Responding to Coffeezilla's STRC Video

Added: 2026-05-05

[00:00:00]Coffeezilla dropped an 18minute investigation into strategy stretch, calling it a potential Ponzi, comparing it to Teral Luna and warning retail investors that the whole thing might be smoking mirrors. That video crossed almost a million views in 3 days. Then he followed it up a day later with a second video and it's already at a million views. Nearly 2 million total views accusing strategy of running a scheme on retail. I want to say upfront, Coffeezilla does very important work. He exposed some of the worst actors in crypto over the years. Uh from FTX to Logan Paul's Cryptozoo and dozens of rug polls in between that would have and did cost retail investors millions of dollars and they would have cost him millions of dollars more had he not been on the case. So respect is due full stop. But I think he gets this one wrong. Not in his instincts to investigate or his concern for retail, but in the specific conclusion about what stretch actually is and what the risk actually looks like. So, what I'm going to do is play his first video. I'm going to pause at the key accusations and walk through the numbers that change the picture so that by the end of the video, hopefully you'll have a better understanding of STRC and you'll understand why his argument is flawed.

[00:01:10]Let's get into it. It's been compared to the iPhone. It's been compared to a Ponzi scheme. Either way, a lot of people are investing and talking about a new product. It's really a stock, specifically preferred stock called Stretch, and it's sold by Micro Strategy. You may know them. They're the guys who have been buying up a lot of Bitcoin. You may know Michael Sailor from the memes about Bitcoin. He's like, you know, there's no second best but Bitcoin. There is no second best. There is no second best crypto asset. There's a crypto asset. It's called Bitcoin.

[00:01:38]Right. Well, now it looks like he's changed his tune because his company So, I have to stop right there because this framing is sort of where the entire misread starts. Coffeezilla is implying here that Sailor has abandoned his Bitcoin principles and launched some kind of crypto token. There is no second best obviously meant and still means Bitcoin, but Coffeezilla is saying now supposedly Sailor has gone back on that by creating a new product called Stretch. Well, that's not what Stretch is. It's not a crypto token or an I would say the other word. It's not an altcoin and it's not a competitor to Bitcoin. It's a perpetual preferred stock. It's listed on the NASDAQ issued by a publicly traded American company with Bitcoin as the underlying collateral. It's much different. Um, but to get into the specifics, what Sailor has done is take Bitcoin's properties, specifically its high growth, and package it into a form that the fixed income market can legally hold. So, right now, pension funds, insurance companies, sovereign wealth funds, endowments. I've talked about all of it on the channel. Uh, but this is what most of the $300 trillion global fixed income market is, and they can't buy Bitcoin. For reference, there's about one quadrillion dollars worth of total global wealth. So, almost onethird of it is locked out of Bitcoin because their mandates don't allow it. Stretch is how Bitcoin's properties can get routed into that market. So, Sailor has not changed his tune. He's just found another instrument to pull global fixed income capital toward Bitcoin. He's effectively transmuting Bitcoin's properties from a high- growth asset and into one that the fixed income market can legally hold.

[00:03:07]That's the opposite of abandoning the thesis. In fact, in my view, this is what is scaling it. But let's continue.

[00:03:13]Is currently raising billions of dollars by offering something called Stretch.

[00:03:17]The company uses the proceeds from those sales to then go buy more Bitcoin. and they claim that this has been their fastest launch in history. They say it's growing their revenue faster than the iPhone.

[00:03:29]>> So, it took us seven months to go from 0 to5 billion in cumulative revenue. And if you compare this historically to other products, uh the most successful products in the world, the Apple iPhone took about a year to get to $5 billion of cumulative revenue.

[00:03:46]>> You know, the iPhone comparison sounds insane, but that number is actually real. strategy raised billions of dollars in stretch in seven months and the notional value outstanding is 6.35 billion dollars. The market cap is about 6.3 billion. That's not retail FOMO and in fact it did hit that number before the iPhone did. Um so that's a capital market saying that this is a legitimately priced security. The 30-day average trading volume is $360 million per day. That's the kind of liquidity that you see in midcap equities. So yes, the growth is very fast, but the key here is that fast growth in a liquid publicly audited security is much different from fast growth in an opaque offshore token. Uh I'll get into that a little bit more later. Let's keep going.

