Transcription
Strategy and Stretch are in a doom loop. Today we're going to be breaking that down for you. There is a lot going on in the market. Let's just get right into it.
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Let's go over to a couple of points I want to start with right here. Kobe, of course, brings up even more salt in the wound, and that is the US May PCE inflation. The Fed's preferred inflation metric right now rises to 4.1. This is the highest since April 2023. The core PCE inflation rose to 3.4, and its highest since October of 2023. So when you look at what's going on in the market, including with what's happening right now with traditional stocks, Micron beats earnings. So you've got good things happening, bad things happening. Their revenue was 41.4 billion versus a 36 billion expected. This was a huge win. Of course, it's why we're seeing Micron, uh, up right now, uh, on the day, and we'll probably continue to see some movement here. Remember, Micron is the picks and shovels, so to speak, for what's happening in the AI evolution, but primarily it goes into the hardware.
And speaking of hardware, look what Apple is in the process of doing right now. They are raising rates and in a big way for hardware. And of course, I think everybody probably saw this coming. MacBook Air's, remember the $599 great price, $699 now. MacBook Air, remember that $999 up 20%. That's an unbelievable price increase. We have not seen these kinds of price increases in hardware tech in a while. Uh, Scott Melker kind of hits on it right here. AI boom no longer just boosting chip stocks, starting to increase the real price consumers pay. I think this is was an obvious thing. We've seen this coming. We've talked about it quite a bit. Here's an interesting chart right here. This is the inflation coming in at the same time that the NASDAQ 100, uh, was reporting, went up a percent and then fell three and a half before 10:00 a.m. on minimal news. So I think this is another factor that people are starting to get very skittish in the market. S&P down. We, of course, are seeing Bitcoin now under 59 or right at 59k, under 60k with all of that kind of macro impact that we're seeing in the markets, unstable on traditional finance, what's happening in the Middle East, what's going on with clarity. I'll talk about that in a minute. And then, of course, we're getting inflation continuing to press. This is the worst time to see the kind of issues that we're dealing with with Stretch right now. And Stretch now below par starts to affect Strategy, the stock, in a very big way. This is the doom loop that essentially puts it into a very, very precarious situation for Sailor and his team on being able to coordinate against this.
Now, there's a couple of points that you want to make sure and understand. The diluted shares that are outstanding. Look at how much has grown, and it's only going to most likely get worse as we continue to see this fall. I want to go to a clip real quick and get into some of where the market sees this effect starting to happen and how we should address it. Take a look.
>> This is an important development that appears to be unfolding. This basically the lowest level since 2024. CryptoQuant CEO is basically saying right now it would probably be better to preserve cash so that you're able to pay dividends on this preferred perpetual stock product STRC because you have about, you know, from going from seven years of the ability in terms of their cash balance strategy in order to pay, uh, future dividends here has dwindled down to what, 14 months. Kind of take your pedal off this Bitcoin buying strategy is what, you know, Cybercoin is Cryptocoin is saying, uh, and therefore just preserve that cash for capital preservation. And then when we get a recovery potentially in Bitcoin and the price of Bitcoin, then that might be the time buying Bitcoin might have better price momentum to the upside rather than trying to defend price levels of Bitcoin because it's dropped down here. And Strategy's average cost per Bitcoin, I believe, is around 74K or so. So, this is going to be something to monitor in in the coming weeks.
All right. So, something to monitor for sure. I think the thing that he's getting at is if you're conserving cash, that means you're not buying Bitcoin. And this is one of the biggest contributors to Bitcoin right now, and that is what Strategy's overall plan is. And that is to continue to add to the balance sheet, continue that cycle of process. And remember, we've had Strategy on the show. We had Fongi on not too long ago, and we reached out to them. Just reached out and said, "Hey, come in, clear the air, let us know what's going, what's your plan." Uh, we didn't really get a response. So hopefully, uh, we get something from them in the future.
