Has Michael Saylor changed Strategy's bitcoin playbook?

Scott Melker discusses the latest crypto headlines, including Michael Saylor's new approach to Strategy (MSTR) and bitcoin (BTC-USD), stablecoin developments, the US Securities and Exchange Commission (SEC) pausing tokenized stocks, and more.

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Video Transcript

00:00 Scott Melker

Michael Sailor set the world on fire by tweeting that this week we bought bonds, not Bitcoin. We're going to explain to you why that's a savvy move and exactly what he means. Also, quite a few stories here about stable coins, hyper liquid versus poly market and prediction markets and more. Let's break it all down right now. Let's go.

00:32 Scott Melker

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. You've got 15 minutes with me where we're going to unpack all of the news, some of it which happened over this very long weekend and some that's happening in real time right now. Now, on this show we're not going to talk about the Iran conflict and what Donald Trump said and how the macro might affect it. We're going to dig into the very crypto native stories, the ones that could potentially move markets even as Bitcoin right now is actually at a nine-month low in volatility. Not much happening with price, but a lot happening in the background and probably the biggest continuous story that we have right now certainly with Bitcoin is one Mr. Michael Sailor himself. We got this story right here, as I alluded to in the intro.

01:21 Scott Melker

This week, we bought bonds, not Bitcoin. The bit that is charging. Now, I want you to focus in on that language because diehard viewers of this show may know that I always talk about the bit back. It's Mega Made as Michael Sailor from Spaceballs, right, sucking up all the Bitcoins like the oxygen and air from Druidia. I believe it was called Druidia. I mean, I'm not going to say that he stole it from me, but I may have called him to find out if he stole it for me. Haven't gotten a response yet. Call me Michael. But anyways, yeah, he bought bonds, but it's his own bonds. Strategy has completed the repurchase of 1.5 billion of its own 2029 convertible note at an 8% discount to par generating an incremental 0.7% Bitcoin yield and lowering aggregate debt to 6.7 billion. So they had

02:29 Scott Melker

8.2 billion in convertible debt total. As he said, he has reduced that now to 6.7 billion. So basically they took the money that they would have previously used to buy Bitcoin in this week. Remember he bought about two billion dollars worth last week. and they paid off their own debt. Now why would they do this? So I've talked about this quite a lot and we've seen this across the board with a number of entities. Strive, who is another Bitcoin Treasury company that's basically been copying the strategy playbook, but only focusing on their STRAC type product Sata. They've paid off all their debt, only using Sata now to fund Bitcoin. Marathon, uh Marathon, the minor, I told you about them, how they also closed all their convertible notes last year they were trying to be a Bitcoin Treasury company like Sailor, but they're fully pivoting to AI, clearing off the debt and basically reconfiguring their cap table. Iren, another Bitcoin miner turned AI company doing the same. Well, now Michael Saylor, who obviously has led with all these products, is closing down the convertible debt as much as possible. This is interesting because

03:49 Scott Melker

as he said to me at Money 2020 Las Vegas right after STRC was launched. He said, listen, I wish STRC had been the first product that I had created to fund Bitcoin purchases. Obviously they have STRK, STRD, they did the convertible notes, they were able to financially engineer their stock. Well, STRC is the final boss for him right now. So basically he's taking the money when he can to shut down the others and optimize the balance sheet to make room for STRC to be the main focus. So not a surprise

04:36 Scott Melker

that they're doing this right now. As I said, he got it, uh he was able to pay it back at a discount, which is obviously very, very good news. So they're reducing that collateral that collateral debt, uh convertible debt right now. So interestingly, we have a very good quote here from Fong Lee, who is the president and CEO of strategy. He said, on our first quarter quarter 202 2026 earnings call, we said we would proactively manage our convertible debt

05:15 Scott Melker

and use the full range of capital management tools available to us, including the disciplined sale of Bitcoin.. These transactions reflect that approach. So he very specifically said that they would use Bitcoin sales to uh disciplined to manage their capital, but they did not do that in this case. They have over 800 million now in cash. They were able to use funds from STRC and from using their stock to actually pay off this convertible debt note.

