David Parker

You must understand interest rate parity to see the long term outlook for $STRC and $MSTR. Interest rate parity is the idea that different fiat currencies with different interest rates and different exchange rates should still have the same long term total return. FX arbitrage ensures this. Traders constantly borrow or lend at certain rates for Currency A and then lend or borrow at other rates for Currency B. The trade very often involves three or more currencies at once (look up triangular arbitrage). Traders can use futures to hedge exchange rate volatility. The result of all this arbitrage behavior pushes overall long term returns close together. @Strategy's $STRC is like a fiat currency. It has a base value of $100, and it has some tools to defend this peg. (Btw, you can switch out "Strategy" for any central bank, switch out "STRC" for the corresponding fiat currency, and switch out "100" for the intended exchange rate. The sentence still makes sense. That should be food for thought.) So $STRC will eventually be subject to interest rate parity. A few things will help make this happen: - Liquid derivatives on STRC for hedging - Brokers take it as margin collateral with minimal buying power haircut - Financial institutions use STRC as repo collateral Once these things happen, you will see arbitrage push STRC's long term total return toward that of $USFR and $TFLO (US short term floating rates). Traders can borrow at near the risk free rate and purchase STRC to pocket the interest rate spread. They can also hedge out STRC downside using derivatives, effectively guaranteeing that the trade doesn't have any issues. That will cause $STRC and T-bill yields to converge. What does this mean for $MSTR in the long term? It means @Strategy borrows at will at near the risk free rate. Imagine having a credit facility where you never pay the principal and your interest rate (paid monthly) floats slightly above the risk free rate. This is no longer the same game being played with zero coupon convertible bonds (repayment and dilution risk) or 10% STRF and STRD (high yield, variable price) or the common ATM (highly variable price, low torque, highest dilution). This credit facility will drive the biggest bitcoin accumulation engine. $STRC is literally about money printing and becoming a sovereign fiat issuer. Let's think about this: who else borrows money at the risk free rate and never pays the principal? I'm sure there's someone you know🦅