Strategy holds its ground: Strategy confirms its bitcoin course amid investigation and market pressure
Michael Saylor has stepped into the public eye for the first time in a while to confirm the steadfastness of his company's strategy. On June 26, he wrote on X that Strategy remains committed to Bitcoin. This statement came amid two alarming signals: a legal investigation into securities and growing pressure on the company's capital structure.
Notably, Saylor's post avoided mentioning the class-action lawsuit from investors and the collapse in the value of Strategy's preferred shares. Instead, he emphasized discipline in capital management. This is a direct signal to shareholders and creditors: the company intends to stick to its original plan despite the turbulence.
The numbers are on Saylor's side, but the market demands more
Strategy holds 847,363 Bitcoin on its balance sheet, representing over 4% of the total supply that will ever be issued. The average purchase price is around $75,500 per coin, significantly higher than the current price. This gap has substantially reduced the premium on MSTR shares, which investors paid for leveraged indirect exposure to Bitcoin.
The majority of the Bitcoin was purchased through several issuances of preferred shares traded on the exchange. These securities are now under pressure due to the weakening BTC price and declining market confidence in the dividend model.
Market pressure tests Strategy's resolve
The day before Saylor's statement, Peter Schiff once again criticized the weak performance of Strategy's stock. According to him, MSTR shares have fallen 84% from their all-time high, while STRC preferred shares have dropped 25% below par value, with their yield reaching 15.3%. Saylor's post appears to be an indirect response to this criticism, though he did not address it directly.
Questions about the long-term sustainability of STRC are becoming increasingly pressing. Dividend payments on these securities cost approximately $1.2 billion per year, while the company recently disclosed only $1.4 billion in cash reserves—enough to last about a year under current conditions.
My analysis: Saylor is betting that Bitcoin will recover to levels above $75,000 before the company's cash reserves run out. This is a risky but not illogical move. However, if the Rosen Law Firm's legal investigation uncovers violations in five securities issuances, the company will face not only market but also regulatory pressure, which could call the entire financing model into question. The next few months will be decisive for Strategy.