Really not sure what this guy is watching (smoking?!) to think that Strategy is "teetering," but then again SEO people, not authors, pick headlines. We talk about this theme a bunch around here (#1475688) because, let's be honest, it's the most fascinating finance/econ thing happening in Bitcoin.

Obvs the FT peeps are on the anti-hypetrain, this being bitcoin + financial-markets-doing-wacky-shit.

The Contradictions of CapitalismThe Contradictions of Capitalism

Uh-yes, this is surely what Marx meant: a financialized, Ponzi-financed, entity taking over the only non-financialized thing around.

Since its 2020 reinvention as a bitcoin treasury company, Strategy (née MicroStrategy) has morphed from an enterprise software business into a leveraged investment vehicle with a single, volatile asset. It has been a wild ride.

The recovery has given executive chair Michael Saylor the opportunity to do what the model requires: raise more capital.
Hence the company’s renewed pushing of “Stretch” (STRC) perpetual preferred stock — marketed, apparently without irony, as an “iPhone moment” for crypto capital markets. A more fitting metaphor might be Jenga. The tower looks impressive; the question is how many more blocks can be pulled before it keels over.

Yes ok COOL, now spell out to me how precisely this monstrosity "keels over." I don't see it. I've thrown every analytical tool at it and can't see it fall apart #1081555: I can see the strategy come to a stop, but that's not the same as collapsing.

"Strategy’s game plan is straightforward. The company sells high-yielding, unsecured perpetual preferred stock and uses the proceeds to buy bitcoin.""Strategy’s game plan is straightforward. The company sells high-yielding, unsecured perpetual preferred stock and uses the proceeds to buy bitcoin."

The annual dividend bill is now roughly $1.5bn, and rises with each new issuance.

Where does the cash to pay these dividends come from? Not from operations: the legacy software business is a rounding error. Not from bitcoin: the asset generates no income. Instead, dividends are effectively financed through fresh capital raising. New money pays old claims. The “yield” amounts to a transfer payment, siphoning value from common shareholders to support a more senior instrument whose appeal [...] rests on the appearance of stability.

This is a correct description. The (honest?) Saylorbois would retort, "Yes, and?! Bitcoin going to the moon; will drag MSTR with it!"

This bit is what I ROYALLY DETEST about tradfi coverage of Strategy,

The much-vaunted Strategy flywheel is straightforward: it issues STRC to buy bitcoin, which supports the price, which rerates the common stock, which enables Strategy to issue more common stock, which enables it to pay the preferred dividends, which enables Strategy to issue more STRC.

No, the price of bitcoin doesn't go up because Strategy buys (if anything, it tends to fall... or do nothing)... bitcoin is way too big for that. It goes up because legacy money is fucked, because fiat has no bottom, and because y'alls won't stop printing dirt.

This supposedly avant-garde financial engineering has a familiar, arrière-garde feel. Before 2008, demand for AAA-rated, income-producing securities prompted banks to originate ever more home loans to package into mortgage-backed securities, pushing house prices higher in the process. Rising prices then validated the credit assumptions embedded in those securities, such as low default risk and ever-rising collateral values. Here, demand for high-yield preferred stock enables STRC issuance, which funds bitcoin purchases that support the price used to justify further issuance.

True, but difference is Strategy's bitcoin is unencumbered and thus not backed by low-income earners, and the price of BTC/USD has to fall a lot for this to become a critical issue, whereas housing prices only had to fall slightly below their accompanying mortgages for it to become a systemtic tradfi banking problem. God dammnit, financial journalists, Den really has to do your work for you??

We have a long way to go.

"Strategy is financing a non-yielding asset with a growing cash obligation, sustained by receptive capital markets and recovering asset prices. For now, both are holding.""Strategy is financing a non-yielding asset with a growing cash obligation, sustained by receptive capital markets and recovering asset prices. For now, both are holding."

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