Wall Street’s Bitcoinization Just Took Another Stride

First came MicroStrategy, the only Bitcoin development company on the stock market. Then came the Bitcoin ETFs. Then Strategy (after the name change) decided to roll out AI-built, Bitcoin backed securities. The latest financial engineering and Bitcoin product to hit the institutional roll call…high yield-bearing Bitcoin proxies.

On Monday, Strategy (the newly branded MicroStrategy) unveiled its latest market play, Strategy’s 10% Series A Perpetual Stride Preferred Stock, STRD will be the ticker.

The nuts and bolts of this offer is to issue 2.5 million STRD stock at $100 a share to raise $250 million.

This stock works by offering a 10% dividend (at Strategy’s discretion) to investors but with the ability to repurchase the STRD stock under certain conditions. What this doesn’t do is convert to MSTR stock.

If Bitcoin’s price rises, the potential for Strategy to pay the 10% dividend improves. And the idea of a reliable, effectively Bitcoin backed bond may just be appealing to institutional investors, or investors who want some of the potential yield opportunity from Bitcoin but obviously can’t generate yield from direct Bitcoin ownership.

In short, it’s really a kind of a Bitcoin bond for Wall St and sophisticated investors.

What it’s not is a new play toy for crypto degens!

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Is This 2008 On Repeat?

I must admit, this latest move from Strategy does add another layer to the increasingly sophisticated Bitcoin-linked financial empire they’re building.

We already had MSTR common stock, and earlier this year Saylor launched STRK and STRF, two preferred securities he’s openly called the first AI-designed securities in the market.

Now, STRD takes a different angle — it’s a yield product designed for the big institutional pools that can’t own BTC outright. Pension funds. Insurance. Endowments. Many of these entities can’t touch Bitcoin ETFs or MSTR common stock, but they can buy a 10% yielding preferred stock.

The term ‘financial engineering’ is being thrown about when it comes to these layers of stock offerings and creations that Strategy is building. And when you see financial engineering used in relation to anything, you can’t help but throw back to 2008 when financial engineering annihilated global markets… and became the flint strike that launched Bitcoin.

My view is that what Strategy is doing is not ‘financial engineering’ in the toxic, 2008 CDO (collateralized debt obligations) and MBS (mortgage-backed securities) sense.

STRD is transparent, capital raised goes to Bitcoin purchases and working capital. The structure is straightforward, and there’s no hidden leverage or derivative complexity.

Yes, it’s tied to Bitcoin and Strategy. But it’s not shady debt deals packaged up to look like something they’re not. And there’s no ratings agencies in sight.

But…

Make no mistake, this is a clear sign of how fast the Bitcoinization of Wall Street is accelerating.

The Soft Intro for Boomers?

We’re not just seeing new ways to own Bitcoin anymore. We’re seeing Bitcoin used to underpin entire new capital market structures, built for traditional finance, and tuned to different investor appetites.

While the core part of me does think it takes away from the soul and original cypherpunk ethos of Bitcoin. Another part of me also thinks, if this is the path towards Bitcoin as a global reserve asset, then maybe it’s the only way to go.

Kind of like its gutting the system from the inside out.

Should Bitcoin investors pay attention to STRD? Well, I’ll admit it’s not for me. However, I know plenty of retirees, who hunt for yield within their retirement savings. And honestly, some of them still think Bitcoin is a scam (even after 15 years of me trying to convince them otherwise).

So, maybe this is the soft way into Bitcoin for them. Exposure (to a degree) of the future global reserve asset, while getting their (potential) fix of a 10% yield.

Seems like a win/win…

Trust in crypto,
Adam Atlantic