00:00Lynn, thank you so much for joining us. Katie and I have been excited the whole show to chat with
00:03you.
00:04So we do know that Saylor really has this reputation of never, ever sell.
00:08So when strategy sells Bitcoin, how should investors interpret that?
00:12Is this business as usual or is this a signal of something bigger?
00:16So thanks for having me. I interpret it as getting back to their prior guidance on their USD reserve.
00:22So if you recall, a couple of quarters ago, they had a view that they were going to have two
00:28to three years of dollar reserves,
00:31which would give them kind of a volatility buffer to keep paying dividends on their securities without having to sell
00:37Bitcoin.
00:38And for a couple of different reasons, they ended up dipping down to about six months.
00:42And that was at a time when there was leverage built on top of one of the most popular security
00:48other than their common stock, which is STRC.
00:51It had that large like DPEG moment going way below their target price.
00:55And since then, the company's come out with a board level decision to have at least 12 months of reserves,
01:01unless the board allows otherwise.
01:03Currently, they're back up to 17 months.
01:05And recently, they announced that they were selling Bitcoin to pay some of their most recent dividends,
01:10which at least I interpret as not wanting to have their reserve, their US dollar reserve dip again.
01:15So I think they're kind of rebuilding back to, you know, we're going to see what the number actually is.
01:20But I think they're basically getting back to something more resembling their prior guidance from six months ago.
01:26And that includes being willing, clearly, to sell some Bitcoin when needed.
01:30It's a small percentage of their stack.
01:32Right.
01:32And then I want to talk about sort of the symbolic importance of strategy, because I have a lot of
01:38folks from TradFi.
01:40And when it comes to crypto, all they want to talk about is what's going to happen to micro strategy.
01:45So, you know, you just went into the details about, you know, what some of their financing looks like at
01:49this moment.
01:49But when it comes to a sentiment perspective, when it comes to a signal perspective, I mean, how do you
01:55think about strategy in the broader ecosystem?
01:59Yeah, it's a good question.
02:00I mean, the strategy owns something like 4 percent of Bitcoin.
02:02Bitcoin. So it's large, you know, it's large in and of itself.
02:05You know, I wouldn't call it systemic, but it's large.
02:08You know, the chairman obviously is, you know, extremely well known in the space.
02:12And, you know, he's well known outside of the space to a significant degree.
02:16So the combination of the social reach with the scale involved, you know, it's a very large levered Bitcoin entity.
02:24So it's obviously a massive bellwether for the space.
02:26So when they're having problems with their securities or deviating from their guidance or deviating from their expectations, I think
02:33it's right for investors to pay attention to that and be concerned about that.
02:38They've, you know, they've shifted their model toward more of a bend, not break model, meaning that very adverse scenarios
02:44tend to, you know, cause them issues.
02:47Obviously, they can, you know, their securities can run into issues.
02:50They can bleed out Bitcoin. They can end up selling Bitcoin for less than they bought it.
02:54There's a bunch of things that can happen to them.
02:56But they generally don't have like a catastrophic failure mode other than extremely, extremely adverse scenarios.
03:03And so that's kind of the message I think I would lead to outside investors that when they're running into
03:07issues, it makes, you know, Bitcoin's in a bear market.
03:10It makes sense that the big levered Bitcoin entity is also having even more troubles, much like how they generally
03:15outperform on the upside.
03:17But, yeah, I do think it makes sense, at least to some extent, to monitor strategy for the space, even
03:21though I wouldn't say it's indicative of the entire space.
03:24And we have around one minute left with you.
03:26We wish we had more time.
03:27But in your June newsletter, you introduced Orange Juice, which is a company combining cash flowing businesses with a Bitcoin
03:32treasury position as the anti-strategy.
03:35Can you tell us more about that?
03:37Should treasury companies have been like that from the beginning?
03:40Well, it's a good question.
03:41I wouldn't call it an anti-strategy.
03:44It's just a different model than strategy.
03:45It's not a pure play or close to a pure play like the pure Bitcoin treasuries are.
03:49You know, we have a view that cash flow combined with a treasury strategy, a Bitcoin treasury strategy, creates that
03:58more permanent capital.
03:59Instead of having to constantly issue securities, you have more optional security issuance on top of that more operational foundation.
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