[00:04:33]Pure product perspective, you could uh argue that Stretch is the fastest growing product in the history of the world.

[00:04:42]>> Wow. Now, setting aside the fact that Stretch is not really a product, it's a stock. Those are still some mind-blowing numbers. So, what does Stretch do? I'm going to try to make it simple. You put in your money, they say they're going to yield about 11 12% a year. Now, that is a variable interest rate, but it's basically doubledigit returns, which is just mindblowing. I mean, it's way more than anything you would get in your normal bank account. And that's got people curious. It's true. It is way more than you'll get in your normal bank account. And again, I'll talk about that a little bit later. There's always a question with all of this financial engineering. Anytime you see it, you always wonder what is the catch? And I like to describe it like a perpetual motion machine. You may have seen, you know, these videos of people, they invent a system that can come up with free energy. And there's always, you know, some weird base plate that's made out of wood or something that they won't let you inspect. And that's because there's always a battery hidden somewhere in the device because no matter how many times people say they've cheated thermodynamics.

[00:05:46]Actually, they've just cheated you.

[00:05:48]They've hidden the actual system somewhere. And you don't really fully understand that when you're getting in.

[00:05:54]And that's really what he describes here is the entire crypto yield complex perfectly. The framing here is absolutely perfect. Coffee is saying that too good to be true yields always have a hidden battery. And that instinct is understandable. It's actually correct. I actually want to concede something here. The Bitcoin and broader crypto community, and again, I'm a Bitcoiner. This channel is all about Bitcoin and markets, not crypto. It has an immune response to the word yield because that immune response was earned.

[00:06:24]You have Celsius, BlockFi, Voyager, FTX, just to name a few. Every single one of those collapsed because they were running a black box. You deposited your Bitcoin or your US dollars. They took it behind a curtain. They did shady derivative trades or they rehypothecated it and when the music stopped depositors got wiped out. Coffeezilla has made videos on this time and again and of course the pattern matching here makes sense. So if your pattern matching brain hears 11 12% yield and Bitcoin in the same sentence, it thinks Celsius, right?

[00:06:53]I get it. That's a healthy instinct. But here's the difference. Stretch is not a black box. It is a publicly traded preferred stock listed on the NASDAQ.

[00:07:01]Again, Strategy's balance sheet is the first thing you see when you go to their investor website. Literally, go to strategy.com. It's the first thing that's there. You can see every Bitcoin purchase, all of their debt instruments, their their entire balance sheet.

[00:07:14]They're not required to give you this, but they do in real time. You'd also see all of the issuance of their preferreds and all of their dividend obligations.

[00:07:22]And they also have a stat that shows the amount of years left in dividend coverage in Bitcoin alone, not to mention their dollar reserve. So, right now, Strategy holds 780,897 Bitcoin. I hope they don't buy more by the time this gets out, otherwise I'll have to change it. Which is worth about 16.5 billion at current prices against $1.237 billion in annual dividend obligations across all their preferred stocks. So, that's 48.9 years of dividend coverage in Bitcoin alone, not counting the $2.25 billion USD reserve, which gives them another 21.8 months of cash coverage. So, the battery isn't hidden. The battery is on the front page of the website. They have this massive engine, Bitcoin, which historically has a compound annual growth rate over multi-year time frames of anywhere between 20, 30, sometimes even 40%. And I'll talk a little bit more about this transmutation math earlier. But the battery is far from hidden. The yield is not somewhere that's coming out of a black box. I'll get into that a little bit later in the video. Let's continue.

[00:08:21]Too good to be true yields in finance.

[00:08:24]There's always a battery hiding somewhere or a risk that you're not really aware you're taking on. Like if you think back to the Terra Luna collapse.

