Bitcoin treasury companies under stress: Strive's Ben Werkman

Transcript

So, one of the things that gives me a lot of confidence in the long-term success of Bitcoin is that this need for a completely sovereign asset, something that's a bearer instrument that you can transact globally, that is for individuals, that is for corporations, that is for nations, right? Because of that, I can see a very significant bullcase as we continue to see weaknesses in the fiat currencies and particularly as we see more global conflicts where currency is used as a form of that warfare, right? Cutting people off, sanctioning, doing all those things. It highlights the need for an asset like this. Bitcoin treasury companies were riding high during the bull market, but now we are deep in bare country and everyone is wondering how

will these companies survive and when will we get back to par on all these preferred products. Hello and welcome to the Milk Road Show, the podcast that knows that bears are scary, but they will have to spend a long time in hibernation when the bulls come back. I'm your host, John Gillan. Today is Tuesday, June 30th, and today we are joined by Ben Workman. Ben is the chief investment officer at Strive Incorporated, a Bitcoin focused asset management firm where he oversees investment strategy, capital deployment, risk management, and Bitcoin treasury initiatives. Ben is going to save Bitcoin today. So, if that all sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going to enjoy it.

Today's episode is brought to you by BitGet Stocks 2.0 with real liquidity, real dividends. And without further ado, welcome to the Milk Road Show, Ben Workman. How are you, sir? >> I'm doing well. Thank you for having me, John. >> I'm glad to have you here. I think there's a lot of questions that I would like to get answered today. Um, but I thought a good place to just start the conversation would be with Strive. Overall, you're an asset management firm with over 15,000 Bitcoin, I believe. You could update me on that if I'm out of date on that. Um, but just talk to me about Strive. How did you get here and what makes you all unique as a digital asset treasury company? >> Yeah, absolutely. So, so Strive really began as an asset management company. We were founded by Vive Rama Swami back in

2022 and we we really started with the foundation at the time of we thought that some of the DEI initiatives that were going on and some of the ESG initiatives that were going on were effectively a breach of fiduciary duty. And so we were launching ETF products that were effectively stripping that narrative out of them because we thought that it was a breach of the fiduciary duty to the investors. Over time though, Vet got orange build by our CEO Matt Cole and a few others. And it was back really about a year ago when this all really launched where we decided to make a pivot as an organization. We decided to look for a path to becoming a public corporation. We did that through a reverse merger last September. And we

announced the intention to run a Bitcoin treasury. I believe it was back in May of last year. So just over a year ago. So we've been, you know, a little over 12 months into this journey so far. And you know, it's it's been quite a journey uh to say the least. And so starting in September, we reverse merged into a company called Asset Entities that was a publicly listed corporation on NASDAQ. We closed a $750 million pipe which was the seed capital effectively that built the first iteration of our treasury. And from that point on we've really had a very active path throughout this bare market. You know if you think back to last summer when a lot of the mania was going on around the treasury sector was

when you saw most of these companies coming out of the gate and really getting established. you know, for years before that, there were really, you know, three of them that you could really point to a strategy, metaplanet, and some scientific in the United States. But when everybody came out, you know, it was a time where capital was readily available. And there were several options for how you could take that initial seed capital. The one that you saw that was the most common was a combination of pipe capital, which is private investment and public equity, right? So that's equity capital that comes into the business. The other one was convertible bond capital. You know, convertible bonds had been made very popular by strategy. They had a lot of success in the early days raising money

through the convertible bond market. And so, companies that were just launching did the same thing. The problem is that when you start to see the market turn, it can become very restricting on your balance sheet. It can really restrict the way that your company can operate. So, we came out initially with no convertible bond debt on our balance sheet. We can talk a little bit more about that here in a little bit which allowed us to have full optionality for how we were going to build ourselves as a treasury company. So when we first launched we came out we bought about 5600 Bitcoin at the time and you know within a matter of two weeks we had announced you know the first M&A in the space where we acquired the second publicly traded Bitcoin treasury company in the United States which was Semilar Scientific. And so we announced that

