The biggest Bitcoin holder on the planet

strategy just entirely wrote its

rulebook. Now they spent years doing one

thing, raising cash to buy Bitcoin, but

now they have an entirely new toolkit

and framework announced today. We're

going to talk about that. Some words

from the BIS, the Central Bank of

Central Banks, some news from Japan, and

a little hopium from the charts. Let's

go.

What is up everybody? Welcome to the

Daily Wolf on Yahoo Finance. I am your

host Scott Melker, also known as The

Wolf of All Streets. We're going to

spend the next 15 minutes digging

through a weekend's worth of news and

markets to figure out what is signal and

what is noise. Now, I just had a long

conversation this morning on my YouTube

channel on Macro Monday with Peter

Schiff, and I got the full bear case on

Bitcoin and strategy. Of course, there

was much debate, definitely worth

revisiting and watching if you want, as

we had two of the biggest bears on

Bitcoin there. But even in that

conversation, we were unable to fully

unpack exactly what is happening with

strategy, which I will attempt to do

now. So, first I'm going to show you

this one image. This was yesterday.

We've gotten very accustomed to Michael

Saylor drawing new orange dots on his

chart and tweeting on Sundays about

another Bitcoin buy. This time he said,

"We're going to need more charts." Now

everybody assumed that meant he was

going to buy more Bitcoin. That was not

the case. He was actually telling you

that we're going to have a whole lot of

new things that we're going to have to

actually chart, right? And what happened

today was instead of announcing a buy,

they put out basically a new framework

entirely. I'll show it to you right

here. Strategy announces digital credit

capital framework USD reserve policy

STRc dividend policy digital credit and

MSTR repurchase authorizations and BTC

monetization program. That is a

mouthful. Try to say it five times fast.

Go ahead.

You can do it. Anyways, while you're

doing that at home,

we're going to talk about what happened

here. So, for a few decades, the only

verb, obviously, in strategy was buy.

Today, they added a few more to the

manual. We got reserve, repurchase, and

if necessary, sell. So, it turns out

there were other pages in the playbook.

Right? And they have to be. This is what

the market was looking for, and

initially, actually, we saw uh some nice

buying on MSTR and STR C. So, let's

break this down. So, first, as expected,

and I told you to look for this next uh

next week when we did a summary of what

was coming on Friday, STR C dividend

raised to 12% from 11.5%

effective for July 1st record dates.

This move comes after STR C, obviously,

traded uh below par down into the low

70s. Interestingly, strategy said that

they won't necessarily adjust the rate

just based on STR C trading below par.

So, the next big piece here is the BTC

monetization program, and the board

authorized selling Bitcoin under

specified conditions up to 1.25 billion

to fund a cash reserve, plus more for

dividends and buybacks. Cuz so, they

could technically sell a bit more, but

there's no obligation to sell any BTC.

So, of course, the headlines you're

seeing is MicroStrategy will sell 1.25

billion in BTC. The board approved up to

1.25

billion under circumstances certain

circumstances if they need to boost up

their USD reserves. So, just make sure

that you're very clear on that headline.

We know that MicroStrategy or Strategy

already could sell Bitcoin if they

wanted to. This is just the board voting

on a specific amount. So, they have two

billion-dollar potential buyback

programs, one for their preferred STR C

first,

uh when buying below face value is

accretive. Only if it will be accretive

to MSTR shareholders, and a billion

dollars for MSTR common if it will be

accretive. And this is more interesting.

They have a cushion. They said they have

2.55 billion in USD reserves right now,

which is 17.4 months of dividend and

interest coverage at current prices.

Uh 225.9 months counting the authorized

Bitcoin sale capacity. So, their floor

policy now is that they will always have

at least 12 months of runway to pay. So,

there's a lot to unpack here, right?

They're saying that they're going to

have a robust cash reserve when their

policy used to be any cash they raised

immediately went into Bitcoin regardless

of the price, but they're raising the

cash reserve as the market wants to see

and I discussed with Fang Li

just a couple Fridays ago here on this

show, and interestingly, they would be

willing to sell some Bitcoin to do it.

Now, that 2.55 billion USD reserve, that

had a little head scratching for me.

They don't have that much. They have 1.3

billion-ish, I think, in cash, maybe

1.7. They've added to it a bit, but

they're calling certain things cash

equivalents that are highly liquid and

they would be able to sell quickly. So,

that is fine. So, the story here is not

will strategy sell Bitcoin to raise a

cash reserve or to defend MSTR's uh

price or to defend STR C. I think the

bigger story that the market's sniffing

out that I've been talking about for

weeks is will strategy be able to buy

Bitcoin in the current environment, and

were they the only major buyer that was

even in the market, right? I think that

that is a valid and huge question, and

one that will get an answer as we see

price action advance here into the

future. Now, notably,

we also had uh the MNAV by almost any

calculation for MSTR now dropping below

one. Depending on how you do it, some

people had it at 0.58, a massive

discount, but if you count the

preferreds and the

uh and all of the convertible notes and

such, some people now putting it at

0.99, meaning that right now it would be

definitely dilutive and probably a bad

idea to buy more Bitcoin by selling the

common and the flywheel might be

temporarily turned off. Now, I can't let

the day pass without re-showing this

meme because I had told you in the past

when STR C was cooking

that Michael Saylor was basically Mega

Maid from Spaceballs and he was had a

huge vacuum cleaner and was sucking up

all the Bitcoin, but I've also showed

you this one in the past, especially

when he sold that Mega Maid can go from

suck to blow.

And this is a how the market seems to be

reacting to everything that Saylor and

strategy do right now, uh even after he

sold a measly 32 Bitcoin. Listen,

there's obviously pressure here. I

believe that strategy right now is doing

what they believe the market needs to

see to give renewed confidence uh in the

capital structure, and only time will

tell. I will tell you that it backed off

some of the bears in the timeline on X

that some people who've been highly

critical said, "I'm pretty impressed

with this. This makes a lot of sense.

They're being responsible." So, we'll

see.

Uh as I said, my bigger fear is that we

find out that strategy was

the only major buyer in the market and

that uh we could see

very little demand if we see a major uh

uptick again in selling. And to that

end, we have the next story here.

Bitcoin ETF set for worst month with $4

billion in outflows. So, while we see

strategy potentially selling or

certainly not buying, we also have

massive buying in the market, but that's

not really the story. The full story is

South Korea's $518 billion AI chip push

shows crypto is still losing the capital

race. Now, we don't need to get

specifically into Samsung and SK Hynix

again, but I will tell you that there

are a lot of pundits pundits and

analysts who continue to point out the

fact that the biggest headwind for

crypto is that people are more

interested in other things. And right

now that's obviously in chips and AI uh

which have really become the hot ball of

money that many believe has taken the

shine off of crypto at the moment. But I

mean, you know, zooming back out to that

other story, 4 billion in June, we know

that there was a 6.4 billion dollar uh

run for about 2 weeks. So I I haven't

seen the updated number, but I've got to

imagine over the last 2 months that the

number is far, far, far higher. So, you

know, listen, I mean, the the fact is

the bullish narrative for crypto for

very long time here has been the

institutions are coming, the

institutions are buying. It turns out

the institutions uh went and bought

Nvidia.

Right? So, uh unfortunately, you know,

we thought that uh the riskiest thing in

our portfolio would be crypto and would

have massive upside. It turns out that

the riskiest thing now is just being

beat by a graphics card.

Right? But I I think that this too shall

settle down. Listen, all of this bearish

euphoria against Bitcoin, as I've been

saying for weeks, as we continue to

trade in the 60-ish thousand region,

it could of course break down, but looks

like uh that bearish euphoria, fear and

greed, a lot of things pointing to at

least having some sideways and bottoming

action for quite a while. Now, this next

story,

I find this one really, really, really

interesting and kind of funny when you

think about it. So, here you go. BIS

warns stablecoins are more like ETFs

than actual money and they're creating

FX risk.

BIS's latest annual report dives into

stablecoins and AI trends. So, listen,

if you don't know the BIS is, they are

the central bank of central banks.

So, if you hate central bankers, these

are the guys that you can really point a

finger at and just scream, right?