[00:08:34]Look at that. Look it. He mentioned it perfectly. So again, the immune response is understandable because the words yield and crypto historically have yielded absolute catastrophe. That was a completely unintentional pun. Absolute catastrophe. But it couldn't be different from the case here. coin, an algorithmic stable coin involved, which was supposedly pegged to a dollar until it suddenly wasn't, and then everyone lost their money suddenly in a crash.

[00:09:00]But before that, it had yielded about 20% returns. People thought, okay, so Teruna and STRC are not structurally similar. They're complete opposites. So I want to explain what Terara was. So Terara had a US stable coin. That's what the ticker was called. and it maintained its dollar peg through an algorithmic mint and burn mechanism with Luna. So Luna was a free floating token. Now Luna was printed out of thin air and it had no reserves and no intrinsic value whatsoever. The way that it worked is when US drifted below $1, the protocol printed Luna and it burned US. And when US drifted above, it minted US and burned Luna. The peg was just pure reflexivity. There was literally no collateral. There wasn't a balance sheet. Luna's market cap was the collateral. So when confidence cracked, Luna crashed and US's backing evaporated. Both went to zero in 72 hours. Right? So you understand the the key differential there. So that 20% yield on ankor, which is the protocol that enabled this all to happen. The piece that most retail investors were chasing, was subsidized out of a reserve fund that was visibly drying up for months before the collapse. And everyone could see it drying up, but nobody stopped. Stretch has none of those mechanics. So Stretch isn't pegged to a dollar through an algorithmic reflexive token. It's a preferred stock with 60.5 billion dollars in Bitcoin reserves on its balance sheet and almost 50 years of dividend coverage. That that dividend isn't subsidized by a runaway fund that's burning down, right? It's funded by capital raises secured against a real audited onchain reserve. Luna had no collateral whatsoever. Again, Stretch has 50 years of Bitcoin denominated dividend coverage at current prices. Um, so the reason Terra collapsed was that its entire capital structure depended on confidence in a token that had no backing. So the second confidence wavered, the mechanism aid itself.

[00:10:53]Whereas Stretch's capital structure depends on Strategy's ability to service dividends out of a treasury that mind you could lose 95% of its value and still cover obligations for years. So that's not the same risk profile. It's not even the same asset class, right? So comparing stretch to terra is like comparing a mortgage to like a chain letter or something or a pyramid scheme because both involve monthly payments.

[00:11:16]So the surface rhyme is very much there, but the underlying mechanics couldn't be more different. Uh let's continue. And so it goes for many of the most famous financial engineering projects throughout time. It's only obvious where the risk was in hindsight for a lot of people. But I'm making this video to tell you it's also obvious in foresight if you know where to look and you just know that super high yields always carry a lot of risk. The only question is where does that risk exist in any of these engineering projects. And by the way, I'm not just using that word financial engineering as some sort of, you know, gotcha. Like that's how Michael Sailor describes his own product. stretches the simplest simplest instrument we've ever created uh from the point of view of the investor but it's the most it's the most ambitious piece of financial engineering from the point of view of the issuer >> and I think this is at the heart of the mismatch when most people hear about stretch their friends tell them about it Michael Sailor is talking about it all the time they're given a very simple view a very too good to be true view where stretch is some money market like instrument where it's like a bank where it's like a savings account but it's paying you 11 a.5%. But you dig into the details and that's not what it is. And the risks are not too different from the risks you have just buying Bitcoin except the way those risks manifest in the financial engineering instrument are just very different. Instead of getting a very volatile product, you are tying your risk to Bitcoin, more specifically strategy. and their general ability to pay this yield in perpetuity forever.

[00:12:57]>> Okay, so Sailor said that himself. Um, but I want to reframe what financial engineering actually means here. Uh, because the phrase has gotten poisoned unfortunately by 2008. What strategy is doing is a carry trade. That's it. So a carry trade is when you borrow at a lower rate and deploy the capital into an asset that returns a higher rate. Uh, every major bank on earth does this. So every insurance company also does this.

[00:13:21]Um, and Japan's entire monetary policy for the last 30 years has enabled a global carriage trade in Japanese yet.

[00:13:28]It is the most popular way for investors to invest in US equities. They borrow it in the end because it's cheap and they invest in high growth assets elsewhere.