agreement, you know, within a couple of weeks of us becoming a public corporation. And then about a month after that, we IPOed our very first perpetual preferred equity, SATA. And that launched in November. And so after all of that happened, we closed on the Similar Scientific acquisition, you know, and earlier this year and did a follow on to SATA that allowed us to scale. So we're actually above the the 15,000 mark that you mentioned earlier. We're closing in on 20,000. you know, we're a little above 19,800 Bitcoin at the moment. And one of the things that we're very proud of as a company is that all of the actions we've been able to take so far have been in a consistent bare market. Right? I don't think anyone at this point is going to argue uh that

we're in the middle of a bare market here, you know, being down more than 50% from the highs that we saw late last year when most of these companies came out of the gate. And you know to be able to build at that pace it takes a lot of foresight and a lot of ability to say no uh to bad terms that were available out there when we were you know getting pitched the initial capital raising for our company. There were there was an abundance of convertible debt capital that was available to us. The problem was it came with a lot of restrictive covenants. you know, things like collateral coverage ratios above the debt, which become, you know, very restricting, particularly when you see something like a 50% draw down. A very common term that you would see was a 2:1

coverage ratio. So, when the collateral draws down by 50%, you start to find yourself in an issue. So, we took the position of saying no to all of that, maintaining our flexibility, and you know, so far that's proven to be a very good choice for us. >> Guys, listen, we are at a very crucial point in time right now. AI stocks have ripped. They're going to keep ripping. Our analysts on the AI side are up like literally 100% or more on quite a few calls. And crypto is about to boom again, or at least it feels that way. If you want all the insight on what we're buying, what our analysts are doing, what's on their watch list, all of that is in Milkroad Pro. So, join at the link below.

>> Ben, I really appreciate you walking us through some of that history there. I think that's important for the audience to have that context. Um, and congratulations on accumulating more Bitcoin. I'm I'm happy to hear I'm not the only one uh getting a bigger bag here. Um, I I want to hear more about, you know, your role as chief investment officer of Strive. How do you think about finding alpha strategies over and above just outperforming holding Bitcoin, right? What are some of the opportunities that you guys have as a digital asset treasury company to get that alpha for for your investors and and how do you think about those opportunities? >> Yeah, this is something you've really seen evolving out there. uh for us when you look at the the highle strategy of what you're trying to do as one of these treasury companies, we're effectively

putting on a very long-term carry trade, right? So, if you were taking on debt, you would call it you're taking on leverage against the balance sheet that you're holding and you're putting on a a directional trade against Bitcoin where structurally you should outperform Bitcoin over the long run, you know, as you exceed your cost of capital. For us, we actually term it amplification. And that's a very important distinction, you know, when people think about perpetual preferred equities. These are equity products, right? This is equity capital that is coming into the business. And that's been getting highlighted recently pretty significantly because when you take debt onto your balance sheet, the one thing that you always have is an anchor point out there in the future that the market has to focus on, which is a risk event

where that debt comes due. there's a maturity of that debt and there's a principal repayment activity. With convertible bonds, you would see them hoping that that debt equitizes, but there's no guarantee of it equitizing, right? If that debt matures and you haven't reach the exercise price, you owe that capital back to the investors. So, you have a major cash outlay coming in the future. And what scares a lot of investors in this space is they want you to be continuous accumulators of Bitcoin, right? They believe in the long-term Bitcoin bull thesis. They want you to keep that leverage or amplification on your balance sheet so that your company is positioned to be able to outperform when Bitcoin Bitcoin goes on the next bull run. What started to happen and you saw this particularly,

you know, around strategy recently. It started getting highlighted, but strategy had several convertible bonds that were effectively laded out into the future, which is a risk mitigation technique, right? You make sure none of your debt is all coming due at the same maturity point in the future. and they started to retire it because debt is a senior claim on your balance sheet even above your perpetual preferred equities. Right? So if we were to go take a bond onto our balance sheet, that claim would be senior to our SATA product, right? And so we've chosen to use perpetual preferred equity as our medium of putting amplification onto our balance sheet. What's important about the perpetual preferred is that principal amount never comes due, right? These trade openly in the markets. There's

