From "Holding" Bitcoin to "Creating Credit"—Why Saylor Created a Third Financial Instrument That Is Neither Stock nor Bond
"Fix the Money, Fix the World"—this is the slogan Michael Saylor repeats, and it is also the core business strategy of his company, Strategy (formerly MicroStrategy).
Appearing in an interview with Bankless, Saylor spoke for about an hour and 40 minutes on his 21-year price outlook for Bitcoin, the design philosophy behind his new credit product "STRC," his views on quantum computing, and the future of the digital asset market, including Ethereum. This article organizes those points structurally and explains the key takeaways for investors and business professionals.
1. Saylor's Long-Term Bitcoin Outlook—The Path to $21 Million per Coin
1-1. 29% Annual Growth Rate Over 21 Years
Saylor stated his valuation of Bitcoin succinctly:
"I believe we are looking at an ARR (annualized return) of about 29% over a 21-year horizon. It has been about 37% over the past five years, but that will gradually slow down."
Applying this growth rate compounded over 21 years, the price of Bitcoin would eventually reach $21 million per coin (approximately 3 billion yen), with a market capitalization of about $400 trillion. Saylor positions this as the "dominant digital capital of the world."
1-2. Cautious Stance on Short-Term Predictions
On the other hand, he keeps his distance from predicting short-term price movements.
"Bitcoin has made fools of everyone who has tried to predict its 12-week or 24-week movements. That is above my pay grade."
While bullish in the long term and even the short term, he acknowledges that in the medium term, there will be "unexpected surprises due to unpredictable developments."
2. Conditions for Reaching $21 Million
Saylor listed the following multiple factors as necessary conditions for this long-term goal to be realized.
2-1. Formal Recognition as a Global Asset
The recognition of Bitcoin as a "capital asset" that can be held long-term by the United States, China, Europe, and Japan. This is the most fundamental institutional prerequisite.
2-2. Integration into the Banking System
Currently, Basel regulations impose heavy penalties on banks for holding Bitcoin. Saylor stated, "It would be a major step forward if it were normalized so that banks are not penalized for holding Bitcoin as collateral."
2-3. Securitization and Capital Inflow via ETFs
The formation of Bitcoin ETFs and the inflow of capital into them is the third step that has already begun.
2-4. Formation of a Bank Credit Network
This is the factor Saylor is watching most closely.
"Bitcoin miners are currently bringing about 450 BTC per day, or approximately $10 billion worth of new supply annually, to the market. Every time someone creates $10 billion in credit, they are buying up the entire annual supply."
If major banks like JPMorgan begin providing credit collateralized by Bitcoin, a single bank issuing $10 billion in loans would absorb the entire annual supply of Bitcoin. Saylor analyzes that this expansion of the bank credit network will be a structural factor that significantly pushes up prices.
2-5. Elimination of Rehypothecation
Currently, over $1 trillion in Bitcoin is in an "unbanked" state, being rehypothecated at cryptocurrency exchanges to earn yield or obtain loans.
"If someone borrows $10 to $20 billion in cash using $100 billion in Bitcoin as collateral, that means $100 billion worth of Bitcoin is being shorted. It is the same as shorting 10 years' worth of supply."
If banks begin offering conventional conforming loans collateralized by Bitcoin, this rehypothecation will become unnecessary, potentially eliminating short-selling pressure and triggering a short squeeze.
3. Is Bitcoin Adoption Stagnating?—Evolution from Equity to Credit
Responding to a point from Bankless that "adoption might be stagnating," Saylor explained the phased evolution.
"At first, it was the equity stage. Next, there was the convertible bond stage, and we became the world's largest issuer of convertible bonds. And after exhausting that market, we have now entered the credit stage."
At the core of this "credit stage" are digital credit products such as STRC and SADA, which will be discussed later. Regarding their potential, Saylor states, "There is no reason why they shouldn't expand to a scale of billions, and then tens of billions of dollars per month."
Saylor organizes the two sources of capital currently driving the Bitcoin market as (1) the issuance of digital credit by publicly traded companies like Strategy and (2) the formation of a bank credit network by mega-banks.
4. Design Philosophy of STRC—"A Bitcoin-Collateralized Money Market Product"
4-1. Lessons from Existing Products
Strategy has introduced multiple financial products to the market so far, including Strike, Strife, Stride, and STRC (Stretch) and Stream. Saylor frankly reflects on what investor needs each product aimed to meet and what was lacking.
Bitcoin itself is a "product that requires 100 hours of explanation," and convertible bonds cannot be purchased by individual investors due to "144A" regulations. Convertible preferred stock (like Strike) became available to individual investors, but there was a risk that the principal could fluctuate by several percent daily.
"You can walk down the street and ask 100 people. Would you like a crypto asset with a volatility of 50 and an annual return of 37%? Only one or two people will be interested. How about a bank account with a 10% yield? Almost everyone will want it."
4-2. What Investors Really Wanted
Feedback from non-crypto friends determined the design of STRC.
I want dividends to be monthly, not quarterly
If the principal fluctuates between 95 and 105, a year's worth of dividends is wiped out—I want principal stability.
