Strategy CEO on Bitcoin-backed credit and Wall Street products

Transcript

I think Bitcoin price does what it does, right? Like people want to say, "Well, what's your projection for next year?" I don't know, right? Like, uh, it it's it's playing the markets. We're not short-term traders. We're long-term inventors and investors of capital. >> GM, good morning. Welcome to the Milkro Show, the daily crypto show that is here to remind you that no matter who you are, you don't have enough Bitcoin. I'm your host, John Gill, and today we are joined by Fung Lee. Fun is the president and CEO of Strategy, formerly Micro Strategy, a role he assumed in August of 2022 after joining the company back in 2015 as the chief financial officer and later serving as the chief operating officer. Today, we are going to discuss everything you need to know about strategy, their Bitcoin backed

securities, their outlook for 2026, and a lot more alpha and insights beyond that. So, if that sounds good to you, make sure you like and subscribe, share this episode with someone who is down bad and needs to be up only. And as a reminder, we just dropped our brand new AI podcast, Milk Road AI. Episode one kicks off with Mike Novagrats breaking down Galaxy's Data Center Empire. And episode two lands tomorrow, so hit subscribe on Milkroad AI. Jump in on the newsletter weight list as well so you don't miss out on that. The link is below in the show notes. Today's episode is brought to you by Gemini Credit Card. Turn your everyday spending into Bitcoin. Stack SATs without even thinking about it. Block trust IRA. Let AI outsmart the market and grow your crypto while you sleep and figure markets. Earn solid returns on your cash

because sitting idle is not a strategy. And without further ado, welcome to the Milk Road Show. Fun. How are you? >> I'm doing great, John. Thanks for having me. >> I'm really excited to talk to you today. We we're going to try to get this in. Uh your schedule is kind of busy, so we're a little cramped for time. So, I wanted to kind of skip some of the intro questions on the history of Micro Strategy and your your journey to being Orange Build and just kind of come straight to the the big the big thing you guys have brought to the market, which is these Bitcoin back securities. Um, I'd love for you to just sort of walk us through the suite of these products now that Strategy is offering.

Uh initially it was just MSTR micro strategies common stock but now there are there's strike stride uh MSTR strife and stretch and there's more on the way from what I understand but could you just give us sort of a quick overview of what is a bitcoin back security and what differentiates some of these products from one another. Yeah, you you know it's it's interesting. We we happened upon uh some of these securities as we were trying to solve problems with our capital structure and ultimately problems with the capital markets. Uh and you know we started with MSTR which is amplified Bitcoin. So if Bitcoin is returning 50% a year with 50% V, MSTR might return 80% a year with 80% V. And

so we amplified Bitcoin and that's great for people who want to invest in in in common equities and want to see greater upside, greater risk, greater return. Uh but we realize not everybody wants that, right? And uh we we we accessed the debt markets in 2022 uh sorry in 2020 uh right after we launched uh our Bitcoin treasury strategy and we primarily did that through convertible bonds. Uh, and those convertible bonds cause MSTR to be amplified because we're able to lever up the company. But when you access convertible bonds, you start to realize it's a 144A regulated market, which means that only qualified investment investors can invest in these, retail

cannot. You realize it's not the most liquid market. There aren't a lot of people, like maybe 50 people around the world who invest in convertible bond market. Uh, and you start to realize that the pricing as a result is not as advantageous to us. And although they're fairly long duration, four, five, six, seven years out, they're not perpetual like our preferreds are. And and we raised right around 10 11 billion through convertible bonds. That was great to purchase Bitcoin and start to scale our company and lever up the company. But we realized as we entered 2025 that we started to tap out that market. In 2024, we're the largest issuer of convertible bonds in the world. I think we were something around 35% of the entire convertible bond market. And so we said, what are our

alternatives to that to raise capital? And we stumbled upon this idea of preferred. Uh and so there was a company reason to want to do preferred cuz they're perpetual nature. They can be retail accessible. We can put an ATM on top of them. Um but there was also a market reason for these prefers. As we looked at the market for prefers, we realized they weren't liquid. the investors and the people offering these uh were not not the most attractive in terms of the companies offering them and the investors weren't getting a lot out and we said hey we can disrupt this market. The preferred hybrid security is something that is easily accessible. You can put a four-letter ticker on top of it and if it's generating 500 600 700 basis points because of Bitcoin we can

offer somebody 10 10 12%. Uh and so what did we do? We said, okay, there's a need for the company to offer a perpetual security and there's a need for the market to be able to invest in Bitcoin, get lower volatility, lower returns, and to get paid a dividend of uh that's much greater than what you can get in the market, 400 to 600 basis points greater. You [snorts] know, it's not often uh in your career do you find a product that the company needs, right? and a market that wants the product, right? And and as we started to evolve this over the course of the year, we realized there's real product market fit here, right?