liquidity in the secondary markets here for people to trade in and out of these products. They're highly liquid and there's no future maturity. So, we can put a structural position in place here where we're matching the longest duration instrument we can find, a perpetual instrument, with the longest duration capital we can find, which is Bitcoin. And that's effectively how we're putting the carry trade on. And so what you're making a bet on with any of these companies that are using either debt or the prefer preferred equity model is you're underwriting the long-term performance of Bitcoin. So as a company, we have a directional thesis that we believe Bitcoin is going to appreciate, you know, somewhere between a 20 to 40% compound annual growth rate, you know, here into the future. And because of that, we're willing to take

on, you know, a cost of capital here with SATA of around 13%, right? We would only issue SATA if it was above that $100 par mark. And we believe that the performance of Bitcoin from this point in time will exceed that cost of capital. And all of that excess return beyond that cost capital accrs down to the common shareholders. That's how they outperform Bitcoin. Right? That excess return is captured in the common equity. They also take the risk during these drawdowns. It's why you see the equities be more volatile to the downside. You know, if you look at a stock like ASST for for SATA, it's our common equity.

You know, our beta to Bitcoin is above two. So, we have a significant amount of volatility structurally. We we did that intentionally. And it's kind of interesting when you think about the management of these products and and I think this is something the market hasn't spent a lot of time digesting. The amplification or the leverage that you're going to have on it varies depending on what Bitcoin's doing. So what you're trying to decide as a management team is where are the right points to increase that amplification and where are the right points to decrease that amplification because they're equally important to the long-term success of the company. And so when you look at something like where

Bitcoin is in relation to the cycle or where it is in relation right now to its 200E moving average or the power law floor, right? whatever the model is that you're using to underwrite Bitcoin's performance and you know see you know what you expect it to do you would expect that during the depths of a bare market if you really wanted to structurally build in outperformance relative to Bitcoin going forward you would want to put on higher amplification at the lows right you would want slightly more leverage slightly more amplification to the lows so that during the next extension cycle or the next bull market for Bitcoin when it starts to move up you've got your highest prob probability of outperformance relative to Bitcoin and you can outperform it in the highest way. It's equally as important in the

next bull market to figure out where is the right time to start taking some of that risk off the table, right? Where do you let your balance sheet become deamplified? And I think, you know, if I look at one of the things that makes Strive very different from most of the other companies out there, it's that because we have this background in equity markets, you know, and our CEO ran one of the larger bond funds and fixed income funds at Kalpers. So, he ran about a $70 billion bond fund over there. Is everything we do is through a risk lens, right? We were the first organization to put a chief risk officer in place where the full job is to continue focusing on underwriting. You know, what do can these draw downs look like? How resilient can we make our

balance sheet? What types of draw downs can we survive? What does that look like? And we took a very risk forward approach. And so, as a management team, when you get into a bull market, well, it's very easy to get into the mindset that, well, this is the new normal. This is going to go on forever. Bitcoin's never going down again, right? We've all been through these cycles where where we've seen that. Our job is to continuously underwrite what happens in the next bare market, right? Historically, it has drawn down again. And it's always when you don't expect it to. You see it on the other side, too, right? Right now, people are talking about how it's never going to go up again, right? And this is this is no different than what we see in the bull markets. And so you're in this constant

balance of amplifying and deamplifying your balance sheet, maintaining strong enough US dollar reserves to be able to make sure that you've got your capital in place for paying these dividends, you know, in the event that you do find yourself in a period where you're frozen out of the capital markets. And that's really the main focus when you're running these organizations. And so we're putting on that structural carry trade long into the future. We're underwriting the long-term success of Bitcoin. And then we're positioning ourselves in a way that we think is going to capture the maximum amount of value for our shareholders when that thesis plays out.

>> Gotcha. I think that's really helpful and I think it's a great way of framing, you know, the the strategy here. Um, but I think a lot of investors, you know, to your comments about risk management. A lot of investors are getting nervous about some of these preferred uh products, not just SATA, but STRC as well. Um, but you talked a little bit about this, but Seda is uh a 13% dividend that's paid daily, which I think is an interesting thing, but right now it is trading around $90, not $100, which is par. Talk to us a little bit about this this gap, this it's not a d peging, but it's off par. Um, and you know, when do you think this what first of all, why do you think it's off par and when do you think it'll get back?

