Samson Mow

“When $STRC returns to par and you held for a year, you’d make 51.6% return from effective yield + pull-to-par capital gains. Probably more as Strategy will likely increase the dividend as per guidance. https://t.co/K5yQrCVRDC”

“I'd be surprised if it took more than a few weeks for $STRC to get to par again.”

“$STRC has a self-repairing mechanism that most people don’t really understand. 🛠️ Below par, Strategy stops issuing new shares via ATM. No new capital is raised at a discount, and no new perpetual dividend obligations are added to the balance sheet. This is the case at both $99.99 or $90. The self-repairing mechanism then activates automatically - the farther below par, the more powerful it becomes. Here’s how it works 👇 1⃣ Effective yield increases (higher % return on the same cash dividend). The 11.5% dividend is not paid on the market price of STRC. The dividend is paid on the par value of $100. Think of each unit of STRC as $100 but you can buy it for less sometimes, depending on market conditions. If you buy one share of STRC for $90, the effective yield is 12.78%. 2⃣ Pull-to-par capital gain incentives activate. Strong buy pressure emerges from investors who want the combination of elevated effective yield + capital gains as price moves back toward $100. The higher effective yield feeds the pull-to-par dynamic, which is further supported by the Bitcoin balance sheet continuing to strengthen. Buyers at a discount capture the recovery to par as capital gains. The system self-corrects without anyone having to “defend” a peg (and again for the people in the back, there is no peg because it's not a stablecoin). STRC and similar instruments (such as SATA) rely on free-market incentives and long-term Bitcoin growth to restore equilibrium. If liquidation events (like we saw last week) push STRC below par, it simply trades below par. STRC below par does not negatively affect the dividends; it only affects short-term capital that wants to exit immediately. If STRC required active defense, that would actually be a weakness. Structures that cannot bend under stress will break. Now let's run some numbers to get an idea of the actual incentives for the market. As STRC is a perpetual, we'll go with a one-year time frame for recovery to par. And let's use the $90 IPO price. Effective yield (what you actually earn in dividends relative to your $90 cost): 11.50/90 = 12.78% Pull-to-par capital gain: (100-90)/90 = 11.11% Total return on your $90 investment: (11.5 + 10)/90 = 23.89% *Note this is a simple sum approximation. As dividends are paid semi-monthly throughout the year, the actual realized return is slightly higher if you factor in the timing of cash flows. So this ~24% one-year total return profile (yield + cap gains) is exactly what makes buying below par attractive for total-return investors. It turns a temporary discount into a high single-year payoff (or shorter) while the self-repairing mechanism does its work. To reiterate what I said previously, there's nothing for @saylor and @Strategy to do here. No need to raise the coupon, no need to increase the cash buffer, or anything else. They could do those things of course, but it’s not a necessity. STRC is working perfectly as designed.”

“$STRC is a brilliant instrument. It’s effectively what I tried to do with Bitcoin Bonds: strip out the volatility from Bitcoin and share the upside with investors. There is a massive market for a product like this somewhere in the ballpark of $200 trillion. There’s nothing structurally wrong with the design of STRC (or SATA, MARS, etc.) unless you think Bitcoin won’t appreciate in the long term, which I’m sure none of us do. Can STRC trade for under $100? Yes, of course it can. It moves freely according to market forces (this drop was caused by some leveraged plays). Do some people panic when it’s below par? Probably. That’s the behavior of short-term capital. However, when STRC is trading below par, that’s an opportunity for long-term capital to arb it. It’s the same case as when stablecoins like USDt (note STRC is not a stablecoin) are trading below their peg. It presents an opportunity for people to come in and earn money by buying it at an effective discount and redeeming for $1. It happens all the time. STRC pays the same dividend whether you bought it for $90 or $100. Long-term capital will absorb any below-par STRC like a dry sponge. Keep in mind that STRC is not even a year old. It’s still a baby, albeit one that’s growing at an incredible pace. It seems fashionable to dunk on it these days, but it’s far too soon to say it doesn’t work. Remember, the goal is to strip out the volatility from Bitcoin to package it into an instrument for investors who aren’t necessarily seeking out Bitcoin. This isn’t a year-long project. It’s a decades-long initiative that requires a massive balance sheet to shock-absorb. And that’s exactly what @Strategy has.”