Nov 21, 2025

Subject: Sneaker Derivatives, BDCs, NAV Loans, and Crypto Treasury Insights

Hello,

Here are some key highlights and detailed insights from the latest financial developments and innovations:

1. Sneaker Derivatives and Event Contracts:
2. Futures contracts traditionally allow locking in the price of commodities like wheat.
3. Now, platforms like Kalshi and StockX are creating event contracts tied to the resale prices of collectible sneakers and trading cards (e.g., Labubu and Pokémon cards).
4. Instead of standard futures contracts with settled delivery, these are binary yes/no bets on whether an item will surpass a price threshold after release day.
5. This new development marks a fascinating step toward financializing collectibles.

6. Event contracts have easier collateralization and lower liabilities compared to traditional futures.

7. Business Development Companies (BDCs) and Liquidity:

8. Private credit funds often provide illiquid investments with long-term loans.
9. Publicly traded BDCs allow investors to buy and sell stock representing these loans, but prices can discount true asset values.
10. Blue Owl Capital runs both a publicly traded BDC (OBDC) and a private non-traded BDC (OBDC II).

11. A recent attempt to merge these two funds to improve liquidity was called off due to potential discounted losses amid current market conditions. This highlights the challenges of balancing liquidity and value preservation.

12. NAV (Net Asset Value) Loans in Private Credit:

13. Major alternative asset managers like Apollo, KKR, and Carlyle utilize NAV loans, using fund investments as collateral.
14. These loans provide liquidity to buyout funds for portfolio company support, fund seeding, and investor payouts.
15. NAV loans tend to have investment-grade credit ratings due to overcollateralization and diversification.

16. However, potential credit risk exists if private equity portfolios underperform, emphasizing cautious evaluation.

17. Crypto Treasury Companies and Market Challenges:

18. Strategy Inc. (formerly MicroStrategy) pioneered raising capital to buy Bitcoin, initially benefiting from stock premiums and relatively cheap borrowing.
19. Recently, Strategy’s market valuation relative to Bitcoin holdings has collapsed from roughly 2.5x to about 1.2x.
20. The company sold preferred shares priced under par with high coupon rates, amid Bitcoin price decline, diminishing the financial leverage of the crypto treasury model.
21. The crypto market is undergoing a prolonged aftershock from October’s liquidation event rather than a collapse, with volatility persisting across major tokens.

This newsletter provides a deep dive into how traditional and emerging finance intersect with technology, collectibles, and alternative assets, highlighting risks, structural changes, and market behaviors.

Thank you for reading. For more detailed analysis or specific questions, feel free to reach out.

Best regards,

[Your Name/Your Team]

Stay Well!