[00:13:36]Also, Berkshire Hathaway's float from Geico is a carry trade. Warren Buffett has said so explicitly. So, strategy is just doing the exact same thing that retail investors and institutions have been taught is sophisticated when Bergkshire does it. But the only difference is the asset on the other side is Bitcoin instead of equities or bonds. So framing a standard carry trade as exotic financial engineering is a rhetorical choice and using it to suggest that somehow someway what Stretch is doing and what strategy is doing is hugely risky is just pretty baseless because again the carry trade is genuinely so common place in finance.

[00:14:11]You're not going to go to any major institution and find somebody not doing it. Let's continue. Right. So key to strategy is its simplicity. According to Michael Sailor, that's what the world wants. And specifically, he's pitching to retail investors. He's pitching to everyday investors. He says most of the buyers are everyday people.

[00:14:31]>> In fact, 80% of Stretch is held by retail investors. And so, it's meant to be a retail product that's really easily accessible by anybody. 80% of this thing that's raising billions of dollars is being held by mom and pops, not institutional investors who understand the risks of preferred stocks, who understand that they can suspend dividends if they want, who understand that ultimately Micro Strategy has no obligation to pay you back the initial money you put in. That's fine. That's one thing. But we instead have this product that's being marketed by their own admission to regular people. They admit it's an ambitious piece of financial engineering, but when they talk about it, they're using words like bank. You know, their CEO is recommending it for lowincome investors.

[00:15:19]>> But what about people who are watching who maybe live paycheck to paycheck?

[00:15:23]They're lower income. Is this a product that would make sense for them?

[00:15:27]>> Yeah. You know, this is this is another sort of aspect of this product that excites me and I know having readen h having written Bitcoin for everyone, right? like I I'd like to say stretches for everyone. Um, and I know this is important to you is a product that is for people across all income levels, >> but is it really for everyone? I mean, if you just have a rainy day fund, should you be investing what was in a money market, what was in a bank into Stretch, right? The way they talk about it really, you'd be forgiven for believing that yes, it's kind of the same. I mean, >> so this is Coffeeoffezilla's strongest point in the whole video. Should someone living paycheck to paycheck have their rainy day fund in STRC? Probably not.

[00:16:11]And I don't even think they should have it in a money market fund, right? I think that money should sit in their bank account. If you got a high yield savings account, put it in there. Make sure there's FDIC insurance. I'll grant that. But there is a distinction to make here. The critique of the marketing is fair, but the critique of the instrument is different. And so bundling the two together and suggesting that because the marketing needs some work, the instrument is a Ponzi scheme, it just doesn't really square, right? you know, a sharp kitchen knife is not appropriate for a toddler. That doesn't mean that all kitchen knives shouldn't exist or that they're scams, right? Uh it it performs a function for a certain subset of people in a certain subset of circumstances the same way STRC does.

[00:16:47]So, the marketing might need to be clear about who the appropriate buyer is, but that's a legitimate criticism of how strategy talks about the product, not what the product itself is or its merits. Let's continue. Michael Sailor Stretch delivers money marketlike stability with marketleading risk adjusted returns.

[00:17:07]>> Well, that's true. That's just a plain statement. It does have a 4.49 sharp, which is the highest of basically any major macro asset. Um, that part is true, but I'm curious to what uh as to what he says here. So, again, you can see why this is compelling to people, right? They're presenting it like such a simple thing. It's just like your savings account, right? but better but just juiced returns. Now, what is the problem with that? Well, ultimately, Stretch is nothing like a savings account. It is a stock, meaning the company has no obligation to pay you that money back. Like, you give them $100, they have no obligation to pay you back. And you actually find this in sort of the longer podcasts where >> Well, Coffeeil's argument here is technically correct, but it's very misleading in its framing. So yes, stretch is a perpetual preferred stock and yes, there is no redemption right.

[00:18:00]Strategy is never contractually obligated to pay back your principal.

