MSTR shareholders question Michael Saylor: What to do when an investment of $73,000 is left with only $20,000?

Source: Strategy

Compiled by: Wu Says Blockchain

On August 17, 2026, Michael Saylor, founder and executive chairman of Strategy, and CEO Phong Le participated in a live Q&A for investors hosted by Natalie Brunell, the host of the Coin Stories Podcast. (This interview took place before the market recovery, and some information may be outdated.)

During the interview, they responded to investors' questions regarding MSTR stock price pullbacks, common stock issuance, STRC buybacks, Bitcoin sales, and cash reserves. Michael Saylor stated that Strategy's most important task currently is to repair and expand its digital credit business, rather than paying dividends to MSTR shareholders or prioritizing the buyback of common stock. He believes that Strategy is in a Bitcoin bear market and needs to prepare for a difficult period lasting several months to one or two years, but the company will continue to accumulate Bitcoin and maintain a long-term bullish outlook.

Additionally, they discussed Strategy's digital asset classification framework, the possibility of MSCI removing Bitcoin treasury companies from its index, STRC's institutional adoption, the impact of AI on Bitcoin custody security, and why the company will not pay Bitcoin dividends.

Bitcoin is Digital Capital, STRC is Digital Credit

Natalie: Alright, we have many questions to answer, let's get started. The first question comes from multiple investors and is directed to Michael. You recently posted a chart on X listing a spectrum of digital asset currencies, including digital capital, digital credit, digital currency, and digital cash. What exactly are the products you classified as digital currency in the chart? Also, do you disagree with the statement "Bitcoin is currency"?

Michael Saylor: If we adopt the theoretical definition of "currency," you could say that currency is a value storage tool that does not rely on sovereign issuance and is based on ownership by the holder, such as gold. However, this is the classical Austrian school view of currency.

The current mainstream definition considers currency to be fiat currencies like the dollar or equivalent assets that maintain a pegged relationship with fiat. From this perspective, I believe that 99% of the world's population understands currency as fiat currency, and currency market instruments are those fiat-like tools that can generate returns.

I believe that about 1% of the world's population belongs to the Austrian school, who consider gold to be currency; some believe silver is currency, and others believe Bitcoin is currency. But I think this is an academic debate that is not worth getting deeply involved in, because currently only about 0.1% of the global capital or economic value is actually invested in the Bitcoin network.

In other words, 99.9% of the capital, currency, and valuable assets in the world are still outside the Bitcoin ecosystem. A large portion is equity capital and real estate capital, as well as metal capital like gold, along with hundreds of trillions of dollars in credit assets.

Therefore, if we want the Bitcoin network to expand tenfold or even a hundredfold, we must attract capital from the traditional financial system. This means attracting equity capital, credit capital, or money market funds.

For those who have not yet purchased Bitcoin, and whom we hope to serve, they see currency as a medium of exchange, a unit of account, and a store of value. In Japan, they would consider yen or yen money market instruments to be currency; in the United States, it is the dollar or dollar money market instruments; in the European Union, it is the euro or euro money market instruments.

Thus, "currency" in the context of traditional finance or Keynesianism refers to fiat currency or equivalent fiat instruments that can generate returns. The chart I presented shows the classification system of digital assets.

We believe Bitcoin is capital, meaning digital capital is Bitcoin. Bitcoin's competitors include gold, real estate, equity capital, credit assets, money market instruments held as capital, and art.

To emphasize again, 99% or even 99.9% of global economic value and capital is not Bitcoin. To attract this capital, we must explain why Bitcoin is superior to gold, art, real estate, equity assets like the S&P index, or gold bars.

STRC is digital credit. We have extracted a credit tool from capital. It has a certain volatility, less than Bitcoin but greater than fiat currency. The next step is to create something that looks like "digital currency" based on STRC. This digital currency can be understood as an idealized, Bitcoin-backed stablecoin. It maintains stability with fiat, whether it's a stable dollar, stable yen, or stable euro, while also paying returns.

Digital Currency Should Maintain Stability and Provide Returns

Michael Saylor: The difference between digital cash and digital currency is that digital cash usually refers to stablecoins, such as Tether, Circle, or other digital stablecoins. Regardless of which currency system it is attached to, digital cash itself does not pay returns.

In the crypto ecosystem and digital asset ecosystem, digital cash has become the winner in terms of medium of exchange. I know some Bitcoin maximalists or early participants do not wish for this, or have always hoped it would not turn out this way. But by 2026, we can see that almost all prices worldwide are denominated in fiat. If I say 99.9%, I might be underestimating; there could be many more nines after the decimal point.

That is to say, the medium of exchange is still typically fiat currencies like the dollar. Including stablecoins, they still do not pay returns. Therefore, stablecoins are well-suited for making change and settling transactions, but they are not very good stores of value, or can be considered weak stores of value.

