Digital Credit Monthly.

The past month brought big developments in Strategy's preferred complex. The most important was the September 25 announcement of a proposal to move all four dollar-denominated preferreds (STRC, STRF, STRK and STRD) to daily dividends. I believe this marks a real change and a new inflection point for liquidity across the preferred stack. More than that, it signals where equity markets are heading: toward 24/7 trading and, potentially, tokenization.

In presenting the proposal, Strategy said it has gone through five versions of STRC to reach this point. Michael Saylor put it this way: "we've gone through five different versions of STRC." The sequence ran from monthly dividends at the July 2025 IPO, to a variable rate, to an attached ATM, to USD reserves backing the instrument, to semi-monthly dividends and a buyback program. Daily dividends are the next step. I've followed this product since inception and watched each of those decisions get made to improve liquidity, reduce volatility and deliver returns to investors.

The most forward-looking language is in the proposed charter amendments. Today, "Business Day" means any day other than a Saturday, a Sunday or a day the Federal Reserve Bank of New York is closed. The amendments keep that definition but give Strategy the right to designate additional days as business days for dividend payment purposes, "including potentially seven days a week, as market infrastructure evolves." The proxy lists "Flexibility for Future Trading Models" as an explicit reason for the change, citing "a potential transition towards expanded or continuous trading of Preferred Stock." Phong Le was even more direct: "Bitcoin already trades 24/7. Equities are moving in that direction. So our preferred should also move in that direction." This is a forward-thinking piece of financialization. Strategy is writing a 24/7 market into its charter before that market fully exists.

I go into detail on where I see equity markets and tokenization intersecting in the appendix. For now, let's look at how the instruments have traded through the announcement.

Strategy has been vocal that it expects a wide range of products to be built on top of STRC, and that these products are necessary for continued adoption. Saylor noted on September 25 that "there are a lot of different digital assets innovators that are tokenizing STRC." I completely agree. I also think many of the second-layer products built on STRC, especially in DeFi markets, will look different from how they looked at launch.

The structures that last will be the ones that split STRC's risk between two holders with different appetites. A senior holder accepts less than STRC's rate in exchange for a buffer, and a junior holder takes the volatility in exchange for the excess return. Without that split, the product issuer has to keep STRC's volatility on its own balance sheet, which is difficult for anyone without large capacity, especially against a redemption schedule.

Strategy kept buying STRC through September. The September 21 to 27 week brought another $151.7M of repurchases (1.53M shares at an average of about $98.86). That takes the program to 13.27M shares and $1.28B since buybacks began in the July 20 to 26 week, against a $2.0B authorization raised from $1.0B on September 8. Trading volumes are low relative to history, but they have been steady and sustainable, especially in periods when the ATM is not running. Strategy has not sold STRC through its ATM since at least June. In each of the last seven weeks, Strategy's repurchases were roughly a fifth of all STRC shares traded.

We are now entering a unique window as STRC moves from semi-monthly to daily dividends, and it creates an opportunity. In a perfectly efficient market with no growth in STRC's market cap and rational participants, STRC would drop by the dividend on each semi-monthly ex-dividend date, about $0.50, and recover to $100 by the next one. The October 15 record date, which with T+1 settlement is also the ex-dividend date, is the last semi-monthly date before daily accrual begins on November 1. After that, there is no more $0.50 step down on the 15th and the last day of the month. The price simply carries its accrual day by day.

So the question keeps coming up: when does STRC get back to $100? My best guess is that another week or two of buybacks will do it, combined with the incentive to ride STRC up to par during the last window to clip a full semi-monthly dividend and then start day one of the daily accrual stream. That should be enough financial incentive to get STRC trading at par by the switch to daily dividends.

Strategy has held the STRC rate at 12.00% since July and has said it will keep it there until STRC demonstrates sustained, healthy trading near $100. All that is to say, we see a STRC recovery on the horizon. That will be strong support for what looks like the early momentum of a Bitcoin bull market.

The biggest question across the capital structure is what liquidity looks like for these instruments over the next four months. I've always been an advocate of all the preferreds, STRC included, and especially of the other instruments, which I think are excellent capital appreciation vehicles. The fixed-rate preferreds have needed liquidity most of all. Combined average daily dollar volume in STRF, STRK and STRD has fallen from roughly $51M to $57M a day in December through February to about $21M a day in September.

