Blue Coin Capital CIO: MSTR'S BTC Buying Engine is About to IGNITE | Mike Treidl

For more on treasuries, let's go to the expert, Mike Tridle, founder and CIO of Bluecoin Capital. He spent over a decade managing institutional portfolios at Morgan Stanley Fanny May and Capital Group before launching Bluecoin Capital to bring that same discipline to digital assets. Welcome in, Mike. >> It's great to be here, Grace and Sean. Thank you for having me. And uh what a day for it. A year ago this week, the market was liquidating 19 billion. And today we're talking about Bitcoin being back at 83,000. >> Crazy how quickly things change. Um, I wanna we're gonna get into all of it with you, but I wanted to start from the beginning because you spent 15 years in traditional fixed income. What first made you take Bitcoin seriously and how did that background shape the way you evaluate it today? >> Right. So I spent about 20 years in institutional asset management working at Morgan Stanley Capital Group, Peyton and Regal, managing money with committees, mandates, and risk frameworks. I bought my first Bitcoin in 2017. And for years, I watched the two worlds talk past each other. You've got crypton natives on one hand with conviction but no process and you've got institutions on the other with with process but no conviction. I launched Bluecoin Capital in January 2025 to close the gap and bring the discipline I learned from working with investment committees, the sizing, the rebalancing rules, the custody, the due diligence, bringing that to digital assets. you know, I've sat on the side of the table that says no, so I know what it takes to get an allocator to say yes responsibly. And >> and and on that theme, what about Bitcoin do you think meets a need that most investors um you know u have not been able to meet through traditional assets or or kind of fits in in that bucket or or in line with their charter, >> right? When working with institutions or even retail investors, I always say start with the risk budget first, not the return target. I I ask allocators one question. What draw down from this position can your portfolio or your committee actually tolerate? All right, we we've just witnessed it, right? Bitcoin will repeatedly draw down 50 60% over a cycle. It was at 126 last year. It reached the lows of the 60s and now it's back in the mid 80s. So if you allocate 2% to Bitcoin and it falls by half, that costs you 1% of your portfolio. That's that's survivable. Uh you'll hold it and then you'll rebalance into weakness. uh if you put 10% in, you might capitulate at the lows and that doesn't mean it was the wrong asset. It was just the wrong size. So the discipline is the risk budget first and then you back into everything else. >> I want to ask you about where we are in the market today. We've seen broad recovery from the lows around 58K. Um it's Bitcoin has rallied through a rising rate environment. What has surprised you the most about this rally? >> Great question. I think what surprised me most was how quickly it rebounded from the lows in August. I think that caught a lot of fund managers and allocators offguard. Uh I think a lot of people expected it to crawl up slow and steady. Uh you know in the equity markets we say that they take the escalator up and the elevator down but with Bitcoin sometimes it takes the elevator up. So you have to always be ready for it and be positioned accordingly. >> And you know with that rally we've also seen a strong recovery and outperformance by Bitcoin Treasury companies. uh you know h how much of this rally is is owed to to them to the ETFs or or is it just uh some other net new investor stepping in to to buy Bitcoin at a bargain? >> I think a lot of it was just seller exhaustion. After a year of of sellers outpacing buyers, eventually anyone that wanted to sell had had a chance to sell. And with the price so low, it was too much of a compelling offer and and buyers kind of took the reigns and started pushing back. you know, uh, digital asset treasuries, such a strategy or MetaPlanet, they they obviously become the marginal buyer and they help support that and it becomes a bit of a self-fulfilling virtuous circle or virtuous cycle where once the price starts going up of Bitcoin, it enables the flywheel and enables them to buy more Bitcoin and then we get out of the lows and we enter the bull market. So, we've broadly seen Bitcoin Treasury companies shift from using convertible bonds to now using perpetual preferred equity as their financing instrument. What do you think drove this? And how do you feel about the possibility for more innovation on these financing mechanisms that they use? >> Yes. Now, I I think Sailor is spearheading that movement. I I think he he admitted on an interview that he used AI to get the idea. Um, and he's he's full of innovation. He's always finding new new ways to to use the capital markets to his advantage. And [clears throat] then many of the other companies uh follow his lead and and copy his moves. It makes sense. You know, debt it's it's very it can be risky and dangerous for the issuer because if you miss one payment, you're in default, right? And there's a whole set of legal consequences that follow that. With preferred, you get many of the benefits of of debt, but you can defer the coupon payments without any serious repercussions. And so that gives them a huge advantage to weather the storm when they're going through a market crisis or some other some other uh you know difficult market environments. And and on that topic of of sailor and strategy, um you know, the the original innovator of the space, the titan of the treasury space, um but you know, a lot of their buying has been absent uh for many months as as their prep has yet to be back at par. They're almost there. They're approaching $100 now. Um you know, just a few cents short. you know, what would a sustained return to that level mean for, you know, the spot