The concept of "digital currency" is to combine the best aspects of digital credit and digital cash to create a tool that is overall relatively stable with fiat while also paying returns.

If a stablecoin-like tool can generate returns, it would become a much better store of value. The asset I listed in the chart is one of the first, and possibly the first, attempts to create a digital currency asset.

It stabilizes the asset price around $1 while allowing the asset to generate returns, which come from digital credit.

I expect that people will eventually establish dozens or even hundreds of different types of currency assets. The asset in the chart is not the only option. As far as I know, there are currently about a dozen institutions in the digital asset ecosystem developing digital currency assets.

I also do not believe that digital currency will only exist in token form. The U.S. may see the establishment of digital currency funds in ETF form, while other regions may see ETPs and publicly traded funds listed on various exchanges. There will also be private equity funds. Today's money market funds already have non-public trading private forms, as well as products traded publicly in ETF form; stablecoins are currency tools linked to fiat.

We believe that to grow Bitcoin tenfold or a hundredfold, we must create channels for capital inflow into the credit market and money market.

Currently, if there is no STRC and no newly developing digital currency tokens, then the fiat capital flowing into the stablecoin market is still entirely supported by fiat assets like the dollar; the funds entering the capital market can support BTC, but the capital from the credit market and money market has not entered this ecosystem.

If we create quality credit, we can further establish currency tools on top of that credit. Companies like Strategy and Strive that create digital credit also have their own equity, which will attract capital inflow, subsequently flowing into Bitcoin. Companies creating digital currency tools will also have equity, and their products built on digital credit will attract more capital into the ecosystem.

So we believe that if we can create credit tools, currency tools, cash tools, and equity tools, and have them supported by BTC or connected to the Bitcoin ecosystem, the entire economic system will grow. The product in the chart is just the first case among many digital currency tools I believe will emerge in the future, not the only case. I am certainly not endorsing this product or suggesting anyone invest; it is a type of security investment. However, I believe it is a groundbreaking event, much like the first emergence of money market funds and the later appearance of ETFs supported by money market funds, both of which were significant events.

Strategy Will Not Pay Dividends to MSTR Common Stock Shareholders

Natalie: Let's turn to equity and discuss common stock MSTR. Rob asks, "I have three children, and out of confidence in MSTR's long-term potential, I invested $73,000 for each child. Now, each $73,000 investment is only worth $20,000, and the so-called long-term potential has turned into whether I can break even. MSTR common stock shareholders seem to be your lowest priority. You maintain STRC, repay convertible bonds through MSTR's ATM issuance, while the so-called BTC earnings per share do not help my children much. I have a ten-year investment perspective, but I worry that you will issue a large amount through the ATM, causing the stock price to never return to $325 per share. Have you considered paying dividends to MSTR common stock shareholders, at least doing something tangible for them in the short term?"

Phong Le: I'll answer first, and Michael can add. Rob, first of all, thank you for being a shareholder and for investing in MSTR for your children. MSTR common stock shareholders are certainly our most important priority. Creating value for MSTR and increasing the stock price is our top task. How do we do that? By ensuring MSTR outperforms Bitcoin.

Since we began incorporating Bitcoin into our balance sheet in August 2020, Bitcoin has risen 32%, and MSTR has risen 41%, so over the long term, we have outperformed Bitcoin. I understand you came in later and have not seen this outperformance. Over time, when Bitcoin rises, we typically rise more because we hold more Bitcoin per share. In the past, we achieved this through leverage, and recently more through amplification mechanisms.

But this also means that when Bitcoin falls, we typically fall more, which is what you have experienced. Bitcoin has pulled back 50% from its historical high, while MSTR has pulled back about 75% from its historical high.

Since Bitcoin is our underlying asset, when Bitcoin rises, increasing the amount of Bitcoin held per share will increase MSTR's value; correspondingly, MSTR's decline will also be more severe.

So how do we increase the amount of Bitcoin held per share? In the past, we relied mainly on leverage, including convertible bonds. Recently, we have done this more through the digital credit Michael just mentioned and the amplification achieved through STRC.

Ultimately, if we want the common stock to rise, we must increase the amount of Bitcoin held per share; increasing the amount of Bitcoin held per share means we must ensure STRC operates successfully. That is why we seem to be primarily discussing STRC now and how to bring STRC back to par value. In the long term, this will drive up the amount of Bitcoin held per share and MSTR common stock.

We will not pay dividends on common stock because that is not the best use of capital. For us, the best capital allocation is to ensure STRC operates normally, purchase Bitcoin, and put Bitcoin on the balance sheet. That is the ultimate goal of the company.

So if you believe in the underlying asset Bitcoin and believe it will rise again due to the various characteristics Michael previously discussed, then MSTR will ultimately rise over time as well. That is the company's goal.

Natalie: Michael, do you want to add anything?