When we launched Strike in January, which is our convertible perpetual preferred, and we did that because we thought that was an easy transition off of our convertible bonds, people sort of understand it. They get some equity upside, they get a dividend of 8%. Uh we were fighting upstream. Uh we're swimming upstream, right? The banks didn't quite understand it. The attorneys didn't quite understand it. The market didn't quite understand it. And when we did our first IPO, it was still sizable, right? I think it was about half a billion dollars or so. But we were just starting getting started, right? Retail didn't quite understand it. And that was I'll call it our gateway preferred, right? A gateway from our convertible, a gateway from our equity, uh, but something that the

market uh, started to get comfortable with. And we put an ATM on top of it. And we started to see the performance of the preferred just in terms of price outstrip every other preferred. And we saw the liquidity of the preferred about $10 to $15 million a day outstrip the typical liquidity of a preferred which is about a million dollars a day. And so we knew we were on to something, right? And so that was the gateway, a convertible, right? Perpetual preferred. And then from there we said, okay, you know, there are other products that folks might want. They might want just a straight preferred that's not convertible. And that's what strife was, you know, senior in a capital structure.

It looks more like investment grade preferreds. And we put that out there and we said we're going to, you know, pay 10% dividends on top of that. Right? So consider that as an investment grade hybrid or investment grade preferred. Right? So that was the second thing. And we said, okay, now we've got two products. We're going to slot in another one which is now a junior sort of a a a a a junk bond rated preferred which is at the bottom of our capital structure. You know, no governance rights. It's not cumulative, but we're going to pay a higher dividend yield on that, right? 10% at par right now as it trades in around the 80 range is like 13%. Right?

And so and and that's for a different class of investors. Some want investment grade, some want junk junk rated. That's okay. Right? And and I'm saying those as comparison points. And then the last one that we did, or not the last one, the second last one was stretch. In stretch, we said, let's change the entire game, right? If you're not just bond fixed income investor, where do you put your money, right? And and as an average individual, you either put your money in a checking account and you get paid nothing, right, for the most part, or you might put it in a savings account and get paid 45 basis point. Or if you're lucky enough to have enough capital, you might be able to put it in a money market and get paid 350 basis points. Well, what do people park money

in a money market for? It's really overnight money. Of course, you want the principle to be stable. I don't want to put $50,000 into a money market, see it go up 20% and down 20% and I have to use it, you know, the next month to buy a car or to pay my kids tuition. You want the principle to be stable. And so we asked ourselves if those are the requirements and obviously you want a high return 350 base points nice but what if we can give 10%. Right? Then we got an interesting product and and this is just sort of a fascinating uh sort of way of building structured products backed by bitcoin and the capital markets. John, uh, this is never done before, right? Like an equity, hybrid

equity, right? Like, uh, it's treated like equity, trades with a four-letter ticker, and what you're hoping to get out of it, what a buyer is hoping to get out of it is that the principal stays stable. Now, can we get it to trade in a tight range right around a hundred bucks, right? Uh, and still pay a large floating dividend, right? We started at 9%, we increased it to 10%, now we've increased 10 and a quarter. Now it's 10 12%. Uh and those who have studied stretch have seen in the last 2 weeks it finally sees and trade in a very tight range of $100, right? And and even the last few days plus or minus 5, right?

