Transcription
Wall Street institutions are hoarding Bitcoin, and nobody's hoarding more Bitcoin, of course, than Strategy. But they may be missing the biggest opportunity in the market, which could actually be in other tokens other than Bitcoin. We're going to break all of that down right now. I've got Brian Rudik, the Chief Strategy Officer from Upexi, live in the studio. Let's go.
Let's do. Good morning, everybody, and welcome to the show. Happy Thursday. Uh, something I never remember to do. I'm supposed to tell you to subscribe and like to Brian, not to the channel. You like Brian. Good morning, Brian. How are you? This is something we've rarely done, have people in the studio. Obviously, we had Allan in here before, but it seemed like the perfect opportunity uh to break down what's happening sort of on the institutional side because you have obviously endless insight. I think we'll get to Solana and Upexi, but I want to start uh here. As you can see, Morgan Stanley new trillion. Morgan Stanley buys 10.8 million Bitcoin yesterday, cumulative inflows of 190 million since launch. They now hold 1821 Bitcoin. It's kind of a rounding error, to be quite honest. To me, it's more the signal that Morgan Stanley decided to participate than the actual flows that they're getting.
I think that's true. Um, but what I would say is that this is actually a big opportunity for flows over the medium-term. Um, they have 16,000 financial advisors, they manage about 7 trillion in assets. And so, I think even if their clients put a small percentage of even just a fraction of their wealth into Bitcoin, this could add up to a really big number. Uh, to put it in perspective, Eric Balchunas, ETF analyst from Bloomberg, estimated one-year flows could be about five billion. Now, some of those flows will obviously come from other ETFs because this is the lowest cost product on the market. Some of those flows would be new flows that would have went into other ETFs, but some of them will be brand new. So, I do think that this is a big signaling issue. It increases the ability for folks to get their hands on Bitcoin. Uh, but I also do think it represents a new material source of demand over the medium to long term.
I agree with everything, and I think the most interesting part, I don't want to talk about it too much because I've broken it down on the show, but that they did come in at 14 bips means that they didn't just expect it to be their 16,000 advisors selling this. They did want to kind of compete and capture flows if we get a bull market from new retail or as you said, kind of steal the IBIT thunder by being a cheaper product.
100%. And I also think that there's a big strategic component for them too. I think they want to signal to their clients that they're very forward-thinking. They're thinking about how financial markets will innovate in the future. And so this, in addition to actually potentially bringing in some additional revenues for them, I think also speaks well for them uh in their client size in terms of what they're doing on the digital front. Yes, we have this topic here. Wall Street is hoarding Bitcoin, right? The title. I think that uh if we're counting Strategy as Wall Street, I think that's obviously the biggest story, right? So, uh that brought up a different window. See, like we we're live, you know, guys, I'm going to I I shared the wrong screen. Um, but uh obviously the the window I'm about to bring up is going to show you that Strategy is holding 20x everybody else, right? Strategy has 20x more Bitcoin than the next largest treasury company. Unstoppable. So, I think we can talk about whether that's a good thing or a bad thing, right? And whether you can even look at the whole treasury space or it's just Strategy and then the treasury space and then STRC.
Yeah. Um, I think that they've been incredibly innovative. They've basically invented the digital asset treasury company. Um, from my perspective, I think what they did was when they had that premium multiple, and I do think that they will likely get that premium multiple in another bull market. Um, but obviously it's very accretive to issue equity when you're trading at a premium to the value of your Bitcoin. It by definition is accretive to your crypto per share. I think when that premium multiple went away, they had to look for other means. I think then they started to issue convertible notes where typically that conversion price is above the current spot price. So you're quasi issuing equity uh at a high premium uh assuming that Bitcoin moves up, your stock does too, and that converts to equity. Um, but then they kind of flooded the convert market. I think the demand wasn't fully there and it brings on additional credit risk for them. And so now the bet that they're making is essentially like we issue these prefs and buy Bitcoin with the proceeds from that. And if Bitcoin goes up more than the cost of those prefs, roughly 10, 11% per year, then that was a good bet to make. And so this is how they're continuing to accumulate Bitcoin, continuing to increase BTC per share. Uh, so they changed the business model a little bit. Doesn't mean they can't go back to what it was before. Um, but they're in a caper seat to do this uh and and really well-positioned to continue to grow and buy more Bitcoin.