Um, the key though here is the, uh, FUD and and not only just the FUD, but it's the contagion that can take place. And if you guys have been in crypto or in the stock market for a very long time, you understand that this starts to correlate a lot of confusion and then things start to get h get going and we see a contagion based on sentiment. I want to go to a clip here to kind of explain this. Take a look.
So they bought 520 Bitcoin this week, $34.9 million at an average of $67,068. Shockingly, once again, that's probably the highest price that Bitcoin really traded at this week. Stop selling MSTR. Wait for the MNAV to go to a 2.5. And I'm like, you think that the the company like the market's going to give them $80 billion in premium just because like like a 3.4x M. You got to think of when that happened. That was when Trump just won the election where we were talking about a strategic Bitcoin reserve. Why would I give you credit for that pile of Bitcoin you're sitting on when you can't sell it? Because if you do sell it, you're going to scare the market. The whole thing's going to go down. So, it's not really an asset if you can't sell it anyway, right? I think all of this is in the process of breaking the spell of Michael Saylor. We saw this with GBTC back in the day where it traded at a premium for a long time and then eventually ended up at a deep discount.
>> Someone is burdening that cost right now, right?
>> No.
>> Can you explain that to me?
>> Yeah.
>> It's not 10% of value. It's 10% of dollars. And dollar is going this way for 100 years. I don't believe he will be able to deliver 10% in dollars. I'm absolutely sure about that. There is no way he doesn't do it. Like this is me killing ego entirely. I could be missing something, uneducated, the dumbest person, and I'm totally open to that.
>> Do you agree that taking out of the money securities and and treating them as if they're equity is probably like
>> It's not not the way to do it.
Okay. One other thing when you look about the clip that we just played is a lot of people have been concerned about this and and many people still asking the question, is this a Ponzi scheme? You know, those are the questions that everybody has been talking. Even Austin Campbell, who was on that clip talking about this allure that Saylor maybe has been finally broken. I don't know. But when you have the president of the company going out just three days ago, this is three days ago. I bought 1 million. That's Fong Lee. He was just on our show, you know, 1 million of Stretch today. I will hold it until it reaches par, likely longer. So, this is three days before we start to see it continue to accelerate its depeg. I just don't know why they would be doing these things. It just doesn't make sense for a company that has had the kind of credibility score that they've had over the last two to three years.
Speaking of that, I want to go into is institutional now starting to look at flowing out of these ETFs and flowing out of these funds. Take a look.
>> How how big of a factor do you think that is? Especially from your perspective talking to a lot of the institutional players.
>> Institutions raise it. It's not the primary one. I'd actually argue that they have more concern about Quantum than they do about Strategy, but Strategy comes up. I don't think they're going to blow up. I don't think they're going to buy another 800,000 Bitcoin either. I just think that they are going to like sort of be a part of the ecosystem in the same way GBTC is part of an ecosystem and Mount Gox's, uh, distributions are part of the ecosystem. Those again, they they tend to fade, not to explode. I think that will be true here too.
>> Brian, are you concerned?
>> I'm not concerned. No. I I'm actually not. I mean, we do get questions about it.
All right. So, they're getting questions about it. Uh, that's that means that it's got to be coming from, I think, institutional and to a certain extent, major market makers out there, uh, that are looking at this. I, I would, you know, listen, I know Matt, we've talked many times, you've been on the show. I just don't know that that is the position right now. This is a pretty serious issue right now, and it might be just safer for many of you just to say, hey, listen, I'm going to I'm going to back away from this for a bit. Uh, let the dust settle, and if it comes down, maybe I lose a little bit of, uh, opportunity cost, but maybe I secure my assets, whether it's into cash or something that you feel comfortable with. But the point is, is that the market is definitely addressing it right now.
Remember, there's a couple of other things that, uh, Hogan tweeted on this. This was way back in June of '22, and this was in reference to what SPF was talking about, and, uh, it was kind of the, the point of the tweet was that we'd hit at the bottom. This was like in June 19th, 2022. And if you go in and look at the chart, and this is the kind of thing that I'm worried about in terms of contagion. So, what we're seeing today is kind of like this June 19th. Sure, there's smoke right now in the market. Many people would say, hey, we've been through this enough now to know where there's smoke, there is fire, and you've got to be able to get out of the building. If you go back and look at the chart, this, of course, goes into the kind of move that we saw all the way back into June of '22. This was the down area right there, this zone right there. And that was what was perceived as the bottom. But in reality, this came in right here, which was in November. And do you guys remember what happened in November of 2022? I'll share that with you in a second.
