Summary Strategy has engineered a unique yield curve using preferred securities to finance aggressive Bitcoin accumulation at potentially declining costs. STRC, the variable-rate preferred, acts as a 'base money' instrument, allowing MSTR to mimic central bank functions for Bitcoin reserves. Recent policy changes and rate adjustments on STRC demonstrate MSTR's commitment to optimizing capital and defending its preferred share peg. With Bitcoin's outlook strong and MSTR's financing costs likely to fall, I remain bullish on MSTR and continue to hold a long position via put options. Last month, I outlined how Strategy ( MSTR ) has constructed a profound yield curve through its preferred securities ( STRK ), ( STRF ), ( STRD ), as well as the variable-rate ( STRC ) to finance Bitcoin acquisitions at (potentially, especially in today's falling-rates environment) declining blended costs. I also highlighted the company's initial issuance guidelines, including minimal common stock sales when market NAV (mNAV) dips below 2.5×, controlled issuance between 2.5× and 4×, and aggressive expansion above 4×, and how shortly after, the company amended its 8-K on August 18 , granting latitude for opportunistic common issuance even below 2.5× mNAV. In the weeks since, it has been quickly executing on this by raising hundreds of millions of dollars via its common ATM. Far from a reversal, however, I saw this as a commitment to real-time optimization of its capital engine. The Curve That Fuels Bitcoin Today, I want to expand on the yield curve that Strategy has constructed, and more specifically, the incredible role of STRC, which, along with the fact that the company now has the largest corporate Bitcoin treasury (640,031 coins), in some sense, makes it like Bitcoin's central bank. Strategy — Bitcoin Holdings Over Time (bitcointreasuries.net) Now, at this point, I should mention that everything I am about to discuss hinges on two key points. Firstly, you have to believe in Bitcoin for it to make sense. Secondly, at the end of the day, Strategy is running an unprecedented financial experiment. I will challenge this thesis in a minute, but for now, try to keep an open mind and do not be quick to judge the company as a pyramid scheme. Many others, including myself, here on Seeking Alpha, have already explained why that is not the case. So, Strategy's capital stack, in some sense, functions as a series of conduits, "distilling" (Saylor's words) fiat into Bitcoin with varying risk-reward profiles. As a reminder, STRK has a high yield with embedded upside via conversion rights. STRF, as the senior fixed-rate preferred, has an even higher yield and appeals to conservative capital seeking priority claims. STRD, the junior fixed-rate/junk variant, essentially artificially enhances STRF's safety profile. And STRC, the variable-rate, short-duration preferred, targets stability around its $100 par value, adjustable by the board to maintain that peg. MSTR's Yield Curve (Q2 Investor Presentation) Every week, Strategy is tapping the pipe that is more accretive on a common per-share basis, along with common issuances, which are accretive in the first place since it is trading above a market net asset value (mNAV) of 1.00. Now, the magic lies at STRC, as it is at the heart of this architecture, revealing Strategy's evolution into a functional analog of a central bank for Bitcoin. With a stated value of $100 and a monthly dividend rate adjustable to anchor its trading price near par, STRC operates as a base money equivalent. We saw this adjustment taking place last week for the first time following the preferred's initial payout, with management lifting the annualized rate by 25 basis points to 10.25% for October. This was a deliberate policy shift to defend the peg, accompanied by a cash dividend of $0.854166667 per share payable October 31, and it's safe to say that the market started to get the whole thing, as STRC indeed crawled quickly after toward the $100 checkpoint. STRC's Share Price (Seeking Alpha) This mechanism looks like that of central banking tools, as issuing STRC at par expands supply, channeling proceeds into Bitcoin reserves while the rate dial maintains stability. If the price goes The analogy extends further if you basically treat STRC as base money, Bitcoin as reserves, monthly rate settings as policy announcements, and transmission via yield adjustments that attract short-end demand, thus "recycling" fiat into reserves. Of course, unlike the Fed's Treasury purchases, Strategy buys BTC, but the whole "leveraging policy in order to regulate and expand" plan is a close one. And note that the August pivot to allow sub-2.5× issuance of common stock further supports this case, as it makes sure there is BTC accumulation continuity during compression (as long as it's still above 1.0x NAV), so MSTR can, in some sense, act like a lender of last resort. An Example Of STRC As A Policy Lever To illustrate this concept more effectively, imagine a future where Strategy's policy rate on STRC dips to around 3% in a low-rate environment, where the short-term government yield hovers close to 2% and STRC carries a 100 bps premium (which could be fair given the overcollateralization). This short-end compression would cascade through the yield curve, much like how Federal Reserve cuts influence Treasury bonds, encouraging investors to flock to higher fixed coupons like that of STRF's. As demand surges for STRF, it could trade substantially above par, driving its yield to maturity down to 6%, 5%, or even 4% as buyers chase safe high-yield opportunities (and STRF is overcollateralized). And in case you think that buying a 4% yield on a perpetual instrument is sort of weird, let me remind you that around this time in 2020, Austria issued a 100-year bond with a 0.85% yield (if you want to check it, the ISIN code is AT0000A2HLC4, and it matures in 2120), and institutions bought it. Far from a mere side effect, this could even enable Strategy to call its existing instruments (as per the redemption terms) and reissue new long-dated preferreds at these suppressed rates, locking in super-cheap financing potentially below 5% to fuel aggressive Bitcoin accumulation. This all makes sense in a world where Mr. Saylor sees Bitcoin delivering 29% CAGR over the next 21 years. The Yes... But Argument Now, I know that my argument might seem a bit far-out since there is no legal tender mandate, no discount window, and no reserve ratio, and the peg relies on soft tools, such as rates, issuance, and redemptions, which are vulnerable in severe drawdowns. As I have said before, if Bitcoin craters and mNAV nears 1.0×, choices harden as MSTR might have to sell reserves, issue equity below book (diluting BTC/share), or spike rates (elevating costs), all of which could erode its whole point of existence. The macro image bolsters this framework. Gold surged toward $3,900/oz due to anticipation of rate cuts and fiscal/monetary/geopolitical uncertainty, signaling a flight from the relentless fiat debasement that has become a key part of our lives. In the meantime, as I write this on Friday afternoon, Bitcoin is also set to hit a new all-time high, and hopefully, this will encourage more people, a new batch of investors, to research Bitcoin and hopefully realize it's the apex financial asset (which I am becoming increasingly confident in the more I do my own research). Bitcoin's Price (Koyfin) Final Thoughts And What I Am Doing Strategy isn't the Fed, but its functional mimicry, as seen in rate adjustments, peg targeting, and reserve building, redefines Bitcoin's capital ecosystem. With all BTC purchases taking place being accretive (since they occur above NAV), BTC's prospects remaining as bright as ever (due to the debasement story, institutional adoption, and declining rates), and Strategy's own financing potentially declining dramatically if interest rates follow a downtrend, I remain bullish on MSTR. As mentioned in my previous article, I remain long by selling puts (still holding the MSTR Sep18'26 310 Put), which I believe offers a much better risk/reward setup along with direct Bitcoin exposure.