05:54 Scott Melker

but saying very openly that they would be willing to sell Bitcoin in the future. It's a big signal that follows what Saylor said. This was Saylor's quote, These transactions demonstrate the optionality we have built into strategy's capital structure and our dynamic multi-variant capital allocation model. strategy has the flexibility to fund strategic transactions using cash, digital equity, digital credit or digital capital. Well they use the first three and digital capital means theoretically selling Bitcoin. So just know that him strategically

06:33 Scott Melker

selling Bitcoin even though he will be a net buyer, very much still on the table here for strategy and as I said, that's a signal they needed to give the market as STRC is a security and the SEC and the buyers of that security need to know that all tools are on the table to maintain that yield and make sure that retail does not get hurt. Now the next story is a big one about stable coins. Now it's it's not necessarily news in the moment, but it's a really big signal at 322 billion, which is a new all-time high for total stable cap uh total stable coin cap.

07:18 Scott Melker

The stable coin market value exceeds the FX reserves of 95 nations, countries like Canada and the United Kingdom. I mean, this is absolutely astounding. Dollar dollars now basically are living inside of the backing of stable coins more than they're living in the reserves of some of the biggest countries in the world. We've long talked about how powerful stable coins would be and how rapid this expansion is happening. They don't care if the Bitcoin market is sideways if there's not much happening uh with price.

08:00 Scott Melker

Stable coins are quietly eating the world and they are going to become the unit of account, the way that dollars are transacted around the world. Not only do we see individuals using stable coins. Obviously, it makes a lot of sense if you're in a Venezuela or a Lebanon or an Iran, to gain exposure digitally to United States dollars instead of your hyper inflating currency to be able to transact cheap and fast with those dollars without losing value. Obviously that makes sense, but we're also seeing institutions and the banks after the genius Act

08:41 Scott Melker

finding ways to adopt stable coins themselves because it's much faster and cheaper than wires and Swift and ACH ACH and all the existing systems. Jeremy Aller, the CEO of Circle said that every institution right now has a plan for stable coins and I think that he's absolutely right. So stable coins now hold more dollars than 95 countries. I think that's just an absolutely astounding statistic and one worth noting. And at the same time, you can see right here, of course, as you get a statistic like that, you get a hit piece in the Wall Street Journal, why stable coins put economy at risk. Right, when you see this kind of fear, Bitcoin's boiling the ocean, AI power is more than all of the power from the sun or whatever nonsense we see, you know that you're probably uh on the right track when you talk about something becoming powerful and taking over. Classic, classic hit piece there from the Wall Street Journal. Now the next story is really an update on something we talked about at length over the past few weeks. So here we go. SEC delays, tokenized stock innovation exemption

09:55 Scott Melker

amid concerns. This is coming from Bloomberg. It's been reported wildly. So you may remember, I believe it was last week. I told you about the tokenization took the tokenized stock innovation that was coming from the SEC. It was called the innovation exemption. I dove into the past history of innovation exemptions, the fact that obviously trying to regulate and legislate about crypto, especially regulate on frameworks from the 1930s didn't make much sense. But the innovation exemption that was being floated, as I told you, had a lot of massive holes in it and a ton of risk. This is where we were saying that they could tokenize stocks, but then they didn't need permission from the issuer. right? So I used the example of Apple. I told you about how that meant that somebody, me, a third party could effectively tokenize a share of Apple, custody that share themselves, which obviously has risk and then re hypothecate and retokenize and loop it into yield structures and bring it into DF, which we know has risk and could cause real contagion around actual markets around those stocks. Well, there was enough push back from both Wall Street and interestingly from the industry itself.

11:21 Scott Melker

I told you about how the industry was pushing back last week saying that it need to be backed one for one and you couldn't take these kind of risks. Well, the SEC heard and they have tabled this indefinitely, although we know that they will come back around to it. Now I think that's a negative. I do think that it would be great to get this innovation exemption and some sort of framework that lays out very reasonably how people can tokenize stocks and what they can do. That will be accounted for by the way in the clarity act and other regulatory rule making.

11:58 Scott Melker

but there was a lot of push back and there were a lot of holes. It makes sense. So Commissioner Hester Perse, who sadly is actually leaving uh the SEC soon for a job that pays her actual money, which is probably nice for her. Uh she defended on X. She said limited in scope and would facilitate trading only of digital representations of the same underlying equity security that an investor could purchase in the secondary market today. Not synthetic. So she pushed back saying that what was being reported or the way it was being discussed may have been false anyways, but that this would be very, very, very uh controlled and one for one, but like I said, it's not something that's going to be happening in the very short term because it was a bad idea and I give them a lot of credit for for backing off, even though we do need that exemption.

