Digital credit faced its first real stress test this week, as MicroStrategy's STRC preferred stock crashed, prompting critics to declare the Bitcoin-backed ***** et class dead.
Bitcoin (BTC) itself has weathered the same obituaries many times before. On-chain data now tells a different story, with network activity climbing to multi-year highs even as the price slides.
Digital credit is a young class of income-generating securities backed by Bitcoin. Companies holding large Bitcoin reserves issue structured products such as preferred equity and convertible notes.
They use the proceeds to buy more Bitcoin. The aim is straightforward. Long-term BTC appreciation should outpace the dividends and interest those products owe.
Strategy, formerly MicroStrategy, built the clearest example with its STRC preferred stock. STRC has a $100 par value and pays a high, variable yield near 12% per year.
Bitcoin (BTC) itself has weathered the same obituaries many times before. On-chain data now tells a different story, with network activity climbing to multi-year highs even as the price slides.
Digital credit is a young class of income-generating securities backed by Bitcoin. Companies holding large Bitcoin reserves issue structured products such as preferred equity and convertible notes.
They use the proceeds to buy more Bitcoin. The aim is straightforward. Long-term BTC appreciation should outpace the dividends and interest those products owe.
Strategy, formerly MicroStrategy, built the clearest example with its STRC preferred stock. STRC has a $100 par value and pays a high, variable yield near 12% per year.
2 months ago