Looking at trading behavior around past quarterly ex-dividend dates, the volume spike is smaller than you might expect. In the median case, volume the session before the ex-date runs about 1.0 to 1.2 times normal, with bigger bursts in some quarters (STRD ran 2.5 times normal ahead of June 15). The quarterly date shows up more clearly in price than in volume. On the ex-date, each instrument sheds $2.00 to $2.50 of dividend entitlement in a single session, and the price reaction has ranged widely, from a fraction of the dividend to well over it. That kind of step complicates pricing for anyone not specifically trading the date. Daily dividends remove that step. They turn one large, lumpy dividend event per quarter into a small one every day, which, in my view, makes the instruments easier to hold, finance and trade on any given day. That should breed further liquidity.

There is a live example of this. Strive's SATA moved from monthly to daily dividends in mid-June. In September its average daily dollar volume was about $56M, more than STRF, STRK and STRD combined. Some of that is issuance and some is June's stress, so it is not proof that daily dividends cause liquidity. But it is the clearest real-world look we have at what a daily-pay preferred trades like. Strategy's own investor relations team pointed to SATA's move as a model.

I've always been an advocate of STRK, and I remain extremely positive on it for two reasons. First, the move to daily dividends will increase its liquidity; there's no doubt in my mind. Second, we are at the beginning of a new bull market cycle. Every dollar MSTR gets closer to the $1,000 conversion price, STRK will be gamma traded and arbitraged against MSTR in a more meaningful way, which will bring volume into the instrument. I think STRK will be an extremely liquid instrument over the next five years, and the shift to daily dividends will matter a great deal for that.

Now look ten years out. My 10-year forecast for Bitcoin is around $1 million a coin. Say MSTR is around $2,000 a share at that price. Each STRK converts into 0.1 shares of MSTR, so its conversion value is $200, plus whatever premium the $8 annual dividend on $100 of stated amount warrants. Using a standard convertible model calibrated to where STRK trades today, STRK in that scenario is worth roughly $248 to $268, with a delta of about 0.99. You would then hold a preferred trading at close to one delta with MSTR, paying a daily dividend. Today, at MSTR $153, STRK's conversion value is $15.31 against a $74.16 price. And Strategy has no general call provision (STRK can only be redeemed if less than 25% of the originally issued amount remains outstanding, or after a tax event). It can tender to buy STRK back, but it cannot simply call it. The instrument is truly perpetual. I don't see why, in 5, 10 or 20 years, this isn't an incredible instrument. You would essentially hold MSTR exposure with a 3% annualized dividend ($8 on a $248 to $268 price).

River reported on September 23 that 81% of all bitcoin in circulation has not moved in at least six months. Glassnode's data tells the same story: 63% of supply has not moved in more than a year, up from 59% in March, and the share dormant for five years or more is at a record. We are clearly seeing strong hands holding the majority of the Bitcoin supply. Over long periods, that pushes the price up; this is adoption-based price growth.

The technical factors on Bitcoin, which I won't detail here, also look very strong. Given what looks like the early stage of a bull market, I'd be remiss not to discuss the capital structures of Strategy's balance sheet and of Strive, the second-largest issuer of digital credit.

Strive runs much more amplification on its balance sheet. Strategy is more conservative about how much it carries, which makes stronger credit for its preferred securities: a larger cash reserve for dividend payments and stronger Bitcoin coverage across its preferred instruments.

The way I see it, Strategy has reduced its Bitcoin per share by roughly 11% since June 30, and about 15% from its May peak. It did this to support its credit. It issued roughly $7.3B of MSTR through the ATM, which built the USD Reserve from $0.9B to $5.0B, created a separate $1.0B USD Cash balance, and funded dividends and STRC buybacks. Between May and early August it also sold 6,948 BTC, about $432M worth, for dividends, the reserve and STRC repurchases. It has not sold since August 9 and is buying again: holdings stood at 847,666 BTC on September 27. In the short term, these moves have been negative for the common equity in Bitcoin-per-share terms.