And with significant volume, some days $150 million a day. Uh and this, you know, sometimes you have to take steps to get to where you are, right? The big steps were Bitcoin treasury company, levered Bitcoin, you know, company that that, you know, issues debt in the form of convertibles to a Bitcoin credit company that's offering preferred. Those are the big steps. Now the small steps before that were you know a perpetual convertible preferred strike a perpetual preferred that is you know investment grade in nature or trying to be investment grade strife a perpetual preferred that's junior uh to all the others and maybe junk you know rated and

that's uh stride and now stretch is is sort of that you know and and Michael calls it our iPhone moment and we see this thing now trading with a vowel that could adventure should go down to one, right? It's trading in this tight window and also $150 million a day in days. And it's just fascinating. Even if you you don't like Bitcoin, if you just want to study the history of the capital markets and innovation in the capital markets, I think Stretch is going to be seen 10, 15, 20 years from now as as one of the most you know important inventions in the public securities market in the US.

Then obviously now now most recently last week we launched stream uh which is a preferred uh in uh in Europe which which we wanted to give people Euro exposure and uh because of the size and scale and capability of our companies company we're able to sort of get through the the European regulatory challenges which there are many and start to offer the market open up the market over there and and and why do Europeans want these products because they uh you know we here want get 350 basis points on our money market over there. They're getting 100 bas 150 basis points, right? And so they're yield starved even more so than we are. Did you know you can earn Bitcoin without

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>> Gotcha. Well, that's a very comprehensive view of that and sort of like the the background there. Um yeah, and I think that your preferreds were um I could be wrong on this, but I think your preferred were the first ones ever listed on Robin Hood, which was a huge unlock. And this is the first time a lot of retail investors certainly um have have really been engaging with these kinds of financial products. So, it's been really interesting to see the way that you found product market fit, but also brought in a whole new segment of the market to to something that they weren't either interested in or having access to before. Um, so I'm interested to see how that continues to develop and what products do come out of that. Um, but going back to to MSTR, um, you know, there there's this huge capital stack

you guys now have of of different financial products. Um but MSTR's uh performance, their annualized returns on MSTR has been about 80% um which is much more than Bitcoin. However, in 2025, MSTR has started to lag and underperform Bitcoin's price um throughout most of 2025. This has raised a lot of questions from different investors about this. Um and I wanted to get your thoughts on this. Obviously, not everybody can afford to get spot Bitcoin, but some people are saying like, "Hey, just spot Bitcoin is now is better and the right investment choice." Um, how much of a concern is MSTR's price performance relative to Bitcoin to you as CEO? Is this something that you think is a vital KPI? Is it somewhat unimportant? How do you think about that? How important is

that to you all? >> Yeah. So, so just just on on your last comment uh about Robin Hood, you know, I I think what Bitcoin has done for folks in general, and there's a lot of discussions around it's it it increases somebody's time preference, right? you you're willing to uh save your money and you're willing to invest for the long term. And I remember when I was in my early 20s, you know, my time preference was short as possible. I made money. I went and got a lease for a BMW and and I went out to parties at night and, you know, not you know, open open up, you know, tabs and all this kind of stuff, right? uh because at that point in time uh the investment options for something

that provides 40 50% returns or 80% with Bitcoin didn't exist. I think the reason it was important for these prefers to be on Robin Hood is you have long duration products, right, like MSTR, like Bitcoin, you know, that give you high returns and that fits a need. But you also have these short duration products like STRSC that before if your option was to get 2% or 3% or nothing, you would just go spend the money. Now, people in Robin Hood, right, like me when I was 25, right, like I said, well, I could either go out and, you know, go go to a bar or I can put some put my

short-term money into something that gives me 10 and a half%. It it it lengthens your time preference. And so, I I think it's actually quite good for uh for folks who are Robin Hood, but it's quite good for society for there to be these different options backed uh by Bitcoin. Um [clears throat] the topic of MNAV comes up a lot with with us, right? And and and I I've seen it all, right? When we first launched uh in August of 2020, our MNAV went up, you know, past three to to to four and beyond. Like you saw that happen with other Bitcoin treasury companies like Metaplanet.