How does it get back? Or are we going to see like a teruna doom spiral uh on a lot of these products? So, just yeah, walk us through your your outlook on that. Yeah, what you're seeing is the stress test of a new product, right? Anytime you've got a new launch of a product, the market is going to test you, right? That's going to come to be. And if you think about what would create the most optimal product in the capital markets, what characteristics would that hold? That product would have low volatility, it would have high yield, and it would have a deeply liquid market, right? That would kind of be the holy grail trio if you could accomplish those three things.

What you see when you do that is anytime you create a product where the volatility goes really low and the yields are really high is it does introduce the incentive for investors to go take leverage against that product. And that's really what you're seeing currently is you're seeing the impact of a lot of investors taking leverage in the traditional markets not necessarily in the DeFi markets which is what I think a lot of people were expecting here. And so what you started to see was it was stretch in particular was able to provide leverage. People were willing to lend against it. And we spent the last week in New York talking to a lot of the institutional investors, you know, hearing, you know, what they were seeing

out there on this. And some of the feedback that we got was in several instances these institutional investors were getting 3:1 leverage against their stretch position at something like sofur plus 300. So there was a really attractive carry trade that was going on there. The problem is, you know, these lenders that are lending against these products can change those requirements. And last week, you know, that 3:1 got cut to 2:1 and then they put a notional cap on it. And even before that, you know, what you start to see is when uh retail investors use margin accounts and they start to lever up against this.

What's different about the traditional finance markets versus the DeFi markets is that those margin call levels are consistent across all of the investors. So if you think about when these products are trading at a steady $100 value, if people are going out and taking margin against that, right, most of these exchanges have similar margin requirements on there. And so when these products start to draw down, everyone starts feeling pain around the same point and they start delevering around the same points. Whereas in the DeFi world, you might have one person that took on 1.1 times leverage and you might have somebody else that took on a 100 times leverage. there's a significant amount of variation in those liquidation points that are out there. And so when you started to see, you know, that

weakness and part of that was driven by, you know, loss of confidence in the markets from some of the actions that we saw before this around strategy where they used like the US dollar dividend reserve to retire bonds and then Bitcoin drew down exactly after that point in time. So you had an investor confidence shakeout, you know, that happened around that event and then that started to put sell pressure and then everyone who was levered on these products starts to feel sell pressure along the way and then you start to see some of those liquidation cascades or delevering events that happen out there.

So this wasn't a credit quality issue. This was a liquidity issue in these products. Right? These are equities. They do trade on the open market. And so while we've got target prices of $100, right, there is no peg. You know, I think that's a common misconception where people are looking at these products and they believe they're going to behave like stable coins. You know, they're they're structurally built to create a demand profile for them where the return that you're getting relative to the risk that you're taking should price those products out at around $100.

And then as the companies to maintain that $100, we effectively absorb the excess demand above $100. Right? So that's when you'd hear like uh on stretch they would use the ATM to sell shares above $100 which would kind of put a ceiling on that product and hold it more steady in that $100 range. So as long as you have equilibrium in the market, you're absorbing the excess demand that's coming in for those products. Same structure for SATA. That doesn't mean there's not going to be times where events like these happen, right? Anytime you have access to leverage, you have the risk that you're going to have these events where there's going to be delevering events which can cause force sellers and you know, sometimes it takes time for that demand to build back up. What I point to, you

know, you see a lot of the uh the calls for it's over and it's going to spin down. For SATA, you know, SATA was at $100. It was eight days ago, I believe, eight trading days ago, right? So, it hasn't been all that long. These are market cycles. You actually see these events in the traditional credit markets as well. Even around US treasuries, you'll have these these liqu or these leverage unwinds that'll cause those products to draw down significantly too. And those products are built around, you know, what's supposed to be the the risk-free capital out there. So to not expect that in here, you know, I think would have been a little bit naive because that's the way that anything traded on the open markets where you're able to access leverage, it's always a possibility. So, you know, when I look

at this from our perspective, this is why we've got our reserves in place, right? We're paying dividends for us. We're the first security to pay dividends every single day. So, every single business day, which is, you know, effectively when NASDAQ would be open, the DTCC is open, and the transfer agents are open. We've got a dividend being paid every day for the very first time in history. We build that reserve in place to let the market know, you know, for us, we have 18 months. We don't have to raise another dollar of capital to continue to pay those dividends here for the next 18 months.

