Strategy holds course on bitcoin despite investigation and pressure
Michael Saylor has broken his silence for the first time in a long while. On June 26, he publicly stated that the company Strategy remains committed to its Bitcoin strategy. This signal came amid several threats: a legal investigation by Rosen Law Firm and growing pressure on the company's capital structure.
Notably, in his post, Saylor avoided mentioning the investigation itself and the class-action lawsuit from investors. Instead, he emphasized "market volatility as a test" and highlighted Strategy's commitment to creating long-term value through high credit quality. This is a classic move by an experienced captain who, during a storm, tells the crew not about the leak but about the course.
Numbers That Speak Louder Than Words
Strategy holds 847,363 Bitcoin on its balance sheet, accounting for over 4% of the total circulating supply. The average purchase price is around $75,500 per coin, significantly higher than current market quotes. This gap has already led to a compression of the MSTR stock premium that investors paid for leveraged indirect exposure to Bitcoin.
But the main headache right now is the preferred STRC securities. Their yield has surged to 15.3%, and the securities themselves have lost 25% of their face value. Peter Schiff, a well-known Bitcoin critic, did not miss the chance to point out that MSTR shares have fallen 84% from their all-time high. Although Saylor did not directly respond to Schiff, his post appears as an indirect rebuttal in this debate.
Financial Stability Under Question
Dividend payments on the preferred securities cost Strategy approximately $1.2 billion per year. Meanwhile, the company has disclosed only $1.4 billion in cash reserves. This would last about a year under current conditions. The question of STRC's long-term sustainability is becoming increasingly acute, especially amid Bitcoin's weakening price and declining market confidence in the dividend model.
Whether Saylor can restore investor confidence or the investigation escalates to a new legal level will determine Strategy's fate in the coming months. Personally, I believe the current risk configuration resembles the situation in 2022, but with one key difference: back then, the company had a safety margin in Bitcoin's price, whereas now that margin is nearly exhausted. The market will closely watch every next move by Saylor.