Both Strategy and Strive understand something that matters more for Strategy because of its scale. If Bitcoin doubles from here, they will need to sell a massive amount of preferred securities to keep their amplification where they want it. Strategy's stated target is to sell digital credit equal to 10% to 20% of its BTC Reserve annually when conditions are attractive. At roughly $83,600 a coin, that is about $7B to $14B a year. If Bitcoin doubles, it becomes $14B to $28B a year, against about $9.2B of STRC outstanding today. That requires a massive amount of new demand for these credit instruments. So I believe Strategy has been sacrificing MSTR's Bitcoin per share in the short term to support STRC. The long-term bet is that continued strength in how STRC trades will allow future amplification, which will drive outperformance of Bitcoin.

Strive's market cap is much smaller, and it has been successfully re-levering as Bitcoin has risen, because it can sell SATA at the $100 price point. For now, Strive carries much more amplification, and its credit is somewhat less collateralized than Strategy's. Nevertheless, it can keep raising capital and re-levering for the time being.

Our focus is the changing nature of Strategy's preferred complex and making the best investment decisions in the moment as it changes. The value proposition of STRC has only grown stronger. The other preferred securities are now becoming attractive because of the likelihood of increased liquidity across the instruments. We are evaluating them in real time. I see potential opportunities as these securities move from quarterly to daily dividend payments, and as inefficiencies and liquidity develop around that change.

Strategy's letter to stockholders on the daily-dividend proposal made clear that it understands 24/7 trading of equities is coming. There is debate about whether that will be traditional trading that runs 24/7 and still settles through DTC and existing infrastructure, or whether a large share of the volume will be on-chain, as tokenized equities. I believe it will be some combination of the two. Robinhood has been pioneering this on its own platform.

It now seems likely that publicly listed U.S. equities will move to 24/7 trading, and we are seeing the beginnings of it. Robinhood has run a 24/5 market, Sunday 8 p.m. to Friday 8 p.m. ET, for years. At its HOOD Summit this week, it announced weekend trading in a curated list of U.S. equities, pending regulatory review. Its Arbitrum-based Robinhood Chain went live on mainnet on July 1, and its stock tokens trade 24/7 for customers outside the U.S. The exchanges are moving too. Nasdaq, NYSE Arca, Cboe EDGX and MEMX have all received SEC approval for 23/5 trading, with a common go-live of December 6, 2026, and NSCC began clearing on a 24/5 schedule on June 29.

On the September 19 episode of Moonshots (EP #292), Robinhood CEO Vlad Tenev faced a skeptic. Alex Wissner-Gross questioned whether tokenization or blockchain-based settlement is a real improvement in the infrastructure layer for listed equities, when trades could simply settle the way they do today, just on a 24/7 schedule. Tenev gave very good reasons why the traditional infrastructure for settling and holding securities makes instant settlement and self-custody very difficult, and why there will be a market for tokenization going forward. Even years after launching 24/5, Robinhood had to "staple together the primary exchanges and the overnight ATSs… and we're still not at 24/7." By contrast, "crypto … you get 24/7 for free, you get fractionalization for free. You get self-custody and composability with DeFi."

My best guess is that over a five-to-ten-year horizon, both 24/7 equity trading and tokenization will be relevant and implemented across markets. The chains those tokenized equities trade on will be an ever-moving target. We've seen the rise of Hyperliquid, along with Ethereum and Solana, and real growth in tokenized assets across all of them. Tokenized real-world assets distributed on-chain now total about $38.7B, excluding stablecoins: Ethereum holds $16.7B, BNB Chain $5.7B and Solana $4.3B. Tokenized stocks have grown from about $0.7B last November to $3.2B, held by 4.1M holders. On Hyperliquid, trade.xyz's equity, index and commodity perpetuals carry $3.86B of open interest. STRC and MSTR are among its listed markets. Sources: rwa.xyz (Oct 1, 2026); Hyperliquid API; DefiLlama.

Regardless of which chain wins, the underlying direction is the same. Strategy's move to daily accrual, and its charter language allowing payment seven days a week, positions its preferreds for an always-on market, whether that market settles through DTC or on-chain.