You know, that's something we're structurally built to do. It's part of the way that we manage the risk around our business. And that's critically important to us. And I think that was the confident shake that you saw in the market that kind of tipped all this, you know, the very first time was it coincided when they retired those bonds. I think that Bitcoin was trading around $84,000 and then almost immediately after that it drew down to 60. Right? So you had this stress event in the market around Bitcoin, right? Not even necessarily around strategy that happened to coincide with the exact time that they had depleted that reserve that was meant to be in place for a stress event. And so you saw them come out with a new framework yesterday kind of shoring that up. They brought the reserves back up.

they started to see some relief in the market and it's putting them back on the path to stabilizing these. So, you know, that that's really what happened out there in the market. You know, I would expect that it'll take a couple of weeks for that to fully play itself out and start, you know, building more stability. You know, Bitcoin's drawn down still to 583, I think, at current time. Um, so you've got some weakness out there in the market. you have a huge amount of demand for capital out there in the market around all these IPOs that have been going live and that capital has to come from somewhere. A lot of times that draws out of risk assets. I certainly think that that's a factor. So there's many things that are contributing to this, but it's why we build a resilient structure to be able

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>> Ben, I'm you're inspiring a lot of confidence, but you're also explaining a lot of things. So, I really appreciate this and I know our audience will too. Um, and there's a lot more in that answer than just on Seda, right? Like I appreciate the the transparency on the the credit markets and and the thoughts on strategy. Um, how long can SATA stay off of this par level of $100 before you start to get concerned or does that just not concern you at all? Like do do you think we could trade around $90 for months and just like maybe just that's just okay and the market just has to, you know, tolerate that or or do you think eventually we do need to get back to $100?

>> [snorts] >> you know, eventually we would like it to get back to $100. I wouldn't tell you that there's some set timeline, right? There's this is one of the evolutions that I think you're seeing out there and it's the reason why for our product, we didn't make it algorithmic on having to adjust the things like the dividend rates is because there's several factors that can contribute to the pricing around a security. So if I look at what happened over the last couple of weeks, you know, we really didn't have much leverage built up in our product directly, but because our product is so similar in structure to a product like a stretch, when stretch drew down and started moving and those liquidations happen, eventually what you start to get is the yields start to align, the

effective yields of those products start to align. And and what we saw was when the effective yields of SATA and Stretch effectively began to match, SATA started moving in tandem with Stretch, right? Because you're getting the same return. The credit profiles are a little different. They're a much bigger company than we are. People are looking at the capital appreciation opportunity of those securities. So you start to get capital rotation between the two securities. That happens. And so you would expect that during these periods where there's stress, particularly in a market that's so small, right? This digital credit market is incredibly small. There's very few products.

There's only two issuers at the moment, right? It's Strive and Strategy. You know, it it would for me to not expect to have our security move around when that's happening. A stress event that's impacting all the other digital credit events, you know, I just I just couldn't expect that. So, I think you have to let that leverage wash out of it. You have to give it a couple weeks here to watch things stabilize. And it takes a longer period of time to decide that something like the pricing of the yield is under is too low. Right? There's points where the market might be telling you, hey, your security is priced too low for the risk, but there's also points where you go there's macro influences that are impacting the current price of our security. Right? So to the point I made to you just a few

minutes ago that you know like eight trading days ago, SATA was at 100. Right? This has been a very short-term event so far. Right? We're not even two trading weeks into this, you know, being the case for us. And so, it's hardly the point where you start making drastic decisions about how to manage it, right? You have to manage these products over a long period of time, right? Any changes you're making to your cost of capital, right? Those changes to your cost of capital are going to be in place for a long time. And so you need to let all the facts settle out and the market dynamic settle out before you start to make any decisions about whether there's a structural issue with the product or the pricing of the product. And so that's why, you know, we've got more