It's interesting. So, I guess there's multiple ways to look at it. If you're a bear on Strategy or you think that it's a Ponzi scheme, you have the Peter Shifts and such, you'll just say that he's doing everything until he runs out of runway and then finding a new thing and finding a new thing and finding a new thing. But if you ask Sailor, he'll tell you that that was all a part of the process to get to SDRC, which he views as the perfect product for continuing to buy Bitcoin.
Yeah. Well, you need Bitcoin to move up. Um, they have they're and the reason why I say they're in the caper seat to continue to do this is they have so much unencumbered Bitcoin that they could always sell that it gives the market confidence that they can pay their preferred dividends if as long as they want to continue, in addition to that $2 billion cash buffer that they have. And then they also have like best-in-class liquidity so folks know that they can come in and buy it and then they can actually sell it. And so and especially on the ATM side when you're issuing equity, you generally drip it out to the market where you need you can only sell a small percentage of your average daily trading volume. And so obviously MSTR is one of the most traded stocks um in the US. And so uh they really are in this great position to continue to do this. Um and yeah, we obviously have a very strong positive view of Bitcoin. And so I I like their chances. There's an irony when you think about it that it's one of the most traded stocks because of how much everybody hates it, but it's allowed him to actually because of that high volume to continue on the path. It's almost like the bears are enabling the strategy.
Yeah. I mean, half the treasury model is this intelligent capital issuance, but half of it is being as visible as possible and having everybody know about your company and the ability to invest in it. And nobody does it better than Sailor. Everybody, especially in crypto and those folks in traditional finance know who he is and know about MicroStrategy and know about the option to buy Bitcoin and the potential for them to add value on top of Bitcoin. But he's buying four, five, six, maybe by this month, 10 times what's being mined, right? You have to wonder who's selling it to him to be to be honest at this point. Like how that much floor demand doesn't raise the market more dramatically on Bitcoin. I mean, it's just it's a huge asset, obviously.
Yeah, it's unclear. Um, actually, I'm unsure about so far year to date, but I looked at MSTR Bitcoin purchases in 2025 versus 2024, they were down something like 11%. Um, same when I looked at the US spot Bitcoin ETFs, the inflows in 2025 was down 37% versus 2024. So, I actually think even though these are massive numbers, they're down from what they were. So the marginal demand has actually decreased. Now my gut is telling me if you looked at that year to date on MSTR, it actually would be up from their pace in the second half of last year. Um and I do think like this will all help support the price, but um yeah, there's a supply component to this prices too.
Okay. So then thoughts on STRC generally? Like I said, he believes that he's kind of found the perfect product. I actually sat down with him at Money2020 in Vegas sort of right after STRC launched and he broke it down. I think he's unlocked a new kind of capital which he's very good at, right? Finding a new money that can't gain exposure and finding a product that kind of works for them. This 11.5% but it's also nonsense to say that it's risk-free. I I'm a I'm a believer and a fan and I believe in Bitcoin. It makes a lot of sense, but it's it's not the same. People compare it to the risk-free rate of like a Treasury. It's not the same thing.
That's exactly correct. Um, these things can trade below par. Um, it will all be based on well, one, interest rates and then folks' view of credit risk, which is basically their ability to pay that preferred dividend. Now, they do have that massive cash reserve. Um, and then obviously they have so much unencumbered Bitcoin that as long as they want to, they can continue to pay as long as they want. Um, I actually think that they will. They're heavily incentivized to because they want to maintain access to the capital markets. So, um, I think that these things continue to trade around par until they don't. And you're right, like there is that big risk. If we go into a severe, severe Bitcoin downturn and it stays that way for many years, at some point folks will start to question um whether or not they'll continue to pay that preferred dividend. But I think for now, they're in this really great spot and they've got so much leeway that uh I don't I think we're quite far off from that.
Yeah. I mean, if the bare case is a multi-year abysmal bear market, we're going to have much bigger problems and people have probably exited because they need the cash anyway. So, it'll probably just wind down quietly. I don't see the it explodes overnight situation unless Bitcoin like dropped from 75 to 30 in a week and people just completely lost faith entirely in the market.
