Crypto news

The largest public holder of Bitcoin, the company Strategy (formerly MicroStrategy), is entering a new phase of managing its assets. Its survival in a prolonged bear market now directly depends on its liquidity reserve, and the recovery of the MSTR stock premium depends on Bitcoin returning above the company's average purchase price. This is a key point that many investors overlook.

Strategy's model was long simple and effective: attract dollars through issuing common stock, convertible bonds, and preferred shares, then channel those funds into buying Bitcoin. As long as the BTC price rose and MSTR shares traded at a premium to asset value, the scheme worked flawlessly. But in a falling market, the premium shrinks, and fixed capital obligations continue to accumulate—the model begins to stall.

It is at this point that the company introduced a new program, the Digital Credit Capital Framework. This is not just a change of slogan from "only accumulate," but a full-fledged transition to active balance sheet management. The program is based on five key elements:

• Approval of a dollar reserve policy: the minimum must cover 12 months of payments on preferred shares and debt interest. Falling below this level requires board approval.
• Revision of the dividend policy for STRC preferred shares (with a floating rate): the rate has been increased to 12.00%. The goal is to keep STRC in the range of around $99-100, but the company has explicitly stated it is not obligated to raise the rate solely due to the share falling below this range.
• Approval of up to $1 billion in preferred share buybacks, primarily STRC.
• Approval of up to $1 billion in common stock buybacks.
• Permission to sell up to $1.25 billion worth of Bitcoin to establish and replenish the dollar reserve.

Selling Bitcoin is the most important and, at first glance, contradictory change. Strategy's previous investment legend was built on accumulating coins and a principled refusal to sell. The new policy allows management to consciously sell BTC when it protects the overall capital structure. This is not a panic sale, but a hedging tool.

The first application of the program was not long in coming. On July 6, Strategy reported that from June 29 to July 5, it sold 3,588 BTC for approximately $216 million. The proceeds were used to pay dividends on preferred shares and replenish the cash reserve. It is important to note that for a company whose brand is built on accumulating Bitcoin, the reversal itself caused alarm. However, the actual sale was a drop in the ocean compared to the daily Bitcoin trading volume of $200-300 billion—the market absorbed it without a noticeable impact on the BTC price.

Therefore, I see in what is happening not the beginning of a disorderly sell-off, but the first sensible step towards active balance sheet management.

Does Strategy Have Enough Margin of Safety to Last Through the Winter?

June was a tough month for Strategy. The Bitcoin price slid to $58,000, MSTR shares briefly fell below $82, and STRC—the paper the company tries to keep around $100—dropped below $75. Fears are largely linked to the USD Months of Dividend Coverage metric—the ratio of the dollar reserve to the monthly amount of payments on preferred shares. Over recent months, it has changed sharply: 21.0 months with a reserve of $1.44 billion as of December 1, 2025; about 30 months and $2.25 billion by February 1, 2026; and just 5.9 months with a reserve of about $871 million by the end of May.

By the beginning of July 2026, the reserve stands at $2.55 billion against $1.763 billion in annual obligations—coverage from cash alone has returned to 17.4 months. If the permitted sale of $1.25 billion in Bitcoin is added, total liquidity reaches approximately $3.8 billion, or 25.9 months. It makes sense to compare this margin of safety with the duration of the current crypto winter. The last three Bitcoin bear markets fit into similar frameworks: about 14 months and -85% in 2013-2015, about 12 months and -84% in 2017-2018, and 12 months and -77% in 2021-2022. The current cycle peaked around $126,000 in October 2025, and as of July 7, 2026, Bitcoin is trading around $63,000: a drawdown close to 50%, with about 9 months since the peak.

If this cycle repeats previous ones, the bottom will occur in the fourth quarter of 2026, i.e., in three to five months. My base scenario is a minimum in the range of $50-53,000, around Bitcoin's realized price (the aggregate on-chain cost basis of all coins in circulation)—the zone where bottoms of past cycles formed. This level is significantly below Strategy's average purchase price of $75,476, so at the market bottom, the company will be deeply in the red on its Bitcoin position.

Thus, looking only at dividend coverage, Strategy's reserve is sufficient for a historically normal remainder of the crypto winter. The company will survive another 3-5 months of the bear market comfortably.

Return to Cost Basis in the First Half of 2027 Will Revive the MSTR Premium

The Bitcoin bottom is not yet the MSTR bottom. With a minimum around $50-53,000, Strategy remains deeply in the red on coins purchased at an average of $75,000. The stock minimum usually forms later than Bitcoin's: the market needs proof that the recovery is sustainable—only then will the MSTR premium return, STRC stabilize, and the capital attraction mechanism work again. For this, Bitcoin must rise above Strategy's average purchase price of $75,500. As long as the price is below, each sale of coins for dividends locks in a loss, STRC remains sensitive to any news about coverage, and issuing shares near 1x mNAV is unattractive for shareholders—it barely increases the amount of BTC per share. Above this mark, the company's position turns positive, and the MSTR premium can become significant again. Without it, Strategy's historical engine does not work: issuing shares at a premium to asset value, buying more Bitcoin, and increasing BTC per share. A sustained move above cost basis would help restart this mechanism.

To return to $75,500, the price needs to rise by about 37% from $55,000, 45% from $52,000, or 51% from $50,000. After the previous two bottoms, the market covered such distances in about 60-69 days (November 2022) and 108 days (December 2018). This means the first return to cost basis falls within the period from the end of Q4 2026 to Q2 2027—that is, the first half of 2027.

The main conclusion: Strategy's survival depends on its liquidity reserve, and the MSTR premium depends on Bitcoin returning above the company's average purchase price. The bear market may end for BTC earlier than for MSTR. For the stock to finally find its bottom, investors will likely need to see Bitcoin above Strategy's position cost basis—and be convinced that this level is sustainable.

Disclaimer: The information provided here is not investment, financial, trading, or any other kind of advice and should not be construed as such. All materials are published for informational purposes only.