[00:18:03]All of that is true and all of that is in the prospectus. But here's what gets left out. You don't need a redemption right. You have a liquid secondary market. STRC trades $254 million per day and it has a 30-day average of $360 million per day. Several days last week, it had a daily volume of over one half billion dollars. It has a $6.3 billion market cap. That's a turnover rate that makes it more liquid than most midcap stocks. So if you want out, you sell.

[00:18:30]And the par mechanism, which Coffeezilla is framing here as a trick, is actually the feature that enables us. Strategy raises the dividend when Stretch trades below $100 and issues more shares when it trades above it. So that dividend adjustment mechanism is why the one-mon VWAP sits at $99.89 and the historical volatility is like less than 3%. For context, Bitcoin's 30-day historical volatility is an order of magnitude higher. So, when Coffeezilla says you're locked in forever, what he actually means is there is no ability to redeem, but it's a stock with a liquid market, so you don't need redemption rights. There's a daily liquid exit and basically par. So, those are very different things. Let's continue. kind of asked about some of the risks of this strategy and he uses the double speak of how they talk about this stuff to on the one hand make it seem like oh well strategy really has no obligation to pay these people so there's not much risk of a bankruptcy if they can't pay these obligations while at the same time making it seem like they're definitely going to pay you the money.

[00:19:28]>> When we sell STRC we're selling equity. When you give me a million dollars to buy a preferred equity with a variable dividend, if you read the securities document and and you understand what that what that security is, you're entering into a perpetual swap. I am agreeing as the issuer to give you sofur, the standard overnight funds rate, plus a credit spread determined by the company.

[00:19:57]and you are agreeing to give the company that capital forever and and so that and you're not getting the money back. So it's not an overnight loan. There is no collateral call. You have no redemption.

[00:20:14]>> So I understand why Coffeezilla using those words in a vacuum has made the accusation. He said he's not going to give you his money back, but what he was describing is what a perpetual swap is.

[00:20:27]is he wasn't saying strategy is never going to give you your money back.

[00:20:30]Again, you could sell at any point in time for essentially par. What he is describing is a perpetual swap in order to explain that the company doesn't have any leverage on its balance sheet because you're entering into what's more like a swap agreement rather than debt.

[00:20:45]That was the explanation that's being had here. The quote was taken out of context. Now, why haven't people realized this? Why haven't people realized there could be a risk of this stock going down and them ultimately not getting their $100 back that they put in? Well, this is where we get to some of that financial engineering we were talking about. Part of the way Stretch mimics a bank account, mimics a savings account, is that they are trying to keep it as close to $100 in value at all times. You can see Michael Sailor posted it's a 1 cent market closed at par.

[00:21:19]Meaning the idea is there's almost no volatility in this stock. You can also see a longer duration here where it mostly hovers around $100. Now, how are they achieving this? Well, it's actually pretty simple. Basically, when it falls below $100, they just raise the dividend, start offering more money until enough people buy it to bring it at $100. And above $100, they issue more shares to make it fall to $100. So you're given this constant impression that this thing is worth $100. So you never fear the idea of this thing falling and losing your principle. Even if strategy won't cash you out, somebody else hopefully will buy your stock at the same amount you bought it for and you just collect the dividends. Right?

[00:22:04]That's the idea behind it. The problem with it, well currently in order to keep it at par, Michael Sailor says they've raised the dividend rate five times.

[00:22:13]>> So what are they going to do if it doesn't trade to 100 bucks? They're going to raise the dividend rate. Have they done that? Yeah. Five times.

[00:22:18]>> So ultimately, Stretch will only stay at $100 and you will not risk losing your principal investment as long as there's another guy willing to buy it at $100.

[00:22:29]Now, >> so Coffeezilla is essentially saying that stretch is a greater fool scheme and it only stays stable as long as new buyers show up. So I want to address this head on because on the surface it sounds devastating. So every security with a liquid market requires a buyer on the other side, guys. Like Apple stock trades at its current price because there's a buyer willing to pay that price. Treasury bonds trade at their current yield because there's a buyer willing to accept that yield. The question is whether there's a buyer. The question is whether the underlying cash flows justify the price. And ultimately this mechanism to keep stretch at par is very similar to what the US Treasury does when there's a lack of demand. When there's a lack of demand outstanding, they raise the yield. Stretch's cash flows are backed by Strategy's ability to pay $1.3 billion in annual dividends out of a $60.5 billion Bitcoin treasury.

