A responsible Bitcoin Treasury plan should outline how the bitcoin will be used, how it will reward shareholders, and how progress will be transparently reported over time. Anything less can quickly turn into a pump-and-dump scenario, leaving investors exposed, as seen recently with ECD Automotive Design Inc and Vinanz Ltd. Look at how their stocks traded in the two weeks leading up to and two days after their bitcoin announcements
Is that really the kind of exposure you want?
In the end, the simplest and most historically rewarding way to own bitcoin is to own bitcoin directly. There is no CEO headline risk, no quarterly earnings surprises, and no competitive market cannibalization. Bitcoin is a rare, fixed-supply asset with a predictable monetary policy.
You can strengthen your strategy further by holding bitcoin in tax-advantaged accounts like IRAs, or by using selective borrowing to acquire more units when conditions are favorable — while keeping cash available for flexibility during market downturns. These are strategies we have been helping clients with since 2018.
Before chasing after the next quasi-bitcoin product, remember: nothing beats owning the real thing.
For MSTR investors, these convertible bonds have trade-offs. Current shareholders benefit because the proceeds from the bonds go to buy more bitcoin, increasing their bitcoin-per-share exposure. But in the long run, these bonds could create significant dilution if many bondholders exercise the conversion feature. That’s why, for most long-term investors, owning bitcoin directly remains simpler and more transparent.
STRK is another preferred share class, offering an $8 (8%) annual dividend on a $100 liquidation preference. If the price of STRK rises, its yield falls (happening now), and vice versa. Like STRD, its dividend is only paid if declared. So far, one quarterly dividend has been paid, with the next scheduled for June 30th. STRK also has a conversion feature: if Strategy’s share price reaches $1000, every 10 STRK shares can convert into one share of MSTR.
STRF is the most senior of the three preferred classes. It carries a 10% cumulative dividend, which compounds an extra 1% per year up to a maximum of 18% if dividends are missed. Strategy also retains the right to redeem STRF shares if fewer than 25% of the original issue remains outstanding, or under certain tax events.
In general, we recommend generating income through dividend-paying companies with a proven, stable track record of paying out income to shareholders. Strategy is an innovative firm that has repeatedly reinvented itself, and may continue paying these preferred dividends, but its ability to do so will likely rely on further financial engineering. These products are not inherently bad, they are just generally geared to a specific investor type. So make sure you know what type of investor you are.
For example, imagine you buy a share at $100, and it pays out $50 immediately as a dividend. Now your share is worth $50 and you hold $50 cash. You effectively got a 50% yield, but you still have the same amount ($100) you started with. Over time, repeatedly returning capital in this way can destroy the fund’s net asset value, leaving you with less principal despite receiving large payouts.
Leveraged ETFs promise a multiple (2x, 3x, etc.) of the daily return of an underlying stock like MSTR. In theory, if MSTR rises 50% over five days, a 2x (like MSTX) leveraged ETF should deliver 100%. In reality, these products reset their leverage every day, which causes performance to deviate dramatically from the simple multiple you might expect, especially over longer periods in volatile markets.
For example:
Day 1: MSTR falls 5%, from $100 to $95
Day 2: MSTR rises 5%, from $95 to $99.75
Now, a 2x leveraged ETF:
Day 1: falls 10%, from $100 to $90
Day 2: rises 10%, from $90 to $99
After two days, the leveraged ETF is worth $99, lower than MSTR’s $99.75
This “volatility drag” compounds over time and can leave investors with far less than they expect, especially if they hold the product too long through a choppy market.
If you want to invest in Strategy because you believe in Michael Saylor’s vision, that’s fine, just be sure you understand exactly which security you own, and the risks it carries. And steer clear of ETF sponsors trying to capitalize on Strategy’s name with products that sound enticing but take advantage of naive investors. Bottom line, be careful. We still recommend simply owning bitcoin directly and avoiding bitcoin-themed proxies. If you want to talk about strategies to complement a core bitcoin, let us know, we have some tools.
Built And Operated In The USA 