100%. And really hard to think about a risk that would cause Bitcoin to do that anytime in the next couple years.
Yeah, let's hope not. So, that brings us obviously to what you're doing at Upexi. You guys, for context, effectively the first Solana Treasury Company. I think there was like a 14-hour battle between you and someone else who's long gone for for the technical crown. Uh, and and I think you've kind of always been viewed as the adults in the room in the treasury space. You were there even before most of the Bitcoin treasury companies were. So how do you view I guess the current market and how you approach it as a treasury company?
Paradoxically, um, I think it is a really, really great time to consider an investment in any treasury company. I would say, you know, when all these things were trading at five times that obviously you can look at it and say it's quite frothy. I do think that treasury companies deserve to trade at a premium. There are these multiple value accrual mechanisms like issuing equity above book, like buying locked Solana at a discount that you can't get via other vehicles like an ETF or by buying Solana natively. Um, but I do think now where most of these things are trading at or slightly below book, it represents a good risk-reward on the multiple. And then secondly, like the big thing that's going to determine our success or any treasury company's success is the performance of the underlying token. Um, my view here is that right now all altcoins are kind of tied to Bitcoin and will trade with a beta to them. And so there was no world in which Bitcoin goes from 126 in October all the way down, cuts in half, and all these large altcoins don't fall by even more. Um, but I actually do think if you look at the underlying fundamentals in terms of number of users, um, number the amount of adoption, number of developers, number of big corporates coming in and experimenting, it's all up into the right. And over time prices follow fundamentals. I actually do think that Solana and others will start to diverge from Bitcoin and very positive on Bitcoin, but I think Solana can go up over the medium to long term regardless of what happens to Bitcoin. And so um, generally we'll trade with a beta to that and um, I like our chances. And then lastly, like I mentioned, we can add additional value on top um by increasing our Solana per share with these additional value accrual mechanisms that I mentioned.
Yeah, I mean, I think looking back on a year of treasury companies basically, right? And I mean, it's kind of I just remember going to Bitcoin Vegas, which is next week or something, and being pitched seven treasury companies, saying that Bitcoin treasury companies are really bad idea, but then coming to the conclusion that all coin treasury companies, you can debate whether something is a worthy treasury asset or not, but if the goal is to beat a benchmark, that the fact that you can stake and get OTC discounts and stuff makes them actually a much more compelling business in a Bitcoin treasury company because Bitcoin does not have a native yield. You have to do some kind of financial wizardry, wizardry like Sailor to beat Bitcoin. Solana, you can just you guys can literally stake it and buy it at a discount and you're beating it, period. 100%.
So we stake to turn the treasury into this productive asset. We make six to 7% on that treasury. Um, if we do nothing else, 40% of our Solana is locked Solana that we bought at a roughly 15% discount. If you think of that as like yield on a bond and you put into a yield equivalent, we still get the six to 7% staking yield, but it effectively doubles that. So all in, we can increase our Solana per share by 10% if we do nothing else. And then there is that accretive issuance which we did a $200 million subsequent raise in July of last year. It was highly accretive. And so all in last year, we were able to increase Solana per share for our investors by 35%. Uh, to put that into perspective, if you bought Solana yourself and staked it in and similarly proportions and similarly timed, you'd have about 3% more Solana from the staking yield. And so we were able to get our investors 30% more Solana from treasury company operations.
Why isn't the market pricing that correctly then?