But the other thing that, of course, plays into this is DeFi. And DeFi is one of the big exposures that layers into this that I'm again, I'm concerned about if this continues to to move down. And Stretch does not look like it's slowing down. Question is, does Bitcoin slow down? Do we see a 50k Bitcoin or below? That's the real number. Remember Bitcoin pulling back on a little over 70% on the last cycle. Right now, we're at about 50% on the pullback from the 125 high. This is, I think, the situation. Do we see another 20% still on the table for Bitcoin to adjust?
Other things that happened that happened during that period of time? Well, it was this tweet right here on November 6, 2022, and this was talking about Binance's exit from FTX's equity. Binance received 2.1 billion in cash, and then due to the recent revelations that have came to light, we have decided to liquidate all of their FTT. This is what caused the contagion on of course, the FTX, um, nightmare that ended up playing into the market. Remember, it wasn't necessarily that FTX was insolvent. That would the fact, those were the facts. Those all came out. But I think it was the sentiment that started the market in a waterfall and cascade downward. That was the issue. Even though FTX ended up, you know, recouping everything and making everybody whole, the point at that time was the market looked at it as though it was basically a black swan. That's the concern I have right now. People could be smarter now knowing that maybe this doesn't go to a zero. Maybe this is going to get into a little bit of a dire situation. Maybe there's a legal way for Strategy to exit out of Stretch. I don't know what that would be, but, uh, you know, maybe just stop selling the the asset, the preferred stock, and get into a situation where they start to wind down this. But, uh, this is going to be a big deal to watch right now. It is the thing that I think is going to be hitting, uh, the market over a short period of time.
With all that being said, guys, then I want to go into something. This was a a clip that we pulled from Twitter. It was a debate, uh, and it had the Apex founders on it and some analysts trying to figure out how to deal with this situation, and they came up with some interesting statements here. Uh, listen to this.
>> The premium comes back for a bit. They can run the ATM to, uh, raise the cash. You know, they've got, I think it's about 10 months of cash, 1.4 billion relative to the 1.7. They can also sell some Bitcoin. So like the Bitcoin market's very liquid and can support this. I think that they need to retire the preferred Strategy, but in the meantime, I don't think that's really viable. I think the conservative thing to do right now is the right thing. If they just sold a huge chunk of Bitcoin right now, which is crazy to say, just holding the Bitcoin is not productive.
Um, both are saying that they should sell a chunk of Bitcoin. The only one thing that I think is wrong on that is that the market can't handle that, and it will see this as a weakness in Bitcoin. Peter Schiff will start his barrage, and I think we will see Bitcoin under 50K. So this will be the catalyst. Remember, this is all started from when Saylor just did a little dabble into the market, and we started to see this trickle down effect. Now, they go further into this because this is where it gets weird on these unbelievable statements that are being made about how and what Strategy was trying to do. Take a look.
>> At what point though do you shift the narrative of being able to call this a stable coin?
>> That's, um, a very fair piece of criticism. We struggled with how to brand ourselves. Um, we talked to Saylor about it. He was like, "Oh, uh, call yourself a yield coin." I was like, "All right, well, no one knows what a yield coin is. Everyone knows what stable coins are." So, we kind of went with, you know, dividend-backed stable coin. You know, in retrospect, maybe we should have been more, uh, creative with, you know, the nomenclature. So, we've kind of pivoted now to, uh, dollar-backed or sorry, dividend-backed dollar.
>> I think it's again, it's tough calling it a dollar at all. You know, I would argue that they are a company that is, you know, very transparent and kind of in real time growing and defining a category. And so,
>> But they're changing they're changing those different metrics and making them up as the previous ones are breaking.
