The new capital management program of Strategy is undoubtedly a step in the right direction, especially in terms of reducing liquidity risks. However, as my calculations and data from colleagues at CryptoQuant show, this is only a half-measure. The fundamental problem of lacking a clear, systematic strategy for entering and exiting bitcoin remains unresolved.
Let me remind you that the plan was presented at the end of June and consisted of five key points: creating a dollar reserve exclusively for payments on preferred shares and debts, increasing the STRC dividend to 12% per annum, repurchasing preferred and common shares worth up to $1 billion each, and a bitcoin monetization program with a sales limit of $1.25 billion.
Apparently, the first point has been successfully executed. From June 29 to July 5, the company sold approximately 3,588 BTC for about $216 million, and then raised another $466.7 million through the sale of MSTR shares. As a result, the dollar reserve grew from $1.44 billion to $3 billion, and dividend coverage doubled from 14 to 29 months. The bitcoin reserve remained at 843,775 BTC. However, share buybacks have not yet been conducted.
Two unresolved issues threatening the entire turnaround
Lead analyst at CryptoQuant, Julio Moreno, rightly notes that the company has yet to decide on two critical aspects. First, there is no systematic timing model for bitcoin purchases. The share issuance rule at the 1x mNAV mark regulates capital raising but not its deployment. Without a clear algorithm that takes market valuations into account, the company risks again "buying local tops," as we have seen in the past.
Second, and in my view even more importantly, the monetization program is purely defensive in nature. It does not provide mechanisms for partial profit-taking or hedging at the peaks of a bull cycle. A sales strategy "in a rising market" is the second half of active capital management, and its absence makes the current turnaround incomplete.
It is worth noting that STRC shares, after the program announcement, recovered from a low of around $75 to approximately $85, but are still trading significantly below their par value of $100. This suggests that the market is not yet fully convinced of the new strategy's effectiveness.
My expert opinion: Until Strategy implements a disciplined approach to both buying and selling bitcoin, its corporate strategy will remain vulnerable. The market is waiting not just for defensive measures, but for proactive management that allows capitalizing on the volatility of the leading cryptocurrency, rather than simply weathering it.