[00:23:17]That is a 2% annual draw down on reserves in the absolute worst case where Bitcoin goes to zero and they have to sell coins to pay dividends. Bitcoin would have to sit at current prices or below forever with zero appreciation for 48 years before the reserve is exhausted. Bitcoin's 10-year compound annual growth rate is 67%. So even if you assume that Bitcoin's growth rate collapses to 10% over the next decade, which would be a historic collapse in its growth profile, the Treasury still grows faster than the dividend obligation. So the what if no one buys question has a very clear answer. The issuer has the reserves to service the obligation for decades regardless. Let's continue. increasing the dividend more and more and more to try to keep bringing new people in. But that only lasts as long as people see strategy as being wellbacked enough by Bitcoin.

[00:24:07]Which brings us back to what this all eventually is. What are your primary risks? Well, it's Bitcoin, which is volatile, and its strategy itself and their own ability to pay these dividends and not suspend them. Because even though they say they can suspend them, the second they do, you can bet that stretch is going to fall precipitously and a lot of people are going to be running for the door and a lot of people are going to lose money. Now again, they have decades decades worth of dividend obligations sitting in their treasury even in the event that Bitcoin does nothing. If it rises by 2%, just 2% and they have more than enough money to pay existing dividend obligations forever.

[00:24:49]So here, Coffeezilla actually understates the case against stretch in a way that I think is more useful than his earlier framing. So he says that the real risks are Bitcoin volatility and strategies ability to pay. I agree with that framing. That's exactly right.

[00:25:02]Stretch carries strategy credit risk and also the risk of Bitcoin doing nothing with a liquid exit and an 11.5% yield.

[00:25:08]So let's talk about whether that yield actually compensates for those affformentioned risks. The risk-free rate right now is about 3.7%. Stretch's effective yield is 11.6%. So that's a 790 basis point spread over the risk-free rate. For comparison, the ICE BFA US high yield index, which tracks the entire junk bond market in America, is currently yielding about 6 and a.5%.

[00:25:30]Let me say that slower. You can't find a junk bond in America right now yielding what Stretch is yielding. The average B-rated junk bond historically has a 5% default rate. And Strategy has$60 half billion dollars in Bitcoin reserves and 8.25 billion in debt. So a net leverage ratio of 10%. Most companies issuing junk bonds are trading at four to six times leverage on their IBIDA. So Strategy's balance sheet is cleaner than most investment grade corporates, let alone junk. The 30-day sharp ratio, as we saw earlier, is over four, which is exceptional riskadjusted performance. A sharp ratio above one is considered good. Above two is rare. Above four is the kind of number that makes quant funds start paying attention. But let's flip the frame one more time. We just benchmarked 11 and a half% against flat yields. But what happens when you benchmark it against Bitcoin itself?

[00:26:19]Again, Bitcoin's 10-year compound annual growth rate is over 60%. So, against Bitcoin's actual historical growth rate, 11.5% isn't a ridiculous yield. It's quite conservative. It's 20 to 25% lower than what the underlying asset has historically returned over most multi-year periods. That gap between Bitcoin's compound annual growth rate and Stretch's coupon is exactly what allows Strategy to offer 11 and a half% to fixed income holders and still accumulate more Bitcoin than they pay out. Again, it's this concept of a carry trade, borrowing in a low yield currency to invest in a high growth asset. The yield only looks outrageous because most people compare to the wrong benchmark compared to a dying junk bond issuer paying like 9% 11 12% is insane. But compared to the asset actually sitting on their balance sheet, 11 and a half percent is conservative. So yeah, it on paper it sounds too good to be true.