I think they're starting to. Um, I think in generally what we've seen from MSTR is that in bull markets, you can trade at a premium. In bear markets, you will trade at a discount. Um, we're actually trading at one one on our fully loaded basis. And so um, we actually could issue capital here in the secretive form. Now, it wouldn't be super accretive. We'd rather issue capital at two times MNAV uh than at one one, but we could do it. And I do think that if we get into a more full-bore market, it's possible or even likely that we'll see multiple expansion as well. I mean, if Solana doubles in price here, if Bitcoin goes to 100 and something or even into the 90s, which I think could be really supportive for altcoins, the treasury conversation is going to change entirely because everybody's going to have room to maneuver again. 100%. Um, and so the biggest determinant of our price is this exogenous asset that we don't control. What I would say is like we're working on uh things that are within our control. Also, the big one that we've put out publicly is to increase the yield um on our treasury and so I don't believe the argument um there's some treasury companies out there saying like, we make 3% on our staking yield, slap a 20 times multiple onto that, add a NAV and we should trade at 16. Don't believe that. I don't think investors will pay for what they can get themselves in the form of the staking yield. But I think if you can generate alpha on top of that, you can do it in a way that you can show investors it's recurring and be low risk, then I do actually think that they will slap a multiple on that um and then add that to book value. And so we're uber focused to doing this in an off-chain way. So it'll be really low risk in a way that investors understand and in a way that can be recurring. And I think if we can be successful, it can actually support our multiple, push us permanently above one, and then allow us to engage that capital markets flywheel in perpetuity.
Yeah. So it seems like there's been a focus institutionally on Bitcoin and Ethereum primarily, Bitcoin, Ethereum, distant second, and I guess Solana, distant third. We have I was going to play the video but it's not worth listening to him. Kevin O'Leary, but he says he thinks the Clarity Act will pass. I still have extreme doubts about that personally. I don't think so, but that that could send Bitcoin to 200K. Then he kind of goes on to say there's Bitcoin, Ethereum, and everything else. I think he called them poo poo coins. Um, but it seems like there's a lot of opportunity actually in Solana and there's a lot happening kind of under the surface here. Maybe you can explain this better because it's a bit over my head. Solana's prop AMM hits 19.8 billion March volume, outpaces centralized exchanges. So, seems like uh maybe Wall Street's missing some of the higher upside opportunities right now by just focusing on Bitcoin and kind of slightly Ethereum.
That is definitely our belief. Um, so Bitcoin was my first love, Ethereum was my second love, and then Solana, I think is my true love. Um, but what I would say is like we did the first large-scale equity raise for any altcoin treasury. We could have chosen Ethereum. The view within crypto was that um Ethereum is a bit constrained by its original design decision. So it's actually had to push out execution to separate blockchains called L2s and most folks.
Which has been going great.
Yeah. And so I think Vitalik is even coming back saying like they're all achieving decentralization much slower than he had thought. Um, and so there's this view that L2s are parasitic to ETH value capture, whereas when you have one singular state machine and something like Solana um that is highly performant, that has been around a long time so institutions can trust it um and and it has this wonderful distribution with 5 million monthly active users. Uh, I actually do think that it is has the best chance to be the endgame winning smart contract blockchain. And then the last thing that I'd say is Solana has a Northstar called Internet Capital Markets, which I actually think is the key use case for crypto and blockchain. And so essentially uh our current financial infrastructure is built on rails that were created 50 plus years ago. These are things like a credit card issuer networks and even fintech is just a front-end wrapper. So if I sent you 10 bucks via Venmo, make it easy for me to do that, but it's used in the background. Um, and so I think that we can improve all of these things using blockchain and internet-based rails. And Solana is in the caper seat to to do that via things like stablecoins, tokenizations, and even uh AI agents.
Can you break down a bit the other headline I brought up there, but Solana's prop AMMs hit 198 billion in March trading volume, now accounting for over 60% of all Solana DEX activity. I saw that the spreads are tighter than even some of the big centralized exchanges. What does this mean? And is this a missed opportunity or is this just yet again some temporary crypto story where retail is uh degening out in some far corner of the cryptoverse?
Yeah. So, prop AMMs are largely unique to Solana, has to do with the underlying um architecture of Solana's blockchain. Um, but they're basically a new type of AMM where they don't use these public liquidity pools. They're more actively managed by professional market makers. And they can actually provide better spreads than going to a centralized exchange like Binance. And so because of this better uh fill orders and user experience, you're seeing uh a lot of traders on Solana actually gravitate toward these prop AMMs. These are things like SoFi and Humidify and Bison and Oric, and um they're becoming more and more popular. Now, they work best on major pairs. They're not great for the long tail of assets. I'm sure that that will be figured out in time. Um, I do think like this is a great use case on Solana, but just one of very many as we move capital markets on-chain.