discretion in how and when we raise the rate on this. And you saw strategy just go to this as well where they're moving a little bit away from a simple VWAP pricing because you've seen impacts to the products around the war in Iran. That's been a big one. and these IPOs have had impacts on it. Right? There's several things out there that can influence the price of that security in the short term. If you started to see it, you know, dislocating from where you thought it should be priced in the market over a longer time period, right? So, it might be, you know, 2 months or 3 months, whatever that time period may be, that's when you would start evaluating. Okay, maybe the market is telling us that for the risk profile of the product, they're expecting a higher price. And then you would consider

adjusting that price. But for right now, you know, I view this as so far it's a short-term event. We can point to direct things that happened that influenced the event, right? Which, you know, you can see those dynamics play out pretty clearly on charts. If you're looking at the volume spikes on some of the wicks down, you know, and you've been in the digital asset space for long enough, you know what a liquidation event looks like out there, right? It's one of those charts we get really familiar with. But for us right now, you know, this is why we have the reserve in place. We can sit. We're going to continue to pay those dividends every single day and that we believe will restore the confidence in the product over time.

They're going to see that track record. They're going to see those dividends showing up every single day. And, you know, we think ultimately you'll see these products back at par. >> Okay. So, you have plenty of time and plenty of options if you need them, but for right now, you're just kind of letting this short-term market event digest. Uh, that makes sense. Ben, I got to ask you some questions about Bitcoin here because, you know, we're talking about digital credit products. The digital capital product is uh scaring some people as well here. Bitcoin is just a bit over 58,000 USD right now. Uh it's going to or maybe now finally getting below the 200E moving average, which usually is a floor in a bare market, but people are now worried we're going to crash through that. What are you seeing here? Do you think that we're

going to bottom and and move higher here? Do you think we're going to go further fall we have further to fall from here? What's your outlook on Bitcoin? >> Yeah, I still have a very bullish outlook on Bitcoin. And you know, one of the things anecdotally outside of the the technical analysis side of things is one of the things that gives me a lot of confidence in Bitcoin is every time you see a major global event happen, right? So think back to Russia and Ukraine when that war started, look at Iran, look at bricks, you know, every time that one of these major macro events happen, you start to see Bitcoin take center stage, right? So with Russia and Ukraine, Russia got cut off from the Swift system and what asset started popping into that conversation, right? Well, the only one where you don't need someone in the

middle of a transaction where you can transact value and large scale globally to anybody you want, right? Bitcoin. That popped into that conversation. What happened with Iran? You've had a lot of sanctions on Iran. How were they collecting fees for people trying to move through the straight of Hormuz? They were using Bitcoin, right? Why? Because it's an open monetary network. You can transact value in large size. Nobody can stop you. Very important. Same thing with bricks when they were starting to set up a currency. So, one of the things that gives me a lot of confidence in the long-term success of Bitcoin is that this need for a completely sovereign asset, right? Something that's a bear instrument that you can transact globally. That is for individuals, that

is for corporations, that is for nations, right? Everybody has a use for that. And because of that, I can see very significant bullcase as we continue to see weaknesses in the fiat currencies and particularly as we see more global conflicts where currency is used as a form of that warfare, right? Cutting people off, sanctioning, doing all those things, it highlights the need for an asset like this. So just on that use case alone and then you add in the need for continuous inflation to manage an economy like we have here in the United States, right? You need to incentivize your citizens to be consumers. You need to incentivize them to be out transacting in the market buying goods and services. And in order to do that,

those people need to know that the currency they're holding is worth less next year. I should spend it today because it's going to be worth next year. Worth less next year. Right? That's inflation effectively is they're telling you we're increasing the supply of this asset. Your purchasing power goes down slightly. Right? They put it into a framing where it sounds very unassuming, right? Two to 3%. Which has not been the experience, right? M2 has actually grown by about 6.7% over the last 50 50 years on average. And so you're telling your citizens, look, you're receiving money for your time and efforts, right, from your job. If you want to buy goods and services, you should be buying them today because it's going to be worth less tomorrow. problem