>> Yeah. You know, I'd say that's, um, some fair criticism. It's kind of the challenge or the double-edged sword of being overly transparent. The solution there, and maybe they should do this, is just stop being as transparent.
Not good statements there in the sense of stop being transparent. I think that's, I think you have to be obviously as a publicly traded company. But the issue of the yield coin, stable coin debate is probably going to come back and be a problem, I think, going forward because this is the biggest challenge, I think, because that put a lot of people most likely at rest saying, oh, it's a stable coin, it's going to hold par. This, of course, is not the case that we're seeing right now. And then, of course, now breaking today is that Strategy is under investigation. This is the Rosen Law Firm who's opened up an investigation into Strategy and Stretch per Ody. And this is talking about how investors may seek damages over securities violations. So I don't know how this plays out, guys, but there is one thing that is for sure. There's only so much runway available in cash to pay those dividends. At some point, and if you can't get new money on top of that, Bitcoin at some point, Bitcoin will have to be sold by Strategy, and if that does occur, the market will have a huge, huge impact.
Let me go to one more clip here. This is Praxis Capital saying, well, maybe the obvious. Take a look.
>> It was an unpopular prediction at the time because MicroStrategy was at an all-time high, and I was saying that he will do more damage to Bitcoin than FTX. And, you know, ultimately, and it's been like 18 months, and I think people at the time they were like, Vinnie, you're crazy, this is nuts, like why are you such a hater? And now they're like, oh shoot, maybe you were right. Like STRC, but he also had STRD, STRK, STRF, and none of them worked, right? But he kept releasing new ones and new ones. But he used Trackt to do the engineering work on this stuff, right? He even admitted that like a week ago. And so people are losing faith in him. The market is speaking, and it's saying that SDRC needs to trade at a 20% discount to give a 14.5% effective yield. Cannot rep this to 100 bucks. I'll bet anyone that this almost never gets to 100 bucks ever again, like it just can't. It's the damage has been done. He didn't, you know, there's a chess move for this. It's called zig-zag. It's like every move you make, you know, is a losing move. You can't make a move.
>> Yeah. Does he sacrifice MSTR?
>> I mean, it looks like so far he has been sacrificing MSTR.
>> He he repurchased like $1.5 billion worth of debt for 2029. It was stupid. I mean, he he basically blew his runway and then he basically put the price of the cost of doing that on MSTR holders. And look at the price of MSTR since he did that. It's just slid. I mean, it's in freefall right now. You know, we've seen this with with GBTC. That needs to be a discount. That needs to be 0.9, and then the game is over, right? So the market's going to punish him. I think, um, I think you shouldn't see you shouldn't see MSDR trading at anything above 80 bucks, um, within the next week or so, maybe even with the next day or two.
So, as you can see, obviously this is the point that people are getting at is maybe this was always destined to happen. If you look at the Stretch chart right now, this is where it's wicking to down today, and that is coming in sub 74. We're seeing a 73 on the low, obviously trading right now at 76. But the point is is Master right here also trading sub 90. It's at 8632. If this does get into the $80 range, which could happen in the next few days, uh, as we see, this is a major, major step backwards for crypto in general. But then you have, of course, another issue, guys, all brewing in the background. If something does go awry here, what would happen on the regulatory front? You've got, of course, the issue of clarity playing out right now. Senators out there trying to say, "Yes, we are about to get this done over July 4th weekend. It's going to go to the Senate floor." Timing could not be worse. And if this does come together where we see a major issue, then of course you're talking about clarity that could be could be sidestepped for a very, very long time.
Those are the kind of issues right now, guys. I'm just going to break it to you straight as I can because these are, uh, really troubling times right now. And I think a lot of people are still looking at this as a kind of a, it's going to come back. It's going to come back. Too many pressures coming from the macro side, coming from the global economic side, coming from the issues of inflation, what we're dealing with with the Fed. I think the markets right now are in a very, very precarious situation. Stay tuned. If you like this video, hit like and subscribe, drop a comment down below, and also join our free private member group. The link is in the description.