I don't need duration (time to maturity).
I don't need delta (correlation with stock price) either.
I don't need volatility either.
I only want pure yield.
"There is a saying by Winston Churchill: 'Americans will always do the right thing, only after they have tried everything else.' STRC is the answer arrived at after 19 other deals."
4-3. The Financial Engineering Uniqueness of STRC
Saylor states that while STRC is the simplest product from an investor's perspective, it is the product of the most ambitious financial engineering from the issuer's perspective.
"For investors, it's like a self-driving car. You get in, drink your coffee, and go to sleep. But the automotive engineering behind it is extremely advanced."
The specific mechanism is as follows.
Monthly variable-rate preferred stock—Saylor claims this is a 'world-first' design.
Typical preferred stocks are either fixed-dividend or 'floaters' with SOFR plus a fixed spread, but in both cases, the credit spread is fixed.
With STRC, the credit spread itself can be adjusted monthly.
Furthermore, by combining this with an ATM (at-the-market) shelf registration (the right to issue additional shares in the market), the principal price is stabilized around $100.
In the phase where Bitcoin plummeted from $125,000 to $60,000, the following measures were taken:
Do not sell below $100.
Increase cash reserves to improve creditworthiness.
Purchase additional Bitcoin to strengthen collateral.
Raise the dividend rate six consecutive times.
As a result, while the recent 30-day volatility of Bitcoin is 55, the volatility of STRC is less than 2. Considering that the volatility of S&P 500 constituents ranges from 2.5 to 100, it can be said that STRC has become the security with the lowest volatility among all S&P 500 stocks.
5. Where does the 11.5% yield come from?
5-1. Basic theory of asset-backed credit
Saylor explains the source of the yield using the general theory of asset-backed credit.
In the world, there are "capital assets" that do not generate cash flow but are expected to appreciate over the long term. Examples include masterpieces of art, gold, Manhattan real estate, and diamonds. On the other hand, there are investors who seek stable monthly cash flow.
"How do you convert a capital asset into a credit asset? For example, if you believe gold will rise by 5% per year, you can raise $10 billion in equity to buy gold and pay 65% of that expected return (3.5%) as dividends to preferred shareholders."
5-2. In the case of Strategy
Strategy estimates the long-term ARR of Bitcoin at approximately 29%. Paying a dividend of around 11% corresponds to about one-third of the expected return.
The source of funds for dividends is secured through the following three routes:
When MSTR stock is trading at a NAV premium → Sell stock to convert to cash
When there is no premium → Sell Bitcoin with the highest acquisition cost and convert capital gains to cash
Derivatives market → Selling out-of-the-money call options, basis trades, swaps, etc.
In addition, they hold about two years' worth of cash reserves as a buffer for unfavorable market conditions.
5-3. The break-even point is only 2%
"There is a $50 billion equity tower. If Bitcoin rises by just 2% per year, it generates $1 billion in annual profit. That is the source of the dividends. The break-even point is 2%. If you don't think Bitcoin will rise by even 2%, you shouldn't be a shareholder in a Bitcoin company."
6. There is no "margin risk"—STRC as a perpetual swap
Saylor asserts that there is no margin risk in Strategy's capital structure.
"Margin loans are overnight money. If there is volatility, a margin call occurs. When we sell STRC, what we are selling is equity. If you put in $1 million, there is no obligation to ever return that money."
STRC is legally a perpetual preferred stock and has the following characteristics:
Investors have no redemption rights (cannot demand a refund from the issuer)
There is no maturity date
No margin calls
No forced liquidation even if Bitcoin drops by 95%
When modeled statistically, it is equivalent to a product with a duration that allows the issuer to hold capital for approximately 20 years. Saylor contrasts this by noting that borrowing on a crypto exchange is "20-minute money" and standard margin loans are "20-hour money," whereas STRC is "20-year money."
In the unlikely event that dividend payments would cause the company to become insolvent, the board of directors cannot legally approve the dividend. In such a case, it would be adjusted in the form of a 12-week dividend suspension. "It is literally impossible to bankrupt the issuer of preferred stock," Saylor states.
7. Will Strategy stop buying Bitcoin?
7-1. The "laser focus" remains unchanged
To the question of whether Strategy will loosen its accumulation strategy in the future, Saylor's answer was clear.
"For 300 years, the world has run on gold-backed credit. If Bitcoin is digital gold, it is natural to build digital credit on top of digital capital."
If they were to stop buying Bitcoin, they would have to find an alternative investment that yields an ARR of 29%. Saylor asserts, "There is no long-term capital investment better than that."
7-2. Outlook for the $300 trillion credit market
"The current global credit market is $300 trillion. Its yield is around SOFR + 80 to 200 basis points. If we could convert 5% of that, it would become a $15 trillion credit market."
From Strategy's perspective, issuing credit is two sides of the same coin as acquiring Bitcoin, and there is no reason to stop. Rather, Saylor argues that the more Bitcoin they buy, the more the risk of the entire ecosystem decreases, creating a virtuous cycle where uncertainty is reduced.
