broker list,

9:05like a random blog or old directory, you just send incogni the link. You don't have to do any manual chasing of shady websites incogni's team of privacy experts steps in to handle the manual corporate take down request for you. It's a simple setup to get back in control. Create your account, grant the permission, and they get to work clearing your digital footprints on your behalf. They can't harm you if they can't find you. Take your personal data back with incogni. Use code MSTR for 60% off an annual plan at incogni.com slash MSTR. That's code MSTR for 60% off an annual plan at incogni.com slash MSTR. I actually prepared a digital assets taxonomy that I presented at the White House Summit about a year and a half ago.

10:07And I think that's still relevant. If we think about the opportunity for digital assets, the industry right now is about a $3 trillion space. It could become a $10 trillion, $20 trillion, even a $100 trillion space. The opportunities are fairly straightforward. One of them is around digital tokens and capital formation. Right now it's too expensive. There's too much friction in raising capital or financing new businesses. So if we think about the impact of AI and digital intelligence, one thing we're doing is we're going to automate out and a lot of jobs. And we're going to eliminate a lot of jobs and a lot of business models and a lot of traditional products. If we want to ensure full employment and prosperity, we need to create a lot of new jobs

11:07and a lot of new corporations, a lot of new products. So that means that you would like to see a world where 10 million companies can be launched with capital. And right now, even though the US has the most advanced capital markets in the world, our markets and our structures for raising capital for small mid-size businesses are still fairly antiquated. Like for example, what the crypto industry showed is during the ICO boom, you could raise capital in 48 hours. And there are 10 million businesses in the United States that could raise money in four days with 40 bucks. If we had the right regulations, instead, we have a set of rules where people are paralyzed and fear to raise money. If you're a podcaster, there are literally rules that say that you're not allowed to mention to the people

12:08that want to give you the money that you're raising the money. Yeah. Right? And if you think about how insane that is, like we have constructed rules the cripple capital formation, the opportunity is to modernize those rules and allow the creation of digital tokens. And I think one of the great travesties is there's 40 million businesses in the United States and there's maybe 400 million well-known, sorry, there's maybe 400 well-known seasoned issuers. So 400 out of 40 million can actually raise money low friction in the public markets. That's how difficult it is. And there are a lot of companies that, there are companies that when public bias backs, BSTR21, et cetera, in the digital asset space 18 months ago, and after 18 months, even with $4 billion a capital and an army of lawyers 18 months later, they still can't raise money, right?

13:11So I think one opportunity is to modernize that. The second is digital currency, right? Everybody wants to move US dollars at the speed of light. We made some progress with genius, but if we look at clarity, one of the things about clarity was that it wasn't a bill of rights, it was the bill of restrictions. It was 630 pages of which 600 pages are like restrictions and maybe there's a couple of pages of rights that are kind of hidden there. But this is freedom tech, right? And one point I'll make is that freedom starts with the bill of rights, it starts with the ability to do things. You have the right, for example, the right to pay interest on your digital currency. Most of the lobbying in this town has been about taking away the right to make the asset useful. So I think what we've got is,

14:12what we've got is, we've got a world where you would like to be able to issue 10 million different digital tokens. You would like to be able to issue digital currencies. And if there was a competitive free market and digital currency and all the currency issuers were able to offer various yields, then you would have 100 or 1000 competitors and you would have a very vigorous market there. And I mean, there's no reason why. We actually have policy in this town to keep companies like Meta from doing that. Like I think we actually put, at some point, we're putting in rules to prevent Apple or Google or Microsoft or Meta from actually creating a digital currency. But of course, if you were pro dollar and pro United States, wouldn't you want Apple and Google to build the stable coin

15:12into the iPhone and Android phone and give it to 6 billion people? You would think, right? If you wanted to actually cripple the dollar and cripple innovation, you would prohibit these companies from doing that. So a lot of our policy is about pro-abition, right? As opposed to allowance. I think that if we look at the various assets after digital token and digital currency, the question is digital commodities, right? And Bitcoin is the greatest of the digital commodities. And if we want Bitcoin to reach its full potential as a digital commodity or as digital capital, the key there is a set of rules that allow banks to custody it and extend credit on it and to eliminate hostile or prejudicial accounting rules or regulatory rules that would prevent a bank

16:16from handling the asset. But banks, banks and insurance companies are two special types of entities. And they both have licenses from the government. Insurance companies get a tax benefit. They don't have to actually pay tax on fixed income for regulated assets. That's a huge entitlement to an insurance company. And then banks have similar entitlements. The banks have the entitlement to create dollars out of thin air. Okay, so right now there are certain regulatory restrictions or there are rules that discourage an insurance company or a bank from handling an asset like Bitcoin. And so that's an example of policy that tips the balance against the asset and against digital capital. But of course, if you want to have the world's most competitive insurance businesses and the most competitive banking sector,

17:18you would wanna allow digital capital to permeate both of those businesses. Insurance companies backed by digital capital will offer twice the payout and such half the fee. That would be good for the industry and good for the customers. A bank that is able to handle digital capital can offer better money, better investment products at lower cost. So I think that if we wanna see if we wanna see the United States prosper and if we wanna see the world prosper, then you wanna embrace the digital transformation of assets and that would mean tweak a few regulations that keep insurance companies from beginning to put digital capital on their balance sheet.

18:18Eliminate some of the prejudicial rules like the Basel haircut, the 1,250% risk waiting that discourages banks or actually just kind of cripples banks from being able to use Bitcoin in that way. I think we have much more progressive guidance coming out of the Treasury, the OCC, the FDIC, the allows for crypto custody and the formation of crypto credit. And I think that will be a big deal. There's about $1.6 trillion of capital in Bitcoin right now and for the most part it's unbanked. Like the only way to bank it is to convert it is to wrap it into an ETF and then it's sort of banked as Ibit or the FBTC or something. But of course, if the major banks in the US and JP Morgan and Morgan Stanley,

19:20if they start to custody BTC, then they can start to create credit on BTC. And of course, if they do that, the...