Uh and in 2022 with Bitcoin Winter or MNAV dropped, I think it went down to uh as low as 75, right? And so we're trading below uh the value of the Bitcoin on our balance sheet even as the price dropped. Uh and then uh you know it steadily started to march up again in 2024 especially with the approval of Bitcoin ETPS uh with the elections last November. It went up again to two you know close to three uh and now we see it starting to compress again for a variety of reasons back to you know 1.2 2 1.3 and what I'll state is there are fundamentals and

there are psychological reasons for MNAV uh and uh you know our time horizon right you know talking about um you know sort of time preference right our because we're Bitcoin invested our time preference is long right it's high uh and and our being myself Michael our board members our executives and therefore the company Right. And so, you know, we started as a software company that had to generate uh incomes uh and revenue and report them to the street every 3 months and be scrutinized whether our revenue went up 5% or 6% and whether our operating margins were 15%

or 16%. were being measured every quarter by the street and as a result what we delivered in terms of results would cause our stock to fluctuate uh not a lot right and and the volumes on our stock are much less than what they are now and the people interested but the nature of running a software business or any other public company that's capitalized on the US dollar causes those companies time preferences to decrease and you worry literally every quarter right? Like you you built your company all around a 90, you know, day timeline. Uh and that's not good. I don't think that's good. There's a lot of conversations around sort of the

public markets being in a quarterly cycle, right? You know, I know there's conversation about the SEC around should it be, you know, six month cycles, right? Uh with Bitcoin, you know, the cycle becomes four years, five years. Not only has the time preference of somebody who's owned Bitcoin increased, the time preference of the companies that hold Bitcoin have increased. And that's what's happened to us. I fully understand it's frustrating if you're a short-term investor, if you're a day trader, you're like, I bought MSTR, the MNAB was two, now it's down to 1.3.

Holy crap, what happened? They keep buying Bitcoin, but their valuation goes down. What's fundamentally wrong with the company? [snorts] What I would say is the opposite. We're long time preference. And if you look at the fundamentals of the company today, what have we done? We went from a company that holds Bitcoin on our balance sheet to a levered Bitcoin company that primarily invested through convertible bonds, which are illlquid, medium duration, high-risk instruments, to the shareholder and to us to now being a company that's capitalized on Bitcoin and has created a Bitcoin digital credit market. We've IPOed five new securities. Nobody does that. The fourth one, Stretch, was the largest IPO

this year, $2.5 billion. It is potentially the most innovative product in the capital markets. And I sit back and I say to myself, we've had a pretty good year, right? We've fully transitioned the company into preferreds. We've created brand new products. We launched in Europe, right? Europe is not a Bitcoin friendly market. We launched a product in Europe. We've done all these things. We've innovated. We've converted our capital structure. We found a product that pays 10 12% dividend yield tax deferred. The tax equivalent yield on that 17%. Right? So with that long time preference, I say to

ourselves, we've done all the right things. We've innovated. Our M now should be higher. And I do think it'll go back higher again as the market absorbs what we've done. and and and and then the sentiment of the market as Bitcoin starts to go back up again, it'll get stronger. Uh so, uh the long time preference and long time horizon is important for us, you know, and and and I get some of our investors don't have that and and it can be frustrating, but I feel like what we've done is we build built the basis of the company for strength going forward, >> right? And for a long-term success as opposed to minute-to- minute type of success. That that that's a helpful way of framing that. And I think that's really a useful perspective on how to think about that there. Um I want to ask

another question around this. Um strategy has raised nearly$20 billion dollars of capital thus far in 2025. Um which shows not only huge market demand um but it has raised questions uh from among investors about um dilution uh from these ATM issuances. Uh how are you thinking about this? How do you like tell people to think about this in terms of like protecting their shareholder value versus raising capital to increase these purchases? What what's that dynamic like for you? What's the story you tell around that? >> We constantly look at a few important KPIs, right? One is is BTC yield, right?

And and that's the increase percent increase in Bitcoin per share, right? And so a fairly simple way to think about dilution is as a shareholder if you get as an example 100,000 Satoshi per share does that number go up or does that number go down and that per share that denominator basis takes out the dilution effect and says are we increasing Bitcoin per share and and and I think that's that's a very clarifying KPI because it tells people is it good or is it bad dilution? If it's good dilution, the Bitcoin per share goes up.