is to continue stimulating that growth in the economy, you effectively need to continually inject capital into that economy. And that's what we're starting to see. So, you're starting to see this debt crisis get to the point where it's running away, right? You can't put that genie back in the bottle. And so, when I see that, you know, what I see is a need for hard assets with cap supplies. You know, gold has served in that function for a very long time. You saw the spike that gold had not too long ago when a lot of the concerns, you know, around the the debt crisis started to really get amplified. But Bitcoin has the most verifiably capped source out there and the world's becoming more and more digital. So I believe this is the way that people are going to transact. So having a bearer instrument that I can

transact globally with anybody that I could build into, you know, if I'm building a AI agent infrastructure where they've got the ability to transact between the different AIs, like I need a digitally native asset to be able to do that, you know? So I think that the bullcase for Bitcoin continues to be in place, right? It's a matter of time and how long they can keep a cap on this. And I think that that runway for, you know, the Fed is getting much much shorter to where they're going to have to intervene and do something if they want to continue to stimulate the economy. The technical side of things, you know, if you still look back at the cycle theory around Bitcoin, you know, we're in a very normal cycle. You know, I've been in Bitcoin since 2013 was the very first time that I got into it. So,

I've been on this wild ride for uh quite a few of these cycles. And I know the feelings at the peaks and I know the feelings at the troughs. and it always feels like it's over. It always feels like it's never coming back. But you have to ask yourself, has anything about the thesis structurally changed, right? Every asset is priced by capital flows. It's capital flowing in, it's capital flowing out. And so you have to look at where is the demand for capital at the time, right? What are the narratives at the time? And you can start to get a sense for why would capital be draining out of Bitcoin during a time period like this. Well, you can point to things like the SpaceX IPO. people are preparing for, you know, the anthropic IPOs and you see Nvidia raising$2

billion and Google raising 80 billion. Like there's a huge amount of demand for capital that's in the risk bucket. And Bitcoin for better or worse has been trading as a risk asset. And so when people need to free up that capital to use for whatever purposes they want to use for, Bitcoin is a very liquid source of capital that they can draw from, right? It trades, you know, around $30 billion a day. It's a very liquid market and so you can't expect it to be immune from those capital flows. So I look at the price here and I start to see more signals of bottoming than not. So at this point I'm very bullish and your compound annual growth rate is better.

You know when you're buying at these points these are have historically always been very good entry points and I've not seen anything to invalidate you know the the cycle thesis here so far. You know I was more in the camp that the cycle might have been broken at the highs of the last one. And you know, I wasn't immune to that either. You know, I was in the this time might be different. We have more of a structural bid. Here we are down more than 50%. Right? So, it turns out that so far it's been been moving in a very consistent cycle. And uh I'm starting to see those signs of us reaching the point where this becomes a very attractive asset. The other thing I would point to is the capital that rotated into all these other plays, the SpaceX IPO, all these other places. Eventually, that capital

is going to need to rotate as well. And the question those investors will be asking themselves is where can I find value in the market today, right? What assets look like they're priced to be a good value? And there's not a lot of them, right? There's been a lot of, you know, the exciting sectors have drawn up. They're at massive multiples right now, right? There's a lot of risk to the downside in those. You've seen AI disrupting entire sectors like the software sector, right? Where those used to be high-flying. Everyone thought they were resilient, you know? So, there's a lot of risk in those as well. Now you come to an asset like Bitcoin and you start to see it around that 200WE moving average around the power law floor that looks like an attractive entry position for a lot of investors. So if I was them

and I was already looking at allocating into you know the risk sector if I looked at Bitcoin right now I would start to see value at these levels. The euphoria is out of it the froths out of it. You're starting to see more and more adoption you know from the corporate level or from the corporation level. and it would start to look like an attractive entry. So, I think when that capital starts to rotate, I do think you see uh quite a bit of those capital flows move back into Bitcoin. And as we know, when capital starts to flow into Bitcoin, it's a highly sensitive asset and it moves much quicker than people anticipate it will.