We were kind of talking about ETH and layer twos and it naturally takes my brain to DeFi and all the hacks that we've had. I don't have the article here, but a Jefferies analyst basically said that for the first time, he thinks all these hacks that have been happening of late, help drift protocol seeing Arbitrum freeze assets, seeing a freeze assets, and then in this case, the unique contagion that happened with it being toxic debt rather than just stealing assets and selling them, that Wall Street is going to quickly back off of their interest in tokenization and real world assets and and DeFi and yield. How do you feel about that, especially because you're participating in it?
I think there's some truth to that. Um, the good news and the thing that is making me happy is that it these were generally OPsAC issues rather than like smart contract issues or program issues. And so uh I do think that smart contracts are getting safer and safer to use. Um, I think it's so nascent that we're in process of upgrading processes and protocols and so there's a lot of talk like could Circle have frozen USDC from the Drift hack and things like that that I do think will.
There's a class action lawsuit I think against them for not having done it, but they said they needed a court order to do so.
So exactly.
Governance decision, decentralization has been a huge question mark.
Yeah, and and I do think that these things will improve over time. Um, and then as far as tokenization goes, my understanding is that you have a transfer agent, which is the main transfer agent, which is the final record of truth, but then you have this code transfer agent as well, is keeping track of everything that's happening on-chain. And I think the end uh ownership of the asset rests with that main transfer agent. And so I actually do think that if uh some of these tokens were uh involved in a hack in some way, you actually can get it back, is my understanding. So I think that all of this will likely put a bit of a maybe slow down very slightly um traditional finance coming on-chain, but I think the benefits are just so vast and we'll figure out some of these small bumps along the road that um the horse has left the barn and it it's inevitable. I think it's just sort of as usual, we just see a story and we conflate everything together. So you got to get Jeffries' guy who maybe doesn't deeply understand. He says this is going to stall tokenization. But I don't think this stalls the tokenization side of moving things faster, cheaper without a third party, which is the key part of token like tokenizing stocks. It's just a better way to clear and to settle. What it might hurt though is all the things being built to earn yield on those tokenized assets, right? That part is maybe a little scarier because you have to put it to work. So, I don't think they're right about tokenization stopping, but maybe having the full suite of financial services and yield products and stuff may be more hesitant, or we get an extremely centralized version of DeFi for each company. Morgan Stanley has their own like walled garden DeFi, heavily protected, and it doesn't it's not happening on Ethereum.
Yeah, I think that the technology for tokenization exists now and the big thing holding it back, number one was regulation. Obviously, the SEC is doing a lot there, putting these rules in place as we speak. Um, and so the biggest hurdle is being solved in real time. Um, my sense is the next biggest one is you do need a bunch of different players to coordinate to come in and kind of all come in together. But if you look at like what NASDAQ is doing, building tokenization infrastructure, NYC building a tokenized trading platform, or DTCC saying they're going to make all 1.6 million securities that they custody digitally eligible. And the thing that gives me a lot of solace is they're kind of hinting that they're going to do this on public blockchains or give end users like the choice of where to move their assets in time. Um, so I do think that it will not be like something that happens next year, but over three to seven years, we're seeing so much movement from so many key players that and I actually think like this is very underpriced because I don't think a lot of traditional investors that we speak to actually know about this, that it's this massive, massive opportunity.
It is a huge opportunity. I just hate when we score own goals, I guess, and I wonder, you know, I don't know how much of it is truth or myth, but with things like Mythos coming out from Anthropic, the attack vectors against everything non-unique to DeFi are just increasing so massively that it's hard to even imagine what the next hack will be. I think that's why people were so shaken by this because Drift was literally just like AI social engineering posing as a trading firm for months before getting permission to steal the money, right? There was no actual hack there.
You know, there was lies, but uh, they they took money that they were given the car keys, you know, they stole the car that were they were given the keys to borrow. And then with Kelp, obviously they didn't just steal the assets, they went and took a massive loan against it, creating toxic debt on A. These are two things we hadn't seen before.
Yeah, I'm hoping that and I think what we're seeing is this is mirroring traditional finance where, you know, people make mistakes, but then you learn from the mistakes of others. And it's this continual process of improvement um via upgrading your OPsAC, via upgrading your risk management procedures. And I think that we'll get there. Um, and we'll take those lessons and we'll just get better.
Yeah, I agree. So, I have an honorable mention story that I just want to bring up because it's kind of mind-blowing, the takes on it, uh, which is that everybody seems to be talking about SPF again. So, obviously, I guess I'll bring up the story that's sparking this uh, first. I'm controlling my screen with my uh, mouse on an angle is really challenging. SpaceX strikes a $60 billion deal for Cursor. So that was an interesting story in and of itself, especially when you found out that FDX had bought 5% of it for $200,000. So it's basically a 15,000x and makes them worth uh $3 billion their position that it would have been. So I even saw Tom Lee retweet that tweet that I just showed you and say like, "Great job SPF. You're awesome." Like literally like not on accident. So, I would just like to offer my opinion is that if I had everyone else's money to invest with that I had stolen and I was given access to every VC investment, I would also put $200,000 into literally everything, complete spray and pray, and look like a genius down the road. Nobody's listing the hundreds of things that they invested in that did not go up. And this was not his money and he had no risk. So, that's why he's in jail. And by the way, the bankruptcy process is built to liquidate assets to give it back to creditors. So there's no world in which people seem to think they should have like held these assets as investors or something.
Yeah, I completely agree with your take. Um, I know that he doesn't think all this is his fault and now he's probably fuming thinking that, you know, if none of this would have happened, um, then, you know, he'd be sitting on all these massive, massive gains. But uh, actually like he has only himself to blame and if he did nothing, he didn't just like steal customer funds, like he'd be sitting pretty and so would all the investors in FTX. So.
Maybe or he wouldn't have had the money to invest in these things.
Yeah. Uh, that's true too. Maybe or less.
Yeah. I I know that he's got to be fuming, but like I just see this, it just blows my mind that people are acting like he was like the greatest venture capitalist of all time.
Yeah. Because these things went up and once again, there's nuance and there's zero context here, but it sucks to listen. It's brutal, I think, to be an FTX creditor.
I was a Voyager creditor, one of the biggest, and like having found out what they did with the money afterwards after lying, it's horrible. And then, you know, Voyager and them, but not even as bad, but liquidated at the dead bottom of the market because of the timing of the bankruptcy. I can also say, hey, if they had just not paid us back for the last two or three years, imagine what we would have gotten back. And by the way, I've also seen FTX customers saying this would have like uh benefited us. If FTX doesn't go under, these investments benefit FTX, not a customer who had funds on FTX trading. There's no world where these investments were a benefit to FTX without.
A bankruptcy.
Yes.
Like to customers.
Yes. Yeah. Completely agree. Lot of misleading or uninformed takes out there.
So, anything else you're watching before we uh wrap up? Anything else like really compelling that's on your mind?
Um, nothing too much. Uh, I do like the risk-reward here for crypto. I think most things will go the way of Bitcoin. I kind of think we had the perfect storm to bring Bitcoin down from 126 in October. You know, whether that was like four-year cycle fears, quantum fears, Bitcoin OG selling, like precious metals stealing the show, the list goes on and on, but it's hard to think of more things that could really pull Bitcoin down from here. And I do think we have some positive catalysts like the war in Iran ending, um, like the Clarity Act potentially passing. Uh, if a central bank was revealed that they bought uh Bitcoin, I think that would obviously do it. Or even Bitcoin moving up 20% for whatever reason would just cause a bunch of FOMO, could push us back to all all-time highs. So that's my favorite one. When you dumb people down to the, you know, mentality of like a goldfish, like the intelligence of a goldfish, you just say nothing's better marketing than for an asset than higher prices of that asset.
It's true. It should work in the opposite way. But um, yeah, in crypto generally, how it works. It's the best meme, you know, like the line for Bitcoin at 126 and the line for Bitcoin at 60. It's so true.
Yeah.
All right. Well, thank you, Brian. It's great to have you in the studio. Uh, hopefully we can do this again in the not-so-distant future. Everybody, I'll be back, of course, uh, at noon for the Daily Wolf on Yahoo. And that's all we got for you, Brian. Thank you so much, man.
Thank you very much.
Thank you, guys. That's dope. That's dope.