If it's bad, it goes down. As an example, issuing equity above 1x MNAV increases Bitcoin per share. Issuing equity below 1x MNAV uh decreases Bitcoin per share. So that's one sort of guideline we we look at. But beyond equity, right, issuing a preferred, right, is even better because there is zero dilution upfront and the dilution occurs over time as we pay off the interest. uh or pay off pay the dividends over time. But if it's 10% then the dilution effect is much less than issuing equity at even 2xmf. Uh and that's why we like the preferred so much because the upfront dilution effect to the shareholder zero and it only occurs when

we issue equity to pay pay off. We can do that in the preferred market because of our scale, because of our work with bankers and with attorneys and regulators to be able to enter into that market. And that's why we like it so much. And so if if if I'm a shareholder and I think about this, right, like you just can't think about the number of shares outstanding. You can't just think about the ATM as as fully dilutionary. It's are we adding or are we removing Bitcoin per share and all the actions we have taken to date uh are increasing Bitcoin per share and and at our scale right at the size of company we are now uh with over 460,000 Bitcoin it gets harder to increase Bitcoin per share but

we have access to capital markets and access to partners uh that many others don't >> right so it it's a question of how are you denominating your portfolio and if you're denominating in Bitcoin then you actually prefer this. So that that makes a lot of sense that framing there. Um I wanted to ask a question around this. Um strategies Bitcoin purchases have have slowed and gotten smaller recently. Uh and I was curious what you attribute this change to. Is this a drop in demand in the market? Is it a riskmanagement practice that strategies engaged in? Um and what is strategies strategy uh for accumulation during periods like this where spot bitcoin price is sort of lagging or chopping? Um and just how you think about that from a riskmanagement perspective.

Yeah, it it it sort of goes back to the three phases that the company has gone through uh as a Bitcoin treasury company, right? Phase one was uh just buying and holding Bitcoin uh which looks a lot like a a spot bitcoin ETF, right? Just acquiring bit Bitcoin. Stage two was levering up the company through convertible nodes to be able to provide intelligent leverage and increase Bitcoin per share. Uh and stage three is using preferreds to provide intelligent amplification and provide Bitcoin back credit. Uh we just started stage three in January of this year. Uh and and I get it. Bitcoin investors are an impatient bunch. Uh I am too, right? Uh

and people are like, well, what the heck? Like what's going on? And they forget that we've raised, you know, $7 billion in the preferred market. But really for that to mature, we want to raise 10 billion, 20 billion, $30 billion in the preferred market. And as we do that, we'll start to accelerate again our Bitcoin purchases. But we've had to mature and season the market, right? When we launched Stretch, I figured it would take about 2 weeks for it to price up to a hundred bucks. Uh, and it took about 4 months. It's not that long, right, in the grand scheme of things, but we had to see the market season. And now we're issuing equity off of the stretch ATM uh as you saw last week and are able start to accumulate

capital faster and buy Bitcoin faster. Um but it's this transition from uh intelligent leverage to intelligent amplification that took us time expectedly so right like I you know uh and so this is going to take a little time for the market to mature right like the the the first iPhone phone launch didn't even have have 3G 3G uh highspeed internet access right like it didn't have an app store right uh uh and it did pretty well over time right I think our preferred will do well over time.

>> Yeah. So I think that that's a really interesting uh point about how much I mean the strate the name strategy right it's changed from micro strategy to strategy the business model of the bitcoin treasury aspect of the business has evolved um and the market does have to sort of like relearn these things as you guys are changing and evolving the offerings here um so to that point I wanted to get your thoughts around this like piece around education strategy and sailor specifically has been one of the biggest ambassadors for bitcoin and for bitcoin education Hope.com, for example, is a sailorbacked educational resource on Bitcoin itself.

How much do you all focus on educating the public about Bitcoin versus just educating them on these Bitcoin backed securities and the products you are offering? Because like you're saying, there's a an enormous amount of a learning curve to go up here um to to get to a place of understanding these things deeply. And how do you go about doing that? Do you see that as being your job or is it like is it your job to teach people about Bitcoin or just teach them about like stretch and MSTR? walk us through how you think about like the educational piece of this and how you go about tackling that. >> Yeah, I I think there's there's there's a layer of educating people about what a Bitcoin treasury company is, uh what our strategy strategy strategy is a Bitcoin treasury company is, the evolution that we've gone through, which is what why we

get on these shows and talk about this and why our preferreds are such innovative products. And that's what you see, you know, Michael, myself, our IR team, you know, do a lot. We now have channel distribution, right? Meaning, we can work with the Robin Hoods or we can work with the Fidelities or the Morgan Stanley's and these folks to also educate people on our securities and on our strategy. And that's all good. That's all well and done. Uh I think what gets really interesting is educating the masses on the topic of Bitcoin and and everybody has done a great job uh in the Bitcoin community.