[00:27:11]That's the right instinct. But when you look at the actual balance sheet versus the junk bond universe and then against the underlying assets performance itself, that too good to be true instinct flips. Or at least it should, you're getting a yield that doesn't exist in the junk bond market from an issuer with cleaner leverage than like most investment grade issuers. Backed by almost 50 years of Bitcoin denominated dividend coverage. And that yield is still conservative relative to what Bitcoin itself compounds at. The yield looks high because Bitcoin is still mispriced as collateral by traditional finance. But that is a market inefficiency. It's not a scam. Let's continue. Now, I want to be clear that I'm not forecasting doom on the horizon of stretch. I am not even calling it a Ponzi scheme, although I think there are some some comparisons you could make. In fact, I think they disclose a lot of the risks in the fine print. My entire problem is that they are leading people like a pied piper with this kind of ludicrous idea. Their pitch is of a money market and a bank when that's just not what this is. And this is a snowball of yield that will accumulate for this company, which admittingly does have tons of Bitcoin. They have this massive treasury, but Bitcoin, it's very well known, does not yield anything. So eventually, Stretch will have to be funded by what exactly, right? They have a cash reserve, but that'll eventually run out. So, of course, I already covered dividend coverage and I said Bitcoin could be flat for 50 years without any issue whatsoever, right? So, the fact that it doesn't yield anything doesn't matter. Its growth rate is what matters. But he closes out here by saying that he's not forecasting doom and not calling it a Ponzi. So, that's good. but he is worried about retail getting led into something they don't understand. And I want to close by at least agreeing with him on the spirit of that concern, but disagreeing with the specifics. I want to go just one layer deeper. Um because I think that this is the part Coffees audience is going to push back on the hardest if they even watch this. Who knows? The accusation at the heart of this video and then the next one that he made is that stretch looks like a Ponzi scheme because new issuance funds prior obligations. I want to take that accusation seriously because structurally the pattern does exist in the real world but it doesn't exist in stretch. It exists in the US dollar. So the federal government is 37 trillion in debt. It runs a $2 trillion deficit every year. When old treasuries mature, they're refinanced with new ones. And when there aren't enough buyers at acceptable yields, the Federal Reserve steps in and prints new dollars to absorb the supply. Old obligations being serviced by new issuance with no terminal value. That's a mechanical definition of what people are worried about, including coffee uh with Stretch.

[00:29:48]But the difference is that Stretch has almost 800,000 bitcoins sitting behind it, which again is an asset that has grown at above 60% over the last 10 years on an annual basis on average. And even if it didn't, you'd be fine for 50 years. The dollar has nothing sitting behind it except the promise to issue more dollars. So if the test is does new money fund old obligations, the honest answer is yes, that happens. And it happens most visibly in the most important instrument that Americans hold their life savings in, which is the dollar. Stretch looks like a Ponzi from the outside looking in to a lot of people because the US dollar condition them to think that structural dilution is normal. The reality is that stretch is backed and the dollar isn't. So, is retail being marketed aggressively? Yes.

[00:30:31]Should every buyer read the prospectus and understand that stretch is a preferred stock with no redemption right? Absolutely. Is it appropriate for someone's entire emergency fund?

[00:30:39]Probably not. But is stretch a hidden battery scheme like Teral Luna or Celsius? No, it is the opposite. The battery is on the front page. Uh you can go to their website right now. The audit trail is totally public. The issuer is NASDAQ listed. The reserves are verifiable in real time. And the yield, while high, is justified by a balance sheet that most junk bond issuers in America would be jealous of. So to to sort of close out here, Stretch isn't a crypto token, and Sailor has not changed his tune. stretches. Bitcoin's properties transmuted into a fixed income rapper so that the $300 trillion global fixed income market can finally access BTC. Retail investors are not being scammed. They're being given access to a structure that until recently only sophisticated institutions could replicate. That's a real development in capital markets, not a ticking time bomb. So, this was a long one. In the meantime, drop stretch in the comments if you watched all the way to the end. I'd really appreciate it and it helps out with the algorithm a ton.

[00:31:34]And to circle back to where I started, Coffeezilla does important work. So, disagreement on this specific instrument does not change that. If you want to see more of these breakdowns, of course, make sure you subscribe and turn on notifications so you get notified when I drop new videos. And of course, you can check out the last one right here. I'll see you over there.