Michael Saylor: If you want dividends, you should buy our preferred stock. For example, STRD has an effective yield close to 15%. If you want to hold a relatively stable tool that can pay dividends, you might consider STRC or STRK; they are designed to pay dividends and provide some upside.

If your investment horizon is less than four months, you might want to hold money market tools. If your horizon is between four months and four years and you want to get your principal back with a decent investment return, then you are more like a credit investor and might consider some credit tools.

If investing in equity, you should at least have a four-year time horizon, ideally seven to ten years. Bitcoin reached its historical high about a year ago. When we are in a bear market, what you get is an amplified Bitcoin exposure. If Bitcoin falls 50%, we might fall 75%; and in a bull market, we expect to outperform Bitcoin.

So, buying MSTR gives you an amplified Bitcoin exposure. Buying Bitcoin itself is like riding a roller coaster. Since you chose to ride the roller coaster, you should use a four-year comprehensive metric to measure it. When analyzing Bitcoin, we look at the 200-week simple moving average, observing its trading position relative to the four-year average.

I believe MSTR's volatility will be greater than Bitcoin's because the essence of equity products is to provide an amplification effect. If we were to pay dividends on common stock, it would actually undermine the value proposition of equity and also weaken the value proposition of credit products.

The reason equity is so volatile is that we issue credit products; we strive to build a balance sheet because the company's future is built on the credit business.

If we can sell $10 billion of STRC each year, and BTC's performance exceeds our threshold return, which is currently about 10% to 10.5%, then the issuance of this $10 billion credit product, from the perspective of common stock shareholders, will gradually resemble net profit. In this way, credit product sales can achieve valuation multiples. Without credit product sales, there is nothing for the market to assign multiples to.

Therefore, the most important thing is to stabilize the credit business and build a credit business that is as sustainable and high-quality as possible. The returns on equity will manifest later.

Strategy May Need to Endure a Difficult Period of One to Two Years

Michael Saylor: We are currently in an investment phase, needing to establish the credit business first. Short-term actions that benefit equity may not necessarily benefit the long-term value of equity; conversely, short-term actions that benefit the credit business will ultimately benefit equity.

Ultimately, the company's product is credit. The better the credit products, the more valuable the company becomes. We believe that as long as we succeed in the credit business, especially STRC, the company will be very valuable.

This is a long-term investment, somewhat like Netflix or Amazon. When Amazon built Amazon Prime, it provided cheap or even free delivery services for a long time, and people thought this was not good for equity; but later, consumers nationwide subscribed to and used this service, and Amazon won the market.

Our view is similar. We want to win the digital credit market and ultimately create the highest quality credit products in the world. If we can do that, the biggest beneficiaries will be common stock shareholders. I myself am a major shareholder, holding over 19 million shares of common stock, so I understand your pain.

However, we must be prepared to endure difficult years. It could be one year or two years; we believe it will not last four years, but we may have to endure several months, a year, or two years before things start to develop favorably for common stock.

Strategy Currently Will Not Prioritize the Buyback of MSTR

Natalie: Several investors pointed out that you recently sold Bitcoin and also repurchased STRC. Do you have plans to buy back MSTR?

Michael Saylor: If MSTR is trading below mNAV (market value relative to Bitcoin asset net value multiple), or if a buyback is in the best interest of the company, we would be willing to buy back MSTR. We evaluate these options weekly and daily.

Currently, STRC is trading below par, so buying back STRC is a fairly obvious choice; MSTR is not currently trading below mNAV. If in the future it is needed, and MSTR has a significant discount relative to mNAV, you may see us take similar actions.

But this is not the company's current top priority. The most important thing we can do right now is to repair the credit business. If the credit business is repaired, the equity premium should expand, which will benefit common stock.

If we take capital that could be used to repair the credit business and use it to buy back common stock, it will negatively impact both equity and the credit business. Once the credit business weakens, even if we buy back stock in the open market, the fundamentals of the stock will weaken accordingly.

The fundamental question is, is this credit business worth $100 billion or $1 trillion? If the digital credit business cannot be established, the answer is zero; if it can be established, the debate is only about whether it is worth $50 billion, $100 billion, $250 billion, or $1 trillion.

So, our most important task is to make the credit business successful. Currently, our capital is allocated around this goal.

Issuing MSTR Will Not Necessarily Dilute Bitcoin Holdings Per Share

Natalie: So, in other words, repairing credit will repair equity. Phong, the next question comes from Johannes Schmidt. You once viewed JPMorgan as a reference for Strategy's development of the digital credit business. However, the concept of Bitcoin was originally to replace the centralized, trust-dependent banking system represented by JPMorgan. Isn't it contradictory to build Strategy's business, including STRC, by referencing JPMorgan, which goes against the decentralization principle established at the beginning of Bitcoin? How do you reconcile pursuing a JPMorgan-like corporate structure while staying true to Bitcoin's founding principles?