7-3. Transparency brought by purity
"If we hedged or diversified, it would create opaque securities and unclear credit risks. Because we provide pure-play Bitcoin equity and credit, investors can rationally go long, short, or arbitrage."
An investor's entire portfolio does not need to be 100% Bitcoin. What Strategy provides is a transparent and predictable "pure" Bitcoin security for investors to allocate 1% or 5% within their own portfolios.
8. The threat of quantum computers—"Do not panic"
8-1. Optimists, pessimists, and alarmists
Google published a paper on quantum computers, reporting a 20-fold reduction in the logical qubits required to break ECDSA. Saylor's view on this was clearly that of an "optimist."
"There are three types of people in the world: optimists, pessimists, and alarmists."
Optimists understand that new developments bring both threats and opportunities and believe they can be dealt with when the time comes. Pessimists list risks, which is necessary for preparation. The problem, Saylor points out, is the alarmists, who "amplify virtual risks by 10,000 times and try to gain money and power from them."
8-2. Iatrogenic Risk
Saylor warns that overreacting to quantum threats is the greatest risk of all. Citing the concept of "iatrogenic" (where the treatment causes worse outcomes than the disease), a term frequently used by Nassim Taleb, he pointed out the danger that hasty countermeasures could introduce new attack surfaces to the Bitcoin network itself.
“Satoshi was also asked about quantum threats back then, and he replied, ‘We can upgrade.’”
Saylor emphasized that the current state of the Bitcoin community carefully but steadily considering a transition to post-quantum cryptography is healthy, and that it is important to "move at the right time—not too early, not too late."
9. Views on Ethereum—"The future is brighter than it was two years ago"
9-1. The coexistence of digital capital and tokenized networks
While Saylor defines Bitcoin as a "pure long-term capital asset with no cash flow or utility," he stated that he recognizes proof-of-stake networks, including Ethereum, as leaders in a different domain: the tokenization of securities, currencies, and commodities.
“Ethereum is clearly the leader in that field, and competition with Solana, Hype, Sui, and others will continue.”
9-2. Changes in the regulatory environment
Under the previous administration (the Biden administration), tokenization use cases were considered "illegal." However, with the SEC (Chair Paul Atkins) and the CFTC (Mr. Summer) following the Trump administration, tokenization has gained legitimacy.
“The future, which was difficult to see two years ago, is now quite clear.”
Saylor's ideal is a world where 40 million small and medium-sized enterprises can issue their own tokens and raise funds in a matter of days, and where all securities are tokenized and traded 24/7. However, he admits that "that is above my pay grade" and acknowledges the tension that exists with traditional finance.
10. "Fixing the currency"—An 8% bank account for 1 billion people
10-1. Positioning in historical context
In concluding the interview, Saylor placed Strategy's ultimate mission in a historical context.
Rockefeller → Improved lives with kerosene and gasoline
Ford → Brought automobiles to the masses
Jobs → Gave 1 billion people an iPhone
“What is the equivalent in digital assets? The answer is simple. A bank account that pays a yield higher than the inflation rate. A bank account that pays you 8%.”
10-2. The three-layer digital structure
The financial architecture envisioned by Saylor consists of three layers.
Digital Capital = Bitcoin—scarce, desirable, and non-dilutive
Digital Credit = STRC, etc.—removes volatility and provides stable yields
Digital Money = The layer delivered to end consumers by banks and financial advisors
"Money flows into banks, is converted into digital credit, and flows into digital capital. Digital capital is scarce, desirable, and non-dilutable. As the price rises, collateral increases, and the cash flow from capital gains is returned to credit investors."
UAE banks pay 8% on dollar deposits while taking 100–200 basis points for themselves. If $100 billion flows in, the country's GNP would double—Saylor illustrated the scenario in such concrete terms.
10-3. Strategy as a "Crypto Reactor"
"We spent $58 billion to build a crypto reactor. We can generate 10 to 20 cents of credit per year for every dollar of equity. In other words, we can create $5 to $10 billion in digital credit annually and grow that by 30–50% per year."
Saylor positioned this as a business with potential comparable to electricity or energy, concluding that "even if the probability of success is small, it is worth dedicating one's life to."
Summary
Michael Saylor's vision may seem overly grand at first glance. However, its core is surprisingly simple.
Accumulate scarce digital capital called Bitcoin
Distribute a portion of the expected returns to credit investors
Absorb volatility on the equity side while providing stability on the credit side
Ultimately, deliver yields that exceed inflation to general consumers through banks and financial institutions
STRC is the first full-scale product to embody this concept, and its low volatility (30-day volatility of less than 2) indicates that the theory has entered the implementation phase.
Of course, this structure is predicated on the long-term appreciation of Bitcoin, and it will not function if that premise collapses. Saylor himself admits that the break-even point is 2% per annum. However, the very existence of a company that has built a $58 billion "crypto reactor" and continues to purchase more Bitcoin than the annual supply is itself an answer to the supply-demand structure.
Only time will tell if the vision of "fixing the currency" will be realized. But the fact that the blueprint has been articulated in such detail is worthy of attention from investors.