Because they're the absolute worst. But

we've been telling you stories for

months about the fear of central banks

surrounding stablecoins. And now they've

come up with a new and novel and

nonsensical, in my highly

highly biased opinion, uh narrative

here. So, So, saying that they're more

like ETFs than actual money, and they're

creating FX risk. So, what they said is

stablecoins show redemption frictions,

which we've literally never seen, and

trade off par, which we've not really

seen with Tether or USDC for more than a

day or two. And so, they resemble more

like ETF shares, they're not a means of

payment, they don't settle on central

bank balance sheets, and can't guarantee

par at across issuers. So,

just read those lines, uh eliminate a

few keywords, chop off a few things.

They don't settle on central bank

balance sheets.

That's all they're saying.

They're saying it can't be real money

unless it goes through our system and we

have control of it, and we've been

telling you about this

for months.

Stablecoins exist outside the system,

and therefore are a major threat to the

system. I told you a few uh weeks ago,

probably months ago at this point, how

Brazil was getting rid of cross-border

transactions with stablecoins, because

people were just not using Brazil's

system. They were just sending

stablecoins, because it's a better,

faster, and cheaper technology. And so,

if you really want to read between the

lines, you go on to the next part where

they had the bigger warning. Dollar

stablecoins are accelerating

dollarization in fragile economies,

weakening local currencies, and dodging

capital controls, because they can't

enforce border rules on a self-custodied

token.

There it is.

So,

the BIS,

they would rather have someone be forced

to use their own hyperinflating currency

and be a victim of inflation and

struggle on the hamster wheel, and

eventually end up broke through

systemic inflation, than to be able to

use a dollar and exit that system, even

though they know that for that person,

it's better. Now, if you are in

Venezuela,

do you think that you want to use

Venezuelan currency or a stablecoin that

is not going to lose 50% of its value

before you head to the store to buy

bread? The BIS is scared here. Central

banks know that stable coins are going

to replace them and they fear that that

will hyper dollarize the world and

eliminate those smaller currencies.

There's real fear there because that's

exactly what is going to happen. But

when it comes from the Central Bank for

Central banks saying out loud that

they're not valid because they don't go

through the Central Bank system, you

know exactly what this is and that is

fear of being replaced. Now, the next

story is a really interesting one. We

have SBI's 289 million to Bitbank deal

is symptomatic of Japan's crypto

consolidation. So,

SBI here paid eight times revenue for an

exchange that literally does not make

money.

So, this is like you know, I don't think

that any surprises here that this shows

you exactly what is happening, which is

that SBI's crypto custody is being

doubled and they will do that at any

cost because of the way that

legislation and regulation are now

changing in Japan. They're basically

betting on anything regulated fitting

into the new digital asset market

framework and therefore needing to

participate. So, we're having a massive

consolidation here of entities in Japan

at any price. Now,

I've told you about their new tax

regime. Japan really seems to be getting

it together here in a favorable

environment for crypto and all the

incumbents are scrambling to get their

piece of this. But very interesting that

they would

wildly

overpay for for this just to have

something that is regulated as a bank

and to make sure that they can

participate. Now, the last story I have

you right now is just a tiny little bit

of hopeium. You can see on this chart,

Bitcoin monthly returns. Every time we

have had a red June ever

in history, we've had a green July.

It has to happen this time.

Right?

Right? But you can see uh especially a

lot of people point out that every time

we've had two red Junes or three red

Junes, we also always have a green July.

But those people seem to miss the fact

that it's literally always green in July

if there is a red June. Seasonality is

playing in our favor. I would say

obviously that the situation is

different every time. You have a very

small statistical set to draw from right

here. So uh hard to get too excited, but

if you were looking for a tiny tiny

little bit of a sliver of hopium,

it should be a good month. Now, when you

add this to, as I said before, the

negative sentiment that we have around

the entire industry, the fact that

people are so bearish on strategy, but

they've uh now laid out a playbook that

actually makes a lot of sense, the fact

that we now we have broken down below

the 200 MA, but we've rarely stayed

there for very long. So, Bitcoin in a

bottoming area and a number of other

things I've showed you in the argument,

this could be the time to start getting

interested when people hate us the most.

It's going to be interesting to see what

happens. I'm very curious to see what

happens uh with strategy MSTR stock and

STRC throughout the week as people

digest this entirely new playbook. And

uh you know,

we're going to probably continue to see

outflows for a while in the ETFs. Uh and

that will be a normal story. That's all

we have for today. See you tomorrow.

Peace.