Phong Le: I will answer. However, I want to add to the previous question because there is a misconception that issuing equity will necessarily dilute shareholders.

If we sell the digital credit product STRC and then issue equity to pay dividends, it will actually significantly enhance shareholder value.

If we issue equity at a price above 1x mNAV, we are currently about 1.07x mNAV, and use the proceeds to buy Bitcoin, it will also enhance shareholder value because it will increase the amount of Bitcoin held per share.

If we issue equity and then buy back STRC at a price below the issue price, it can also enhance shareholder value. For example, if the issue price of STRC is $100, we issue equity when MSTR is above 1x mNAV, and then buy back STRC at $95, this will also enhance the value for common stock shareholders and increase the amount of Bitcoin held per share.

That is the key. I want to ensure everyone understands this. Many people see Saylor using ATM issuance and think it must dilute shareholders; but from the perspective of the amount of Bitcoin held per share, this is not necessarily correct.

Michael Saylor: There is also a scenario where if we sell equity at a price above mNAV and exchange it for dollars, it can also enhance shareholder value. All the transactions we conduct are enhancing value, strengthening the company's balance sheet, making the company more robust, and improving the company's long-term prospects.

Strategy Aims to Become the JPMorgan of Digital Assets

Phong Le: We do not want to become JPMorgan; we want to become "the JPMorgan of the digital asset space." There is a big difference between the two.

JPMorgan has many aspects worth emulating. It is the most valuable bank in the world, and we want to become the most valuable digital asset company in the world. JPMorgan has a high level of trust and significant equity value; we want to gain the kind of trust and equity value in the digital asset world that it has in traditional banking.

JPMorgan is also one of the largest participants in the repo market and is the bank the U.S. federal government seeks assistance from when necessary. We hope to achieve a similar level of trust and scale in the digital asset world.

But we are not copying JPMorgan's business model. The analogy means we want to be the largest and most important player in the digital asset world.

The first step is to become the company that holds the most Bitcoin in the world. Currently, the amount we hold is about 4% of the total Bitcoin supply. After that, we will build products on top of Bitcoin. MSTR is digital equity, STRC is digital credit; further down the line, other participants in the digital asset space will build new products on top of ours, such as the digital currency Michael mentioned earlier.

We believe that as the largest Bitcoin holder, we can achieve an industry position similar to JPMorgan, but that does not mean we are copying its business.

It's like Michael saying "STRC is our iPhone moment." We are clearly not trying to run the company like the iPhone or Apple; the analogy is simply because the iPhone is the most successful product in history, and we believe STRC can become the most successful digital credit product globally.

STRC Fundraising Can Be Used for More Than Just Buying Bitcoin

Natalie: The next question comes from X user @GrainOfSalt. Can Strategy sell STRC and use the proceeds to build cash reserves and buy back MSTR, rather than just purchasing Bitcoin? This approach was mentioned in the first quarter earnings presentation and is it still a viable option?

Michael Saylor: Absolutely. We can do many things with this capital; we can exchange STRC for MSTR, dollars, or BTC, and we can also exchange it for other outstanding debt instruments or credit tools. There may be other uses as well. We are very open about how to utilize this capital.

MSCI Removal Affects About 3% to 4% of MSTR Circulating Shares

Natalie: The next question comes from Garrett. How do you view MSCI's recent proposed rule adjustment to remove Bitcoin treasury companies from its index? What impact do you expect this will have on the stock prices of related companies?

Phong Le: I'll answer the second part first. The stocks currently held by MSCI index funds account for about 3% to 4% of our circulating shares. If we are removed from the relevant index, it may create some selling pressure for a period of time. But this is not significant for us. 3% to 4% is not enough to cause a substantial change in stock price over a long period, so I would define the impact as "not material."

If we also consider the Bitcoin we hold, the related impact is even smaller, possibly only 0.1%.

More importantly, I believe MSCI's actions are inconsistent with the U.S. government, global markets, and other indices. This is its second attempt to handle this matter, and it has taken another approach by redefining what constitutes operating assets. I think this is somewhat inappropriate. The SEC and FASB have already defined what constitutes operating assets for Strategy, and Bitcoin is clearly our operating asset, but MSCI does not see it that way. It seems to be taking a position that contradicts U.S. Generally Accepted Accounting Principles and the SEC's stance.

We will submit a response, trying to further understand why it has taken this adversarial approach towards Bitcoin as an asset class. I believe MSCI will consider our and other responses and handle this constructively, hoping it will not advance the latest proposal. Even if it does, I do not think it will be very important for us.

Strategy Will Maintain a High Dollar Reserve Long-Term

Natalie: Sergio asks, is it possible for Strategy to primarily build a cash reserve of $20 billion to $30 billion through STRC for large-scale deployment in future bear markets? Would a higher cash buffer also help MSTR be included in the S&P 500 index?