You've done a great job, John, with that. Um but there's still a layer of 90% of individuals in the US and the world who either listen to short sound bites and take that as reality. Right? Bitcoin is for criminals. Uh or listen to uh professors in colleges who talk about Keynesian economics and it's good for governments to print money and they take that for granted. Or people who look to government authorities, right, and state that their whatever currency, their sovereign currency is where you should put all your money, right? And they take that for granted. and and I'm passionate

about educating across all of those levels, right? And that's beyond strategy, but uh it's really creating, you know, we we hire now folks from from from business schools and and some from from great, you know, US institutions and they all tell me, right, CJ and Ellen and some folks on our team tell me, you know, like when I talk about Bitcoin, people think I'm crazy, right? Like when I talk about Bitcoin, there's no one else to talking on the other side. And we we have to fix it at that level because higher education and grade school education they they they they're rooted deeprooted in the current way of teaching technology, teaching the financial markets, teaching corporate

finance and teaching monetary policy and [snorts] and I would love to see us, you know, we'll take more of a role. I'll take more of a role at fixing things at that level, too. Uh I want it to be pervasive. Why do people invest in real estate? Because it spits off cash flow. But I'm not here to manage rental properties. That's why I'm looking at Figure Markets. Their new democratized prime product backs your money with real cash flowing assets and returns up to 9% APY. It's the first real world asset borrow lend pool built for everyone, not just institutions. Ready to lend like a bank and get more than the 5% A is offering you? Download the Figure Markets app today and get 9% on your idol funds. Go

to milkroad.com/figuremarkets. I I know we're coming up on time here, so I I want to try to sneak in a couple more quick questions here, but uh one thing you mentioned was time preference and you know, in Bitcoin, you say like four years is sort of like short-term holding period. There's been a lot of talk about this lengthening cycle theory. Um and I just wanted to kind of get your thoughts on that. Do you have a view on that? Have have we topped and this four year cycle is over? Or do you think that there's there's credence to this idea that these cycles are going to extend because now we have like you know players like strategy that are holding 3% of the supply and never going to sell. Do does those cycles no longer apply? Like what is your thinking on that? And like does that matter to you

all or is that sort of like indifferent to your your long-term strategy here? >> One, I don't think it matters, right? Like uh I think Bitcoin price does what it does, right? Like people want to say, "Well, what's your projection for next year?" I don't know, right? Like uh it it's it's playing the markets. We're not short-term traders. We're long-term inventors and investors of capital, right? Uh and there are folks who sit at trading desk with four screens and are are, you know, going short Bitcoin long strategy or the other trade and let them do that, right? Like that that's okay.

Uh but it is hard to know what Bitcoin price is going to do tomorrow, a month from now, 90 days from now, a year from now. What I do know is as more institutional and more corporate capital gets infused into the asset class, you'll see volatility go down and perhaps the 4-year cycles associated with uh the havingss uh starts to change. And it's not so much having related but it's related to other macroeconomic or investment uh uh uh cycles. So I do think the four-year cycle becomes less important. I do think the volatility of Bitcoin goes down and and although those might be, you know,

less attractive for people who are trying to get the short-term gains, right? Like they want the 80% pop in a year. uh it is attractive to people who want to invest in an asset class that has lower volatility, lower ARR. That's why we put our preferreds out there. We realize that there's a much larger addressable market at lower ARR, lower volatility. And so Bitcoin lowers its ARR and volatility. It's still going to outperform the S&P 500. It's still going to outperform uh private credit markets. Um, so it's still going to be better than whatever it is 15% 15% ARR 15% V of the S&P 500. It might not be 5050. Um, but I think that's okay because as the

cycles lengthen, uh, I do think more and more institutional corporate uh, high netw worth money will come into the market. >> Uh, one final question here and I'll let you go. I promise. But, um, you we talked about a lot of these Bitcoin back securities. There's new products coming out from strategy all the time. Um, what are some of the most exciting opportunities that are ahead? I won't ask you for a price prediction because Sailor's already said $13 million a coin, so we know what that is, but um, but what what are some of the opportunities ahead in 2026 that you're most excited on about and that you're most focused on as as the the world's leading Bitcoin treasury company?

