A Quant Explains Why STRC Isn’t At $100 | The Income Show | Ep. 23
10/22/2026 · 53 min · transcript via mlx
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Key topics
— STRC remains just below par ($99+) due to trader rotation; swing traders are exiting positions while long-term holders have not yet fully taken control of the float.
— Strategy's decision not to raise dividends during the crisis was prudent and discourages leverage buildup, though total shareholder yield (buybacks plus dividends combined) has reached over 60% APR to bring the price back to par.
— Buybacks at 98 cents on the dollar represent waste; capital would be better deployed on deeply discounted instruments like Stride or Strike rather than STRC near par.
— Digital credit fundamentally works: issuing credit against an appreciating asset to buy more of that asset. The concept is sound; risk lies only in execution details and product implementations.
— Two emerging archetypes for layer-three products: debt-based tranching (like UTXO's Preferred Income Fund and Strata/Saturn) and full-reserve spendable balances (like Orange BTC's digital credit ETF).
— Fixed-rate preferreds likely attract a larger market than variable-rate instruments because investors value certainty of income; variable rates only succeeded when anchored to price certainty at $100, not rate variability itself.
Market & price signals
— Float has contracted approximately 20% post-crash: STRC market cap fell from ~$10.5 billion to ~$8.5 billion. Swing traders, who bought during the crash, are now exiting near par; buybacks by Strategy are absorbing this selling pressure. Bitcoin risk is best measured via options markets—a 2x BTC rating means Bitcoin can fall 50% before coverage is impaired; two-year put options on iBit provide quantifiable insurance costs for that risk. Allard expects variable rates to eventually decline as demand for digital credit grows and the investor base matures, but rates may remain stable in the near term to preserve market confidence. Bitcoin is positioned for outperformance over the next one to two years after severe relative underperformance versus other macro assets; longer-term tailwinds include US debt sustainability concerns, Basel risk weightings becoming Bitcoin-friendly, and growing institutional acceptance.
Actionable insights
— For digital credit investors: evaluate each position using a quant framework decomposing yield into risk-free rate plus risk premiums for Bitcoin risk (measured via put options at the BTC rating strike) and governance risk; consider fixed-rate instruments as the better long-term hold if variable rates are expected to compress.
— Buybacks should only occur at steep discounts (well below 98 cents on the dollar); capital-efficient allocation means prioritizing deeply underwater instruments like Stride and Strike before buying back STRC near par, or returning cash via dividends to long-term holders.
— Digital credit instruments are overcompensated for actual risk today due to misunderstanding; early movers benefit from excess risk premiums, but as awareness grows and track records lengthen, yields will likely normalize downward.
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