>> Really appreciate the thoughts there. I do hope this sort of like macro thesis holds and this four-year cycle thesis breaks at some point, but uh for now, it it is what it is. Uh is Strive accumulating Bitcoin here? You said you're getting close to 20,000 Bitcoin as a company. Are you deploying more capital into this and do you have a target for how much Bitcoin you're trying to accumulate or is it just something you're you're trying to get as much as you can without a specific target in mind? >> As much as we can is the answer. You know, we uh we have an entire company of Bitcoin bulls over here and and we've we really believe in the thesis that we're underwriting and so we want as as much Bitcoin as we can, but as a corporation, you have to get it at the right times,

right? You can't force the purchases. You don't want to raise capital at times where it's detrimental, you know, to your shareholders. So, for instance, this last week, while there was a huge amount of turbulence out there in the market, you saw us sit on our hands and just wait, right? That's the benefit of having a Bitcoin balance sheet that's built to be resilient. It's why we have the US dollar reserves. It's so we don't have to force actions into the market during the times where it's inopportune. However, just before that, you saw several weeks where we bought 2500 Bitcoin and 1500 Bitcoin, right? We've been accumulating aggressively, you know, down here in the 60s. We believe these are very attractive entry points.

And for our model, it's it's pretty important to accumulate at the lows because as the Bitcoin value expands, that gives us more capacity for issuance for the credit product while maintaining, you know, controlled amplification levels. And so buying at the lows and particularly, you know, if you've got the ability to buy, you know, near what would historically be, you know, the deep bare market lows, that pays dividends into the future in the way that you're able to operate and execute and it starts to increase your credit quality as that Bitcoin value goes up and it gives you that full capacity to be able to meet the demand of the market. We believe 13%'s a highly attractive rate. Daily dividends is highly attractive. You know, there's no

more waiting for those. Every single day is a record date. every day is a dividend rate or dividend x dividend date and every day is a payment date. So, you know, we think that we've built a product that's structured in the way modern finance should work. If you look back to quarterly dividends, those were first put in place in 1885, right? And the market just really hasn't evolved. That makes up 88% of dividend payers are still paying quarterly. Only 2% even pay monthly and only one single company pays daily, which seems like at in 2026 that should be table stakes. you know, you shouldn't be have to make investors wait anymore. So, we believe we have an attractive product out there in the market and we believe that the demand is going to be there. We've seen

significant demand up to this point. You know, you see some volatility and fluctuations in the demand with the price of Bitcoin and what's happening in the broader ecosystem, but from a credit quality perspective and a risk return perspective, these preferred instruments are incredibly attractive. So, we want to position ourselves to be able to meet that demand, you know, as it comes in. And if you move back into a bull market, we expect there will be significantly more demand than even what we've seen so far. So right now, we've issued about 3/4 of a billion dollars of it. We expect that to be much higher, and we expect to have much more Bitcoin on our balance sheet here in the near term.

>> Ben Workman, chief investment officer for Strive Incorporated. Where can we send people to find more of you and your work online? >> Absolutely. You can start at strive.com. We've got a lot of information out there about our balance sheet and a lot of the presentations we put out there for investors to help understand the way that we think about this space. You can find me mostly on X. It's just workman just at my last name and that's where you'll see a lot of my thoughts here on what's going on in the market and what we're doing at Strive. >> Ben, thank you so much for being on the Milk Road Show. I think our audience is really going to appreciate this. You have a very like calm and clear view of the market and confidence in your company, in your product, and in the

capital that you're building on. So, thank you so much for being here and for sharing with our audience today. >> Absolutely. Thanks for having me, John. >> And thank you all for joining us. I hope you all learned something today. So, until next time, stay safe, stay educated, stay bullish, and we will see you all in the next episode of the Milkro Show. Thanks for being here, everyone. Bye. Want insights on what's moving crypto markets and [music] how we're trading each event? Subscribe to our channel and join the Milkro Daily and Pro Newsletters and start investing like the [music] top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky.