What happens when a former Goldman credit analyst tells you the market is wrong about a Bitcoin-backed preferred stock by 13%? You listen — not because he’s ex-Goldman, but because his model reveals something deeper about how traditional finance misreads the crypto community’s trust thesis.
Khing Oei, a credit veteran who once priced risk for one of Wall Street’s most aggressive desks, recently argued that MicroStrategy’s STRCPreferred Stock is trading at $85.29 when its fair value is $96.30. That’s a 13% gap. The market, he says, is pricing in 17 years of dividend payments, while the company has the capacity to pay for 29 years even if Bitcoin never grows. The disconnect isn’t technical — it’s emotional.
Let me give you the context. STRCOf is a perpetual preferred stock issued by MicroStrategy (now called Strategy), paying a fixed 12% dividend with a par value of $100. It has no maturity date. The company holds 843,775 Bitcoin and nearly $3 billion in cash. According to Oei’s discounted cash flow model, discounting future dividends at 12% yields $96.30. But the market says $85. That means investors are demanding a 14% yield — effectively betting that Strategy will stop paying dividends within 17 years, not 29.
Here’s where my own experience kicks in. In 2017, I watched 15 friends lose their life savings in a project called MyToken. The code was clean, but the psychology was predatory. That taught me a lesson: blockchain adoption is a trust crisis, not a technical one. Oei’s model is mathematically sound, but it assumes markets are rational. They aren’t. The 13% discount isn’t about math — it’s about fear that Michael Saylor’s leverage play might blow up, or that Bitcoin’s narrative will collapse. Trust is the only protocol that matters.
Oei’s core insight is compelling. He points out that the market is miscomputing the dividend yield. Using the current price ($85) and a 12% annual dividend per share ($12), naive observers calculate 14%. But that’s wrong. Preferred stocks are perpetual — you can’t just divide the coupon by price because you’re ignoring the fact that the $100 par value may never be redeemed. Oei instead models the cash flow as a stream of dividends over the company’s available capital. Using Strategy’s $50.2 billion in excess assets (after accounting for senior debt and other claims) and the $10.5 billion in aggregate preferred stock liquidation preference, he calculates that even with zero Bitcoin growth, the company can pay for 29 years. With a 3.4% annual Bitcoin appreciation, it goes on forever.
But here’s where I push back. Oei’s model is a DCF, and DCFs are only as good as their assumptions. The 12% discount rate? That’s an arbitrary choice. If you raise it to 15%, the fair value drops below $80. More importantly, the model assumes the company will never change its dividend policy. But Strategy’s board can suspend dividends at any time — and they likely would if Bitcoin price crashed to $20,000. That’s not a technical risk; it’s a governance risk. Code is law, but people are the context.
During DeFi Summer 2020, I co-founded Ethos Circle, a community that survived the October 2020 attacks by focusing on transparent communication and peer support. I saw that market panic is often a failure of narrative, not fundamentals. The same dynamic applies here. The market’s 13% discount is a vote of no confidence in Bitcoin’s long-term story. It’s not about cash flows — it’s about whether you believe the network effect of digital gold holds. Oei’s analysis is correct if you accept that Bitcoin is a reliable store of value. But if you believe, like Peter Schiff, that Bitcoin will eventually collapse, then $85 may be too high.
The contrarian angle is this: The mispricing may persist because crypto markets are driven by narrative, not DCF. Even if Oei is right, the discount won’t close until a catalyst occurs — either Bitcoin breaks above $80,000 (where Oei’s model says STRC returns to par) or Strategy announces a buyback. In the meantime, the 12% dividend acts as a carry trade for patient investors. But patience is rare in a sideways market. I’ve seen this play out in ICOs where “fundamentals” took years to matter. Community over coin, always.
Still, I see a deeper signal. Oei’s involvement — a former Goldman credit specialist publicly arguing for a Bitcoin-backed preferred stock — shows that traditional finance is starting to treat Bitcoin not as a speculative asset, but as a collateral base. That’s a paradigm shift. If institutions begin pricing Bitcoin-linked credit instruments with the same rigor they apply to corporate bonds, the entire crypto risk landscape changes. It’s no longer about HODL and hope; it’s about actuarial tables and yield curves.
Here’s what I take away from this: The 13% mispricing is a mirror reflecting Wall Street’s cold models against crypto’s warm community. Oei’s math is clean, but it misses the human element. The real question is whether Strategy’s Bitcoin treasury can sustain the emotional confidence of the market. In my 21 years observing this industry, I’ve learned that the best hedge against volatility is a community that believes in the mission. MicroStrategy has that — Saylor’s fan base is almost cult-like. That social layer is something no DCF can capture.
So you can buy STRC at $85, collect 12% dividends, and wait for the model to converge. Or you can watch, learn, and ask yourself: How much trust do I have in Bitcoin’s story? The answer will determine whether the discount closes or widens. Community over coin, always.