Michael Saylor: STRC investors receive cash flow, Strategy is a Bitcoin volatility amplifier

BlockBeats News, March 14th, Strategy founder Michael Saylor posted, A Simple Theory of Digital Credit:

Accumulate appreciating capital (BTC).

Use that capital as collateral to generate credit (STRC) backed by equity.

Monetize some of the appreciation directly or via derivatives (MSTR) to fund dividends.

Credit investors exchange volatility, risk, duration, and performance with equity investors. Credit (STRC) receives cash flow and stability. Equity (MSTR) sees amplified value performance and volatility.

BlockBeats note: Strategy, as the largest crypto treasury, holds 738,731 BTC at a total cost of around $56.04 billion. MSTR is Strategy's publicly traded equity, currently valued at $46.6 billion. STRC is a floating-rate perpetual preferred stock issued by Strategy, positioned as a short-term high-yield credit product, price-pegged near $100, currently with an annual dividend yield of around 11%, distributed monthly in cash, with the dividend rate adjusted monthly.

Strategy funds BTC purchases through continuous new issuances of STRC, aiming to boost the listed market value leveraging the common belief that the total BTC holdings' value should be less than MSTR's market cap, and continues to issue STRC in the hope of a virtuous spiral. Internalized leverage magnifies MSTR's price volatility relative to BTC, presenting a leveraged path to Bitcoin exposure.