Michael Saylor: In the future, we will always hold a significant amount of cash. Over time, we expect our dollar reserves, Bitcoin reserves, and unrestricted operating cash to continue to grow.

These funds can be flexibly used to buy back credit tools, buy back stock, buy back debt, or purchase Bitcoin, as long as we deem it reasonable. Strategy's capital allocation choices are increasing. At this stage, we expect the company to continue to expand and have more trading options than in the past.

Phong Le: Regarding the S&P, we need to distinguish between S&P's credit rating and the S&P index.

In terms of credit rating, Strategy currently has a company rating of B-. Increasing cash reserves may help with this and improve the rating over time. But ultimately, what really affects the rating is whether the rating agencies view the Bitcoin on the balance sheet as capital.

Currently, they do not view Bitcoin as true capital, and the value they assign to it is even below zero. If this treatment changes, our rating will improve. This is more important than increasing dollar reserves. As for whether we can be included in the S&P 500 index, I believe it is not directly related to the scale of dollars on the balance sheet.

Strategy is Not a Short-Term Bitcoin Trader

Natalie: Jerry asks, will Strategy focus long-term on increasing the amount of Bitcoin held per share through financing, or will it engage more in opportunistic spot purchases of Bitcoin to support liquidity and price discovery?

Michael Saylor: Our main business is to create digital credit products that can strip away most of Bitcoin's volatility while extracting returns, and STRC is one of them.

Currently, the digital credit market is about $15 billion. We believe this market can grow to $100 billion, then to $200 billion, $400 billion, and ultimately reach $1 trillion.

The transactions Strategy conducts are essentially bets that Bitcoin's long-term performance will exceed the company's threshold return. Currently, this threshold is about 10.5%, and the relevant data is updated every 15 seconds on the company's website. The company's duration is about 33 years, so we are betting on the next ten to thirty years, not trading Bitcoin daily.

Investors buying MSTR should not do so because they think we are good at trading Bitcoin. If you think you have found someone who is very good at trading Bitcoin, you should invest in their private fund.

The reason to buy MSTR is that Strategy has about $60 billion in capital and may generate $5 billion, $10 billion, or even $20 billion in digital credit each year. If Bitcoin's performance exceeds the capital threshold, then the company could create about $20 billion in value each year and grow at a rate of 30% annually.

In practice, Strategy will hold more cash. If Bitcoin has a very high premium relative to the 200-week moving average, after we sell credit products, we may be more inclined to hold cash; if Bitcoin's premium relative to that moving average is very low or even at a discount, we may allocate more funds to Bitcoin.

Therefore, the position of Bitcoin in the cycle may affect the allocation ratio between cash and Bitcoin, but Strategy is essentially not a short-term trading company.

Many people overlook that in a bull market, MSTR's equity premium typically expands, demand for common stock increases, demand for credit products also rises, and related credit risks decrease. Therefore, both equity and credit businesses will expand rapidly, and more capital will flow into Strategy.

In a bull market where Bitcoin prices are rising or at high levels, more capital will flow into the company, so we typically buy more Bitcoin. In a bear market, equity premiums contract, credit products weaken, and demand for both equity and credit decreases, so the Bitcoin we purchase in a weak market is usually less than in a strong market.

However, if we use common stock issued at a high premium to buy Bitcoin, then the specific purchase price of Bitcoin is not the most important issue. As long as we exchange Bitcoin for stock at a higher premium, this transaction can still enhance shareholder value.

For Bitcoin purchased using credit tools, the real question is not the short-term pullback, but whether Bitcoin's performance over the next ten years can exceed the cost of credit. We are long-term thinkers, not short-term traders.

The scale of Strategy's allocation of dollars or Bitcoin, and how much capital market activity to engage in, will ultimately be determined primarily by the capital markets. The Bitcoin market determines Bitcoin capital, the credit market determines the demand for STRC, the equity market determines the demand for MSTR, and the derivatives market will also have some impact. These markets change independently every day, sometimes interrelating, and we participate in them daily.

Strategy Will Not Acquire Other Cash Flow Businesses

Natalie: We are about halfway through the Q&A session. The next question comes from live audience member Tim Fiaka. How do you view acquiring cash flow businesses supported by Bitcoin treasuries? Is it possible for Strategy to adopt some cash flow business model in the future? What benefits could cash flow bring to MSTR?

Michael Saylor: We will not do that. For other companies, this may be a completely reasonable business model, and there are other businesses and investors that specialize in acquiring cash flow businesses.

But Strategy's business model is to create digital credit. If we deviate from this direction, it will distract us or dilute the company's focus and bring various operational complexities.

This would also undermine the value of equity because it would make it more difficult for investors to accurately assess and trade MSTR. Currently, MSTR investors mainly need to build a Bitcoin valuation model. If we acquire a large number of different businesses, investors would have to separately assess each asset and business we hold.

This would also harm the derivatives market. The market for MSTR call and put options has reached hundreds of billions of dollars; if Strategy begins to diversify into various cash flow businesses, related investors will also be affected.

At the same time, this would weaken the credit business. Currently, we can recalculate the company's credit risk every 15 seconds; if we add other businesses, we would have to establish a heterogeneous credit model to assess what credit risks the new businesses would bring to the existing company.

Therefore, we believe this would be a form of dilution interference for Strategy. We will continue to focus on our existing business model because we believe it is the most suitable business model for the company to execute.

STRC's Recent Pullback Will Strengthen Strategy's Dollar Liquidity Reserves

Natalie: Let's discuss some questions specifically related to digital credit. What lessons has management learned from STRC's recent pullback and recovery? How will these lessons be used to further increase STRC's adoption rate?

Michael Saylor: Phong, would you like to answer first?

Phong Le: The biggest lesson is that we must hold enough dollar liquidity on the balance sheet to ensure dividend payments. That is why we currently hold $4.8 billion in cash.

In the future, when we raise funds through STRC, we may allocate part of the funds to dollar reserves or other forms of dollar liquidity assets to support dividends and enhance institutional investors' confidence in STRC.

Michael Saylor: I believe we also recognize that the company must be ready to buy or sell any asset at any time.

To ensure Bitcoin is fairly valued, Strategy must be able to both buy Bitcoin and sell Bitcoin. If we are unwilling to sell Bitcoin to fund dividends for credit products, it will negatively impact the credit business. Therefore, we must be able to trade BTC.

If we want to stabilize STRC, we must also be able to sell STRC and buy back STRC. In the past, we were very good at issuing STRC at $100, and we were also good at buying Bitcoin; now we have proven to the market that Strategy can also sell Bitcoin and buy back STRC.

It's like a car cannot only turn in one direction. We cannot only have a right hand; we must also have both a left hand and a right hand.

As Phong said, we must also prove that the company can dynamically manage reserves, including dollar reserves, unrestricted cash, restricted cash, and Bitcoin. All of these are very important.

We also recognize that we must continuously focus on and improve our capital structure. If we want to expand the credit business, we must always pay close attention to the quality of the capital structure.

STRC's Institutional Investor Ratio Has Increased from 20% to 30%

Natalie: Phong, when we were at the Bitcoin conference in Las Vegas, you mentioned that about 80% of STRC holders were retail investors at that time. Stewart asks, he recently saw you publish news about several institutional funds making large allocations to STRC. Why did retail investors adopt this product first? Why are institutions starting to enter now? What is the current holding ratio of both?

Phong Le: Whenever a new product category emerges, retail investors are usually the early adopters, and digital credit is no exception.

For products like digital credit, institutional investors typically want to see a track record of dividend payments and price performance for one to three years before entering, so they often come in later.

Currently, the retail and institutional holding ratio of STRC has changed from 80% and 20% to about 70% and 30%. This does not mean retail investors have decreased; in fact, retail holdings have doubled, but the growth of institutional investors has been more significant.

We have seen the institutional adoption rate begin to increase. I believe Strategy's digital credit capital framework has enhanced institutional investors' confidence.

Retail investors are certainly very important, but institutions typically hold for longer periods and use less leverage, so an increase in institutional adoption will help STRC maintain stability over time.

Strategy Currently Has No Plans to Change to Daily Dividend Payments

Natalie: Several investors want to know if STRC might change to daily dividend payments like SATA? Will other preferred stocks change to monthly or daily dividend payments?

Michael Saylor: Currently, we have no plans to change the dividend payment frequency of other preferred stocks. STRD, STRE, STRF, and STRK are primarily aimed at institutional investors, and institutions holding these products have always been able to accept quarterly dividend payments, so we expect this arrangement will not change in the foreseeable future.

We are actively observing SATA's daily dividend model, but currently, there are no plans to switch to daily payments. Strategy's main focus right now is still on improving STRC's credit quality and strengthening the company's balance sheet.

Phong Le: No, that's basically it. Daily dividend payments are an interesting concept, and we will continue to observe SATA, but the current arrangement of paying dividends twice a month has already proven to be quite effective for our investor base.

Strategy Currently Will Not Prioritize the Buyback of STRK

Natalie: Several STRK investors have raised questions, and one live audience member wants to know if you would consider buying back STRK.

Michael Saylor: Currently, our focus is on getting STRC back to a healthy state. You can expect us to be highly focused on this task. We want STRC to remain stable and grow in a predictable manner.

After STRC stabilizes, we will then evaluate whether we should take appropriate actions regarding other products and investors.

For investors in STRK or other Strategy securities, the best thing the company can do right now is to restore STRC to health, as measures that benefit STRC will typically also benefit STRK.

Strategy Will Not Allow STRC to Trade Significantly Above Par for Long

Natalie: John Lee Dumas asks, under what circumstances would Strategy allow STRC's trading price to be significantly above $101 for a long time without taking action to bring the price back near par? What strategic reasons are there for allowing such a premium to persist?

Michael Saylor: We will not do that. STRC's target trading range is around $99 to $100, and we have no interest in allowing it to trade significantly above $100.

One of the most important value propositions of this product is that when the price reaches $100, investors can sell at $100 without worrying about missing a higher price; at the same time, investors can buy almost any desired quantity near $100.

If we allow the price to fluctuate significantly, it will cause the market to stagnate. Investors who were ready to sell at $100 might wonder if the price will rise to $101 or $102, and thus a decision that could have been made in 15 seconds might be delayed for a long time.

If STRC trades between $95 and $105, people might take three months to make a decision that could have been made in three seconds. On the other hand, if STRC's price is $100.50, investors worried it might return to $100 might place limit orders and wait for days.

Imagine if a bank told you that when you withdraw, it might randomly only return 99% of the funds, but sometimes it might return 1% more; this uncertainty would trouble everyone.

The core value of Strategy lies in stripping away the volatility of the product and extracting returns. Just as the name of Standard Oil comes from standardized kerosene, its value lies in the product not suddenly becoming dangerous. If one gallon out of every 100 gallons of kerosene could explode, even with a disclaimer on the can, this would not be a product that is just 1% off; it would be a product that is off by 100 times.

So, we are striving to create the highest quality credit product possible.

For investors, Strategy's value proposition is that the company will provide the required liquidity as close to par value as possible. If someone wants to purchase $1 billion of STRC, we will not ask them to pay $110 per share; instead, we will strive to provide the product near $100.

On the other hand, sellers also want to confirm that selling at $100 is not a mistake. If STRC drops to $95 or $90, the company will use available resources to try to bring it back to the target trading range and near par value.

If the company is ambiguous about this, it would be equivalent to breaking a promise and undermining STRC's value proposition. The goal of STRC is to become the lowest volatility, highest liquidity, and most predictable credit tool in the digital credit market.

Strategy Will Not Sacrifice STRC Stability to Combat Short Sellers

Michael Saylor: Some believe that Strategy should allow STRC to rise to $101, $102, or $103 so that short sellers are unwilling to short it.

But we will prioritize the interests of about $10 billion in credit investors over about $300 million in short sellers. We operate this product for investors who buy and hold credit products, not to worry about short sellers.

Even if someone shorts STRC at $100, we believe this is beneficial for Strategy and welcome this behavior. If someone is willing to pay about 12% in dividend costs to short STRC and contribute their balance sheet and liquidity to help build the digital credit ecosystem, this could actually be a good thing.

If someone shorts a $10 billion product when STRC reaches $100, we will gain $10 billion in credit funding, while the other party will pay about $1.2 billion in dividend costs each year, helping STRC grow into a $20 billion product.

Therefore, we see no reasonable justification for not strictly managing STRC and striving to strip away its volatility. The lower the volatility, the higher the liquidity, and the more likely STRC is to become the best credit tool. The better the product, the higher the demand, and ultimately, higher demand will also benefit common stock and the entire company.

If investors want a product that may trade between $95 and $105, we already have STRF. It is actually lower risk, has a higher collateral coverage ratio, and a longer duration, and is designed for long-term credit investors who hope the product may trade above $100.

However, the demand and liquidity for STRF are significantly lower than for STRC. If STRC were allowed to fluctuate freely like STRF, product demand could decrease by an order of magnitude, liquidity would contract, and market confidence would decline accordingly. Therefore, I believe STRC's price should not be allowed to fluctuate randomly.

Michael Saylor: Strategy is in a Bitcoin Bear Market

Natalie: Michael, you previously stated that if Strategy holds 5% of the total Bitcoin supply, Bitcoin could reach $1 million; if the holding reaches 7%, the price could reach $10 million. Considering Bitcoin's current price is below November 2021, when Strategy only held about 120,000 Bitcoins, have your long-term price expectations and related assumptions changed?

Michael Saylor: We have not made precise predictions about when these prices will be realized. We only know that, directionally, the more Bitcoin Strategy buys, the better it is for Bitcoin.

We are currently in a bear market, so the market environment is more challenging, and moving forward is more difficult. But we will continue to buy Bitcoin and maintain a long-term bullish outlook on this asset.

If you are trying to predict short-term prices, you are a trader, and I do not have much useful advice to provide. My advice is, unless you are prepared to hold for more than four years, do not invest in Bitcoin; ideally, you should hold for ten years.

We believe that the more Bitcoin we buy, the higher the price will be. We remain long-term bullish on this asset.

