EXECUTIVE SUMMARY

Since the outbreak of the U.S.–Iran conflict on February 27, Bitcoin has risen +7.4%, outperforming both traditional equities and gold. The S&P 500 has slipped −0.9%, while gold has dropped −12.1%. Meanwhile, two major regulatory and institutional developments are reshaping the crypto landscape: the SEC’s landmark clarification that most crypto assets are not securities, and a surge of institutional capital into Bitcoin ETFs—highlighted by Strategy’s $1 billion BTC purchase.

I. Wartime Market Update: Performance Since the Outbreak

Price Movement of BTC, Gold, S&P 500 (SPX) Since Outbreak of U.S./Israel–Iran War (Feb 27 = 0%). Gold price data is sourced from PAXG, a gold-backed ERC-20 token issued by Paxos that is redeemable 1:1 for physical gold and closely tracks the spot price of gold. PAXG is used as a proxy given its 24/7 on-chain pricing availability.

Performance Since Conflict Onset (Feb 27 Baseline)

Our view: Bitcoin’s resilience during the conflict has reinforced its positioning as a macro hedge asset. While gold—traditionally the go-to safe haven—has sold off sharply (down 12.1%), Bitcoin has gained over 7%, suggesting that institutional and retail investors alike are increasingly viewing BTC as a store of value during geopolitical uncertainty. The S&P 500’s near-flat performance reflects cautious equity positioning amid rising oil prices and inflation concerns tied to the conflict.

For Bursera’s portfolio, this environment validates our conviction in Bitcoin as a core holding. The divergence between BTC and gold is a theme we expect to continue as digital asset infrastructure matures and more institutional capital enters the space.

II. SEC Clarifies that the Majority of Crypto Assets are not “Securities.”

KEY SIGNAL

On March 17, 2026, the SEC and CFTC jointly issued an interpretive release representing the most significant regulatory development for digital assets in years. The release provides a coordinated federal framework for assessing when digital assets qualify as securities—and critically, when they do not.

What Happened

The SEC introduced a five-category token taxonomy that classifies crypto assets into digital commodities, digital collectibles, digital tools, stablecoins, and digital securities (tokenized securities). The interpretation confirms that digital commodities like Bitcoin, Ether, Solana, and XRP are generally not securities because their value derives from supply-and-demand dynamics and programmatic functionality—not from expectations of profit based on the managerial efforts of others.

The release also clarifies that common activities such as protocol mining, self-staking, wrapping non-security tokens, and airdrops without consideration generally fall outside the scope of federal securities laws. However, the SEC emphasizes that marketing, roadmaps, and public commitments from issuers can still create investment-contract expectations under the Howey test.

Why This Matters for Bursera and Crypto

Regulatory certainty: For years, the SEC’s enforcement-first approach created an overhang of legal risk across the entire crypto sector. By articulating clear categories and confirming that the major assets (BTC, ETH, SOL, XRP) are not securities, the SEC has removed a key source of uncertainty. This benefits any fund that holds or trades these assets.

Unlocking institutional flows: With the securities question settled for the largest crypto assets, institutional allocators who were previously sidelined by compliance concerns now have a clear path to enter the market. This is bullish for asset prices and for fund inflows across the sector.

Staking and DeFi clarity: The interpretation’s confirmation that protocol staking activities generally do not constitute securities transactions is directly relevant to Bursera’s staking operations and yield strategies. This provides greater confidence in the legal foundation of our staking revenue.

Coordinated SEC-CFTC oversight: The joint nature of the release signals that the regulatory turf wars between the SEC and CFTC are easing. A unified federal posture reduces the risk of conflicting enforcement actions and creates a more predictable operating environment for crypto funds.

III. Institutional Momentum: Bitcoin ETF Inflows & Strategy’s $1B Purchase

Record ETF Inflows Amid Geopolitical Tensions

U.S. spot Bitcoin ETFs recorded a $471 million net inflow on April 6, 2026, as Middle East geopolitical tensions drove investors toward Bitcoin as a hedge against traditional financial risks. BlackRock’s iShares Bitcoin Trust (IBIT) now manages approximately $54.5 billion in assets, underscoring sustained institutional demand for regulated Bitcoin exposure.

This inflow pattern reflects a structural shift: Bitcoin is no longer treated purely as a speculative asset. In times of geopolitical stress, institutional capital is actively flowing into Bitcoin ETFs alongside—and increasingly instead of—traditional safe havens like gold.

Strategy Acquires $1 Billion in Bitcoin

Michael Saylor’s Strategy (MSTR) purchased 13,927 BTC for approximately $1 billion at an average price of $71,902 per coin, according to an 8-K filing dated April 13, 2026. This marks Strategy’s fifth-largest single-week acquisition of the year. Total holdings now stand at 780,897 BTC—acquired for a cumulative $59.02 billion at an average cost basis of $75,577 per coin—placing the firm just behind BlackRock’s IBIT ETF (788,927 BTC) as the second-largest single-entity Bitcoin holder in the world

Funding & Remaining Firepower

The purchase was funded entirely through proceeds from Strategy’s at-the-market (ATM) offering of its Variable Rate Series A Perpetual Stretch Preferred Stock (STRC), with over 10 million shares sold between April 6–12 for $1.001 billion in net proceeds. Critically, Strategy retains substantial capacity for future acquisitions: approximately $21.6 billion remaining under the STRC program and $27.1 billion under its Class A common stock (MSTR) ATM program—nearly $49 billion in total dry powder.

Supply Absorption & Market Impact

The scale of Strategy’s buying has reached a level that materially affects Bitcoin’s supply dynamics. In March 2026 alone, Strategy accumulated 46,233 BTC—nearly three times the approximately 16,200 BTC produced by global miners during the same period. A single corporate buyer absorbing triple the new supply is unprecedented, and it creates significant upward price pressure over time, particularly if other institutions follow suit.

BTC Yield & Financial Engineering

Saylor announced a BTC Yield of 5.6% year-to-date for 2026, a metric that tracks the growth in Bitcoin per share held by MSTR shareholders. He also noted that Strategy’s breakeven annualized return requirement on Bitcoin is approximately 2.05%—the rate needed to cover preferred stock dividends indefinitely without issuing new MSTR common shares. Given Bitcoin’s historical average annual returns, this is a low bar, and it underscores the sustainability of Strategy’s capital structure as long as BTC maintains even modest long-term appreciation.

Key Risks to Monitor

Strategy’s average cost basis of $75,577 remains above the current Bitcoin price of approximately $71,000 (at the time of writing), leaving the firm with roughly $14.5 billion in unrealized losses. MSTR shares have declined approximately 76% from their November 2024 peak of $543, and TD Cowen recently cut their price target by 20% to $350. While Saylor has expressed confidence that Bitcoin bottomed near $60,000, a prolonged period of price stagnation below cost basis would pressure the preferred dividend coverage model.

Performance Implications

The convergence of ETF inflows and the strategy’s relentless accumulation reinforces the thesis at the core of Bursera’s investment strategy. Institutional adoption of Bitcoin is accelerating on two fronts: regulated passive vehicles (ETFs) are pulling in hundreds of millions per day, while corporate treasuries, led by Strategy, are absorbing multiples of new mining supply. Together, these forces are structurally tightening the supply of Bitcoin.

Regulatory clarity from the SEC (Section II above) is the catalyst that ties these trends together—by removing the securities overhang from major crypto assets, the SEC has given both ETF issuers and corporate treasuries a cleaner legal foundation for continued accumulation. As a crypto-native fund, Bursera is well-positioned to benefit from these tailwinds, which continue to drive asset appreciation and expand the addressable investor base for digital assets.