The Frontier

Michael Saylor outlines a capital goal: attract 5-10% of all global credit, currently $300 trillion, to flow into Bitcoin-backed credit instruments ($15-30 trillion), and capture 5-30% of global money markets.

Saylor defines digital money as zero-volatility, fiat-pegged instruments that pay yield, built to bridge fiat capital into the Bitcoin ecosystem, distinguishing it from digital credit.

Bitcoin's volatility contrasts with stability in digital credit; during Bitcoin's 50% drawdown from its high, instruments like SEDA and STRX posted positive total returns.

Bitcoin dominance in the crypto market has risen from 41% during the FTX era (2021) to approximately 69%, driven by a collapse in confidence in Ethereum and competing tokens.

Saylor's strategy for MicroStrategy involves raising equity capital at a premium to Bitcoin's price to buy Bitcoin, banking a gain; they raised $21 billion of equity at a 200% premium in 2024.

MicroStrategy's credit instruments (STRC) and preferred equity are structured as perpetual capital with optionality favoring the issuer, lowering the real cost of capital to approximately 8.5%.

Saylor posits that MicroStrategy can pay dividends perpetually if Bitcoin appreciates at least 3% annually, and the equity outperforms Bitcoin if it appreciates more than the company's cost of capital (~10%).

Matt observes that despite the bear market with Bitcoin at its 200-week moving average, MicroStrategy's companies are buying Bitcoin (200 Bitcoin in one week), raising cash, and show no stress.

Saylor and Matt argue digital credit products compete with money market funds and yield-bearing stablecoins, not Bitcoin itself, expanding the network by attracting new capital pools.

Saylor explains that equity issuance for cash or Bitcoin is accretive if done above net asset value, arguing dilution depends on the return of the asset acquired versus the existing business.

They acknowledge that valuing Bitcoin treasury companies requires sophisticated models incorporating forward Bitcoin price, volatility, and cost of capital assumptions, not a single metric.

Saylor states that Satoshi is likely the largest Bitcoin holder, possessing over a million Bitcoin across multiple wallets.