Strategy Begins Using Cutting-Edge AI Models to Check Security Risks

Natalie: The next question comes from William. Phong, perhaps you can answer this. Cutting-edge AI models have been able to discover security vulnerabilities in various software systems. How does Strategy assess the threats this technology poses to Bitcoin custody? What measures is the company taking?

Phong Le: Strategy uses three of the largest institutional-grade custodians globally. We regularly communicate with these institutions to review their security measures in software, hardware, personnel, and automation processes.

These institutions also provide custody services for most Bitcoin ETFs globally, so they undergo many different institutional reviews.

We have always supported these custodians and the entire open-source Bitcoin community in using cutting-edge AI models. Some institutions are already using these models to test their software, and Strategy has begun to do so as well.

Rest assured, aside from Bitcoin capital planning, Bitcoin security and custody may be the company's most important work, and we take this very seriously.

Strategy is also a member of the Bitcoin Security Alliance. This alliance brings together some of the largest Bitcoin custodians, issuers, exchanges, holders, and banks globally. We are working with these institutions to pool resources and collaboratively research relevant security issues.

Strategy Will Not Use Bitcoin to Pay Dividends

Natalie: This question comes from Jim, and I would like Michael to answer. Do you believe in the idea of Bitcoin separating currency from the nation, no matter how long it takes to realize? Is it possible for Strategy to use Bitcoin instead of dollars to pay dividends?

Michael Saylor: The value of Bitcoin lies in its nature as a non-sovereign store of value tool similar to gold. Therefore, it can indeed separate capital and currency from the national system. The larger Bitcoin's scale, the higher the proportion of global capital stored in non-sovereign digital assets, which is also why we are so passionate about it.

However, we have no plans to use Bitcoin to pay dividends. Currently, about 99.9% of currency globally is still fiat, with Bitcoin accounting for only about 0.1%. A more reasonable transaction is to issue credit products, use fiat to pay dividends, and then buy Bitcoin.

If Bitcoin appreciates about 30% annually, and we expect it to outperform the S&P index in the long term, while the cost of credit is far below this level, then we would prefer to pay a 10% cost of credit while gaining 30% appreciation in Bitcoin.

If we use Bitcoin to pay dividends, it would be equivalent to paying with an asset that may appreciate 30% annually while only receiving about 10% in returns. The problem with this approach is that the cost of liabilities will be determined by the strongest currency.

It's like promising to pay a 30% return but investing the proceeds in a bond from a country that only yields 4%. If you reverse the direction of the transaction, you will eventually go bankrupt, so I do not recommend anyone do that.

The correct way is to borrow dollars or yen and then invest in Bitcoin to capture the correct directional spread. Moreover, the scale of dollars and yen that can be borrowed globally is about 1,000 times greater than the scale of Bitcoin that can be borrowed.

Therefore, issuing fiat credit tools and purchasing digital assets like BTC is reasonable, while the reverse does not align with economic and financial logic.

STRC's AI Advertising Increased Retail Investor Adoption

Natalie: Anthony asks, earlier this year, Strategy ran several AI-generated STRC ads on X, including a video of a retired engineer vacationing on the beach, content mimicking "This Is Spinal Tap," and traders discussing simulated scenarios of STRC. What effects did these ads achieve? Is the company satisfied?

Phong Le: The metrics we focus on include views, click-through rates, the number of visitors to the Strategy website, and time spent on the site. From these metrics, the ad performance has been quite positive.

I believe they have also driven STRC's adoption among retail investors. Exploring various capabilities using AI is also interesting, and these ads have established a narrative, so overall, I am quite satisfied with the results.

However, if Strategy believes that institutions are the more important target investors for STRC, then these types of ads may not directly prompt institutions to purchase the product, but at least they can increase their awareness of STRC.

Michael Saylor: I Also Make Bitcoin AI Videos in My Spare Time

Natalie: Let's end with a lighter question. Jay wants to know how you usually relax. Do you play video games, participate in sports, or have other hobbies?

Michael Saylor: We make and publish AI videos promoting Bitcoin. The most interesting thing recently has been making videos of me speaking in Korean, Japanese, Italian, and French.

Natalie: That's right. I remember you once said in a program or interview that a picture is worth a thousand words. These images can sometimes reach more people than a quarterly earnings call or a book. You don't even necessarily need to say anything; the video or photo itself can convey the message.

Phong Le: I still do some relaxing things; Michael basically only works. I have three kids and enjoy traveling with my wife and family. I play basketball, cook, play video games, and occasionally watch shows that don't require much thought.

However, I try to strictly protect my time and avoid investing too much time in things that do not create much value.

The content of this article does not constitute any investment or financial advice. Readers should strictly comply with the laws and regulations of their location. The views expressed by guests do not represent Wu Says' views and do not constitute any investment advice; please strictly follow local laws and regulations. Audio transcription and translation were completed by GPT and may contain errors.