13:00 Scott Melker

Now the next story is really, really interesting. We're going to talk about hyper liquid again. So hyper liquid is emerging as a challenger to traditional exchanges and prediction markets, says Falcon X. A new report shows Hyperliquid is rapidly expanding beyond crypto into pre IPO markets, prediction contracts, 24/7 asset trading, putting Wall Street giants on high alert. Well, that comes right on the back of this. Hyperliquid took a swing at Polymarket with macro outcome bets. So this is their HIP-4 outcome contracts. And this means that now you can also bet on hyper liquid around real world macro events like

13:48 Scott Melker

US inflation and Fed decisions. Now, that has long been the purview of Calshi and Polymarket and the prediction market natives. Hyperliquid is taking their shot into this market with fully collateralized yes, no contracts that will settle at one USDC or zero. And this is pretty crazy because now you can trade alongside your crypto perps or your oil trade or your silver and gold trades from a single account without moving any of the collateral. So Hyperliquid, a decentralized exchange is basically launching contracts for everything you could possibly want and now prediction markets

14:49 Scott Melker

all in a single account. So they're doing what you can do on Polymarket, but also what you can do on Binance and also what you can do, you know, on a forex market, all in one place with the same collateral. and many people pointing out that they actually have a much more uh efficient validator based resolution for the contracts. They'll be much clearer than the ones with Polymarket that have been under fire. So Hyperliquid now, I mean, you could basically pair like a perps position on Nvidia with outcome markets that Nvidia will miss or beat earnings giving you complex ways to hedge

15:43 Scott Melker

and to approach the market. I mean, hyper liquid, I don't even look at the token, I don't talk about it. It's not something that I've done a deep dive on, although very people are very bullish on it. But as a platform, you're talking about a company that doesn't have many employees that's effectively eating the lunch of all the incumbents in multiple markets and you can do it 24/7 365. So when these things are not trading elsewhere, I'm not talking about prediction markets, those trade all the time. But you know, oil trading and metals, when that's not in price discovery on the standard markets, legacy markets you're used to, you can get that price discovery on hyper liquid on a weekend. I mean, I reported to you before, they were doing as much as 700 million a day in volume on oil contracts. So you have this world right now where basically there's no reason to trade alt coin and crypto and even Bitcoin because you can trade everything else on the same rails that people use to speculate on Bitcoin and alt coins

17:05 Scott Melker

and the rest of crypto. Really, really interesting uh and worth paying attention to. I think that this is going to continue to be the biggest story. Now one more story that I just want to highlight before we go. There's been a lot of controversy around Ethereum. So Vitalik Buterin who is the founder of Ethereum, for those of you who don't know, one of the founders but is the main face, signal shift to smaller ship at Ethereum Foundation amid departures. So, you know, we've been following this story, a number of people have left the Ethereum Foundation. People have been calling it a brain drain. I believe five people just in May, eight total this year. Well,

17:51 Scott Melker

he's really pointing out the fact that the Ethereum Foundation itself, their mandate is effectively complete. There's not much left for them to do. And he believes that their focus should narrow, they should be one node on the network among many. He pointed out the fact that they now only hold 0.16% of all ETH and they're likely going to reduce their selling. Really a big shift here from the Ethereum Foundation because many people viewed this as a monolith that was driving the direction of Ethereum. Clearly with the amount they hold, amount of people who have left and the stance that he's taking moving forward, that is not the case. And I think, you know, that is a very interesting aspect of this for sure. But the other aspect is that there's been a ton of attention. I wrote a newsletter about it actually. I'll show you that right here. If you don't subscribe to my newsletter, the the the Wolf Den, you should that came out today. But basically saying that the whole narrative has been for

19:07 Scott Melker

chains to be faster, cheaper. He's saying that even though the market has decided that's what it basically wants, he's going to focus on crops, which is censorship resistance, capture resistance, openness, privacy, security. Basically saying it's okay if Ethereum is not the fastest and cheapest because it's the most secure, the most permissionless and the most decentralized. So really taking a big shot here that Ethereum can continue to be what it is and will not compete necessarily for speed.

19:44 Scott Melker

So, Michael Sailor choosing to buy bonds instead of Bitcoin, but once again, they are his own bonds. He really set the market on fire with that one. Stable coins are eating the world, Ethereum taking a major shift and hyper liquid dominating. That's all we got for you today. We'll see you tomorrow. Peace.

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