Michael Saylor’s Secret AI Weapon for Bitcoin? (James Lavish Reveals All)

本站添加: 2026-05-06

[00:00:00]Which you just hit on the exact, that's the whole argument for Bitcoin right there. You know, you're not going to get yield off of Bitcoin unless you do it yourself or you basically you have to you have to create that the opportunity yourself. If you want to >> Yeah.

[00:00:13]have um you have an asset that's not that can't be seized, then you're going to have to do it yourself. Um you have to get it off exchange, put it in a wallet yourself, and then trade around options yourself in order to create that yield. So, but even then, in order to do that, you're likely going to have to send your Bitcoin to an exchange and trust that exchange to do it. So, it's really difficult to create yield. So, there is absolutely a risk for that, but there's a risk in every single yield product out there. And so, [music] um and I I agree with you. There has to be extremely strong regulation around the issuers of these stablecoins and what they can and cannot do. When James Lavish and his team launched their fund, time couldn't have been worse or better, depending on perspective.

[00:01:03]It coincided almost exactly with the collapse of FTX, one of the largest crypto exchanges in the world. The result, a full-scale market meltdown.

[00:01:11]Liquidity dried up, trust evaporated, prices plunged. And for many investors, it was a brutal wake-up call about the risks embedded in the crypto ecosystem.

[00:01:22]But from that chaos came a shift.

[00:01:25]Instead of speculative hype, the market began prioritizing security, infrastructure, and real utility.

[00:01:32]Companies focused on wallet security, custody solutions, and transaction reliability started gaining traction.

[00:01:39]Meanwhile, technologies like the Lightning Network, designed to improve Bitcoin scalability, continued to develop, albeit more slowly than many had hoped. Lavish is candid here.

[00:01:48]Progress has been steady, but not explosive. The ecosystem is maturing, but it's doing so at a measured pace.

[00:01:56]Yeah, to tell you the truth, the Bitcoin ecosystem has been it's been kind of spotty. Uh so, when we first started the to when we launched the fund, the big things that were were really um liquid and moving pretty quickly were the Bitcoin miners. But we literally launched the fund. We were going out to raise money right as FTX collapsed [music] and you had all that fraud and you know, just that it was an absolute um uh meltdown of this market. And so, it was pretty challenging. But out of that, there were a lot of security companies that came out of it, different companies that that help you with the wallets and and that kind of technology.

[00:02:39]And then, we started seeing just money technology, whether it's lightning, the different lightning companies, and there's been some good stuff.

[00:02:47]But to be honest with you, Bree, it's been it's moved quite slowly.

[00:02:52]And so, where we see our opportunities now is a little bit different. We have seen some opportunity in the treasury space, the Bitcoin treasury companies like MicroStrategy and some of the others. Uh full disclosure, I'm on the board uh the the board of directors of of Strive, which was Strive Asset Management, now it's Strive ASST, and we're doing something similar to MSTR.

[00:03:17]Where am I seeing opportunities? We're seeing opportunities in that space.

[00:03:22]Anything that's got some crossover with AI has been pretty interesting, especially with some of these uh miners that have that have moved into the the uh hyperscaling space, where they're using their energy contracts for uh high performance computing, meaning AI, uh all these data centers.

[00:03:40]So, that's been interesting. Um now, that said, it's been wildly volatile in the public space. And so, some of the stuff we've done there is in the private space, which has been much more um you know, it it it we've been able to get companies and investments at a better um valuation.

[00:03:58]That being a hedge fund, that's your your kind of an edge that you have there, that you can do these private deals.

[00:04:06]What has not been good is long investments with venture um capital like style uh investments, you know, real VC early stage stuff.

[00:04:17]It has taken forever.

[00:04:19]Um there's [music] been a pretty big um washout of of firms that have had to either raise more capital or just they're just struggling um because you know, the quite honestly, the the environment has not been exceptional for Bitcoin and crypto. What we do is we match our investments to the investment profile of the fund, which means that we we typically try to stay liquid on most of the stuff.

[00:04:44]We do have some early stage investments, but by and large, we've been avoiding VC stuff mostly, just because [music] the length of time it's taken for these companies to mature does not match what you would find in a VC fund, whereas it's a you know, 7 to 10-year investment kind of profile of the fund, where you're supposed to be giving investors back their money 8 years, 8, 9, 10.

[00:05:11]I just don't see that happening right now. And so, what what many VC firms are going to do and having to do is they're having to um extend the terms of those funds or do second and third funds to get funding for those initial investments to keep those companies going. So, it has not been exceptional on the private side.