>> Yeah. So, so one, seasoning our preferred, right? And and really by seasoning, I mean getting uh more and more of the market to understand the offering, right? It's it's a product that that I said earlier has a market. Everyone is going to become more aware of it. Uh we'll have more capital infused. Hopefully, we'll see uh more daily liquidity. And so that's piece one, right? Making these preferreds work. It's a new product. People are just learning about it. Everyone that learns about it likes it. Two, opening up more pools of capital of the preferred. How do we do that? One dimension is for uh investment grade investors to be able to access it. uh high yield investors, those who require a credit score. So by getting an S&P uh

score, credit score, we've opened up that market to different pools of investors and also opening up more broadly across the world, right? So that's why we introduce a euro base, maybe we'll do CAD base, maybe we'll do something, you know, JPY base. So, so that that's sort of sort of one in opening up the concentric circles uh on these preferreds and and I think there's a big opportunity there. I think the other big opportunity that we've talked about in the past is seeing the traditional financial system embrace Bitcoin, right? What is that? What form is that? Right now, they're underwriting Bitcoin back securities. Some of them are soliciting Bitcoin back securities to their wealth management channel. The

next is for them to open up custody services, exchange services. And when they're holding and custodying the Bitcoin, that changes the game because then they can let somebody loan against take a loan against their Bitcoin, get yield on their Bitcoin. That opens up the market too. And when that market opens up, you also open up the pools of capital that can invest in Bitcoin grows the overall uh demand, right? Grows the market. And because because uh the supply is limited will will cause the price of Bitcoin to increase. And and what's uh exciting about this is the things I mentioned 2 years ago were one never thought of the Bitcoin back prefers and two not really considered

something that was going to happen on the horizon. Tradfi supporting Bitcoin and now the product's been invented and it's an inevitability of when Trad is going to embrace Bitcoin. I think these are two major interesting catalysts. The seasoning of our preferreds and the preferred market and the embrace of Trady of Bitcoin that if you look at 2026, it's uh very promising for strategy and for the asset class. >> Fong, I really appreciate you being on Milk Road today. I know we're at time, so I'll let you go, but I just want to kind of like bring something together for the audience here. We talked a lot about education, and you talked about innovation, invention of completely new products that have never been on the

market before. Um, there's this, you know, myth that Bitcoin is sort of this static asset, and it is far from that. Um, but it is a a asset that has a long time preference. So, I just want to encourage the audience if you're feeling frustrated or, you know, disillusioned by the the price action in the last couple of months. Um, use this as an opportunity to stay engaged, stay educated because Bitcoin is always growing. Um, and so, you know, Fong, I really appreciate you coming on the show today to share with us. I'm excited for what you guys are doing and I hope we can get you back on again at some point soon to to check in with you guys as you continue to invent the future here of finance. Um, so yeah, just thanks so much for being on the Milk Road Show.

Really enjoyed the conversation. >> John, thank you too. I appreciate all the work that you're doing in the space. Thank you so much, sir. Happy to do it. Happy to be here. And we're glad you all joined us as well. Uh so until the next episode, everybody stay safe, stay educated, stay bullish, and we will see you all on the next episode of the Milkro Show. Thanks, everyone. Bye. If y'all are making swaps or trades right now, highly recommend you check out Milkroad Swap. This is a DEX that we built in partnership with Cow Protocol. Why did we build it? Not to make money. just honestly so we could have a place to do our swaps for the lowest fees that we could find. This is the fees on Ethereum, Arbitum, and Bass are only.15% fees. Uh this is a huge difference from

uh other centralized exchanges that charge half a percent or even up to 1.2% fees on their swaps. Also, you can swap on Salana all at swap.mmillcro.com. Check it out today. You won't be upset and you can join me in my favorite place to make swaps on chain. Want insights on what's moving crypto markets and [music] how we're trading each event? Subscribe to our channel and join the Milk Road daily and pro newsletters and start investing [music] like the top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.