The Inverse of the Private Credit Trade Is Now Listed and Liquid

Two pillars of the recent income boom are weakening, with cash yields low or falling across most of the world, and private credit, once marketed as a source of steady, uncorrelated return, increasingly gating redemptions. In our view there is an instrument that manufactures comparable yield with the opposite liquidity profile, continuously priced rather than periodically marked, and it is already listed. Bitcoin-backed perpetual preferreds, the most visible being Strategy's STRC and Strive's SATA, pay between 11% and 13%, trade on a public exchange and reprice continuously through the session. We read their coupon not as a single yield but as four premia, two structural and two that fade as the market matures, and the allocator able to deconstruct it is paid for the parts others cannot value.

Private credit's appeal was always its illiquidity, a premium investors accepted while markets rose and redemptions were scarce; as liquidity tightens in 2026, that appeal is diminishing. Across non-traded credit vehicles in the first quarter, per Robert A. Stanger & Co, investors requested ~$13.9b of redemptions, sponsors met ~$7.4b and ~$6.5b went unmet. Apollo's flagship vehicle, by its own disclosures, honoured under half of requests against a 5% quarterly cap. Carlyle's chief executive, Harvey Schwartz, put it bluntly, conceding that the products should have been called "sometimes not liquid at all." The remedy the industry proposes is a future in which these assets trade continuously onchain, yet the infrastructure remains in its infancy.

A Bitcoin-backed preferred already delivers what that infrastructure promises, continuous pricing and a real secondary market, and because it trades on an exchange it cannot gate anyone. When it comes under pressure the stress arrives as a price an investor can sell into rather than a queue they are trapped in. This is where the inversion lies, since private credit reveals its volatility only at a quarterly mark while a listed preferred prices it continuously and in the open.

It sits between a bond and an equity, paying an income that looks fixed while never maturing, so the issuer need never return principal and the exit is the secondary market. Strategy’s STRC carries an 11.5% rate and has lately traded in the low $90s against $100 par, with a market value that Strategy says, and Bloomberg supports, makes it the largest single listed preferred at ~$9.3b. Strive’s SATA carries 13%, became the first US-listed security to pay a daily dividend on 16 June, and currently trades at par.

We see the 720 to 870 basis point spread over the risk-free rate as four distinct premia, bundled together and marketed as yield. The first is compensation for Bitcoin's volatility, since with little hard debt what threatens the credit is the asset's price path rather than the balance sheet. The second is value the holder surrenders rather than earns, since the investor is short a set of options the issuer owns, among them the right to cut a board-set dividend, to defer it and never to redeem. That is why, on Strategy's first-quarter earnings call, management put the effective cost of capital nearer 8.75% than the 11.5% headline, the difference moving from holder to issuer. The third and fourth premia are the ones that reward the work, because they fade as the product class is adopted. The former is an access premium that exists because the natural buyers are barred, the instrument unrated, most pension and insurance mandates unwilling to underwrite Bitcoin as collateral, and bank and insurance capital rules punitive where they permit the exposure at all. The latter is a complexity premium, because almost nobody can yet price these structures or the digital credit risk. Neither premium is permanent. As the market matures, ratings emerge and mandates evolve, the compensation for complexity and restricted access should steadily decline.

The framing does not depend on STRC stability. At present it plainly is not, having just printed a record low near $89, with the market openly testing it. The causes, though, are mechanical rather than existential. STRC holds its price near par by issuing fresh shares above $100, so below par that engine stops just when one would most want it running, while a recent hard-debt repayment has drawn down dividend cover. We would treat that as a lever rather than a cliff, since Bitcoin is liquid and the issuer has shown it will sell to meet obligations when the maths supports it. Selling into a deep, prolonged decline does thin the collateral cushion, but only in a severe drawdown. The clearest evidence is SATA holding par while STRC trades beneath it, not because Strive runs less leverage, it runs more, but because of structure and the timing of the cash claims.

Regulated capital's exclusion is what makes the access premium investable, since the deepest natural buyers of a credit covered several times over by its collateral are fenced out by capital treatment, not by judgement on the credit. With those buyers absent, pricing is set by a much smaller pool of unconstrained capital, so the yield reflects regulatory exclusion as much as underlying credit risk. That capital is the marginal buyer and price-setter today. These allocators are paid to be early, holding both the mandate and the resource to close the two gaps others cannot. Those premia narrow as a first investment-grade rating arrives, as rated and capital-friendly wrappers appear and as coverage builds.

The most serious objection is also the simplest, that this is in essence a leveraged exposure to Bitcoin wrapped in an income producing security. The coupon can be cut, the collateral can fall in value, and the holder may end up with an unrated perpetual trading below par. We would concede much of the criticism. This is a young, volatile and equity sensitive form of credit, not a conventional fixed income instrument, and should be assessed on those terms. Where we part company is on liquidity. A fall to $89 may hand the holder a loss, but not without an exit, a distinction that matters most when liquidity is scarce. The honest limit issuers leave out is that a listing guarantees a price and not depth, so in a genuine rush the bid can thin and the price gap, most likely when everything Bitcoin-linked sells at once, an argument about sizing rather than avoidance.

Two things would make us drop this framing. The first is the secondary market seizing under real stress, leaving holders unable to exit at any tolerable price; the whole claim rests on stress arriving as a price rather than a gate, and a market you cannot sell into is no better than the private credit it sets out to improve on. The second is the access and complexity premia proving permanent rather than transient, with no rating and no regulated bid ever arriving, in which case there was never a reward for being early, only a niche premium fairly priced from the start. Short of that, the private credit reckoning has an inverse, and unlike the fix that its own managers are still promising, this one is already trading.

About the Author

Article authored by Ben Harvey, Digital Assets Researcher, Keyrock