[00:05:33]So, um now that said, we have a handful of of early stage companies that we've done that have done pretty well. They're more like in the insurance or technology space. So, uh but like I said, uh the the opportunities we're seeing now are mostly in the public space and mostly in in the private energy space, to to be quite honest. Which you just hit on the exact, that's the whole argument for Bitcoin right there. You know, you're not going to get yield off of Bitcoin unless you do it yourself or you basically you have to you have to create that the opportunity yourself. If you want to >> Yeah.

[00:06:07]have um you have an an asset that's not that can't be seized, then you're going to have to do it yourself. Um you have to get it off exchange, put it in a wallet yourself, and then trade around options yourself in order to create that yield. So, [music] but even then, in order to do that, you're likely going to have to send your Bitcoin to an exchange and trust that exchange to do it. So, it's really difficult to create yield. So, there is absolutely a risk for that, but there's a risk in every single yield product out there. [music] And so, um and I I agree with you. There has to be extremely strong regulation around the issuers of these stablecoins and what they can and cannot do.

[00:06:51]Of course, that can all all be thrown out the window functionally if they want to, because in the reality is, >> [music] >> these are centralized exchanges. These are centralized um you know, products, and they're they're they're being managed and and distributed by one central authority. If it's a bank, it's JP Morgan Chase, or it's Citigroup, or it's Wells Fargo.

[00:07:15]And it's tied together, so. Here's a fundamental issue.

[00:07:18]Bitcoin doesn't generate yield on its own. Unlike stocks or bonds, it doesn't pay dividends or interest.

[00:07:25]So, if you want to earn a return beyond price appreciation, you have to get creative and take on risk. You can lend it, trade options, or use structured products. But all of these require trust in intermediaries, often centralized exchanges.

[00:07:40]Ironically, reintroducing the very risks Bitcoin was designed to eliminate.

[00:07:44][music] Lavish emphasizes this clearly.

[00:07:46]There is no risk-free yield in Bitcoin.

[00:07:49]And in many cases, generating yield means sacrificing some degree of security or control.

[00:07:55]Some background for for your listeners.

[00:07:58]So, MicroStrategy, so this is a company um >> [music] >> now it's called Strategy, that Michael Saylor founded.

[00:08:05]Um and uh and what he's done, I know Michael pretty well. Um what he's done is when he discovered Bitcoin, he it took him a minute. Uh Eric Weiss is a is the guy who um introduced it to him. It took him a minute, but once he understood and once he got it, he went all in. And he realized, this is a way that I can create value for my shareholders pretty quickly. And so, he started buying Bitcoin and putting his treasury into Bitcoin. But he wanted to buy more. He and so, he found a way he found a way to do that. And what he did was he sold convertible bonds. And what he was doing is he realized that as he was adding Bitcoin to his balance sheet, his stock was becoming volatile, just like Bitcoin.

[00:08:49]And so, what you do is he realized, "Well, I could sell convertible preferreds, and that will and that will enable me to take that money that I sell those bonds for and turn around and buy Bitcoin. My my uh you know, stock will continue to be volatile along with Bitcoin, and I'll be able to sell more convertible preferreds or convertible bonds, sorry."

[00:09:12]But the but what what he found was what we all found out was that was just a doorway for basically hedge funds to buy those converts at pretty much at 0% interest rate, because he was he was selling them a bond that had all this volatility that enabled them to trade around it. Because remember, a convertible bond can convert into shares. And so, hedge funds buy those bonds and then do what we call as delta hedging, which is a short sell shares against those converts and trade around it for their profit. So, shares go up, they sell more. Shares come down, they buy them back. Shares go up, they sell more. They come down, they buy them back. And they could they do that all day long. But it [music] kind of puts a cap on your stock because they're selling so much of the stock against those bonds. So, he realized that and he eventually decided to go into the preferred game. So, he had these preferred that have a life, you know, kind of like a life cycle to them.

[00:10:12]And eventually, and he'll tell you, he was using chat GPT and and probably some other um AI tools and trying to figure out the optimal way to capture the volatility of Bitcoin >> [music] >> and arbitrage that against the fiat markets the US dollar market.

[00:10:35]And he landed on what's called a perpetual preferred.

[00:10:38]And [music] that's the stretch. Um the you know, that that's the the preferred called stretch STRC. Mhm.

[00:10:46]And so, what he's doing now is he's saying that we'll pay you 11 and 1/2% is where it is today. We're going to pay you 11 and 1/2% dividend annual.

[00:10:56]And you can buy this from us at par and that's 11 and 1/2% and so, and it'll trade in the market somewhere around $100 and we're going to pay you that dividend every single month. And now they're moving it to every 2 weeks. And so, and so, what it does is it gives investors the ability to get a higher dividend a higher yield Mhm. than they would normally in the market. Yeah.