price of Bitcoin given our current market where sellers seem to be exhausted uh at the margin, buyers are back in control, and there's this huge engine just waiting to be turned on, >> right? Uh so the the preferred give strategy uh a form of built-in leverage, right? So just by leverage alone, the price of strategy can go up. But once the preferred have been at or close to 100 for a period of time, it gives them flexibility to then issue more preferreds and buy even more Bitcoin. Right? So now we have two big engines of strategy. We have the the traditional flywheel which is when the uh when MSTR trades at a premium, you can issue more MSTR to buy Bitcoin. And now once the preferreds trade at 100 or even above, they can issue that as well to buy more Bitcoin. So we're just going to see more Bitcoin buying in this cycle from Strategy. >> Now, for someone who already owns Bitcoin, what would make strategy worth adding for them? Where do you see strategy creating value that just holding Bitcoin doesn't provide? Well, the key one of the key metrics with strategy is uh SATs per share. So, they're not just a leverage vehicle, which in and of itself offers a lot of value. As an investor in a bull market, I'm looking for leverage. And they offer that without the the risk of a margin call, which is huge, right? Most forms of leverage, if if Bitcoin drops, you're going to get a margin call, and you got to you got to pony up the cash. when you buy MSTR, there's none of that, right? You don't there's no margin call. So, that's big. But also, they they work to increase the sats per share. So, then the amount of Bitcoin you have per share increases over time. And that's another big selling point for strategy. Now, obviously, these prefs have been, you know, a large innovation in, you know, institutional Bitcoin adoption, as have the ETFs, as have several products. Um, you know, we're seeing a lot of buildout on on the lending side, credit, debt instruments. When you look at the next wave of institutional Bitcoin adoption, though, um, you know, where where do you see the biggest opportunity? >> I think it's with larger pensions in in larger endowments. Um, obviously, you know, the Harvard endowment and there's been several big names that have already adopted it, but you know, as we go through market cycles and the Lindy effect kicks in, I think we're going to see larger institutions adopting Bitcoin, we're going to see so uh, you know, other nations and sovereign states playing with the idea, experimenting with it, and getting comfortable. And this is this is a this is a narrative that's going to play out over decades, right? We need to keep that perspective when thinking about it. It's not months or days, it's decades. So, if you can keep the long-term perspective, then you're going to see um a lot of interesting things happen. When you're evaluating your cold storage setup, you shouldn't be looking for a company to tell you their product is bulletproof. You want to be able to see how it works, know that other people can inspect it and understand how they handle issues when they come up. That transparency is why we're big fans of BitKey. Bitkey is open- source, which means independent researchers can inspect and test its software. Bit Key also maintains a public security updates page. When a confirmed bug has been fixed and is safe to disclose, BitKey explains what happened, the potential customer impact, the [music] fix, and whether customers need to take action. That kind of transparency matters when you're choosing how to protect your Bitcoin. Security isn't a promise that nothing will ever happen. It's the work a company does before, during, and after an issue is found. Download BitKey today and use our promo code BMTV to get 10% off the second generation BitKey. This episode of BMTV is sponsored by BitKey. So, Bluecoins Fund just earned Bararklay Hedge top 10 recognition, ranking fourth for August net returns in the crypto category. What role did Bitcoin play in that performance and which decisions made the biggest difference for your fund? >> Oh, it it it played a a huge a huge role. Um, we are we are bullish Bitcoin. We were overweight Bitcoin uh going into August. uh my the my primer that I published on strategy and stretch back on July 1st was uh very supportive of it during you know the the fear and certainty and doubt that was going on at the end of June and beginning of July. You may recall that stretch sold off into the 70s at that point. Um but you know my primer was very supportive of that. We added it to the portfolio and you know buying buying strategy below par um provided a a very rare opportunity to get exposure at at a very favorable price and that play a large part in in winning that award for the month of August. Now through that same lens that that you were assessing the market back in um you know July, August over the next 12 to 24 months uh you know what what are the biggest opportunities or risks that you see uh in in the Bitcoin market? >> The biggest opportunities are it's it's growth. Uh you know it's you've seen everyone's seen that rainbow chart. it's on that growth trajectory, especially now coming off the lows. The beginning of the bull market's always the best time to to invest and and to start allocating in. And there's huge opportunities at the beginning of a bull market. I think the the biggest risks are this, as I mentioned before, the the sizing, right? People don't think about that enough that you need to make sure you have a size that is going to on one hand help deliver the returns that you're looking for and the diversification you're looking for, but also it's small enough that you can survive a 50 to 60% draw down because they do happen every few years. And if you size it right, you can you can take that volatility and turn it into profit. Mike Tridle, founder and CIO of Bluecoin Capital. Thanks so much for joining us today. >> The pleasure was mine.