[00:11:26]>> you look when you And so, who wants to buy this? Well, people who believe in Bitcoin and have a a bunch of cash in their balance sheet or in their in their in their own personal treasury and their in their checking or in their personal account. And they're like, well, I want to get better than the 4% that Fidelity or Schwab is giving me. What can I do?

[00:11:46]Well, you could buy other bonds.

[00:11:49]You can move out on the treasury curve and buy treasuries. Not a great idea in my my opinion. Or you could you could buy things that are a little bit riskier. High yield bond funds or ETFs. Uh you know, but they're only paying you about 200 basis points which is 2% over what you're getting in the money market.

[00:12:11]For something that's pretty risky. So, he clued into this. He said, look, I'll pay you 11 and 1/2% >> [music] >> I can easily make that dividend through all of my Bitcoin holdings I have. And you'll get a better yield by just holding this instrument. So, who's it [music] for? Right now, it's mostly small investors, you know, people like you and me who want a better yield.

[00:12:34]But eventually, it's it's starting to bleed into a larger market which is family offices, [music] small family office small small endowments, you know, the the endowments that don't have massive oversight that keep them out of it. And I'll explain in a second. They they're able to buy this and put their money there and get an 11 and 1/2% dividend and get liquidity, you know? So, if we pull up, I can pull up on Bloomberg STRC. It's trading all this, you know, and that's not that's actually not that much. I mean, it it's traded up to 15 million shares just a few days ago. And so, as you get closer to the dividend, it's trading more cuz people are buying it right before the dividend. So, but you're talking about something that's trading like anywhere from 3 to 8 million dollar or 8 million shares of this every single day.

[00:13:33]It's got tremendous amount of liquidity.

[00:13:36]Okay, so why is that important? It's important because if you're an investor and you're in an family office and you may need capital, you want to have the liquidity to move around in it, right?

[00:13:49]But it's not for somebody who wants to just park their money for a week or two because the volatility can get big. You know, it can have a drawdown of 5, 6, 7% as we've seen. Well, I think it's kind of both. If you're if you're somebody who's retired and you've got a lot of capital you're sitting on, but you don't want to be in the market generally and you don't want to just sit here making 4% because you know that inflation's higher [music] than 4%.

[00:14:11]They're saying it's 2 and 1/2 to 3%, but that's just nonsense.

[00:14:14]>> We all know it's not. You can't look at your medical insurance, your house insurance, your car insurance and tell me that it's been It's just not. So, they know that.

[00:14:23]So, you can take a portion of your capital and put it in this and get an and get a blended rate that's better than 4% that you're getting or 3.8% you're getting from the money market funds. So, that's that's that's a demographic. Or people are just sitting on money who don't need it for a long time. They say, look, I don't need this for at least a year. Then that's fine.

[00:14:43]You can get your 11 and 1/2% and know that you can pick your spot to get out when you need to and when it's when it's trading at par. And so, that's that's really who it's for right now.

[00:14:55]Eventually, it will move into a bigger space.

[00:14:58]The reason it's not being adopted by the larger institutions yet is cuz MicroStrategy doesn't have they don't have a rating that is high enough on their bonds to warrant that. So, you have to have an investment grade rating on on, you know, your on your company typically for a lot of the larger institutions to buy this this kind of instrument, but it's starting to it's starting to get picked up by by family offices and smaller endowments obviously because >> [music] >> it's got 8.5 billion dollars of value now. That's how much they have raised from that. So, and we're doing the exact same thing at Strive on a much smaller scale. So, ours has 437 million dollars worth of notional value, a fraction of [music] what he's got.

[00:15:46]>> Okay. And ours trades at a much, you know, smaller amount. But we're a much smaller company, you know, we're a billion dollar company. Um you know, so it's a it's a it's a much different kind of profile for our company. We're just a smaller version. We're we're doing the exact same thing [music] at a higher interest rate because, yeah, quite honestly, we don't have the balance sheet that that Michael does. But we do have a strong enough balance sheet that it's trading close to par. So, that's the good news. This brings us to one of the most fascinating parts of the discussion. How MicroStrategy engineered a way to extract yield from Bitcoin volatility.

[00:16:22]Initially, the company used convertible bonds to raise capital and buy more Bitcoin.

[00:16:28]Here's how that worked.

[00:16:29]Investors bought bonds that could convert into shares. Hedge funds used arbitrage strategies like delta hedging.

[00:16:36]This created trading opportunities, but also capped stock upside.

[00:16:41]Recognizing this limitation, MicroStrategy pivoted. They introduced a new instrument.