Analysts at CryptoQuant have assessed the updated capital management program of Strategy, calling it a significant step towards reducing liquidity risks. However, in their opinion, fundamental shortcomings in the approach to managing bitcoin reserves remain unresolved.
To recall: at the end of June, Strategy presented a five-step plan that included forming a dollar reserve exclusively for dividends and interest, increasing the dividend on STRC preferred shares to 12% per annum, a buyback of both preferred and common shares worth up to $1 billion, as well as a bitcoin monetization program worth up to $1.25 billion. The initiative also provided for more disciplined share issuance when trading near 1x mNAV.
The initiative emerged after analysts recommended the company suspend bitcoin purchases and restore the dollar reserve amid a sharp decline in dividend coverage. As data showed, Strategy responded promptly: from June 29 to July 5, the company sold approximately 3,588 BTC for about $216 million, and then raised $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 approximately 29 months. The bitcoin reserve remained at 843,775 BTC. However, share buybacks have not yet been conducted. Notably, after the program announcement and dividend increase, STRC shares recovered from a low of around $75 to approximately $85, though they still trade below the par value of $100.
Two unresolved issues
Despite clear progress, CryptoQuant's head of research Julio Moreno highlighted two critical gaps in the company's strategy.
First: the lack of a systematic model for timing bitcoin purchases. The rule for share issuance near the 1x mNAV mark regulates capital raising, but not its deployment. Without a clear model that accounts for market valuations, the company risks once again "buying local tops."
Second: the lack of a disciplined approach to selling in a rising market. The current monetization program is purely defensive in nature. It does not provide for partial realization or hedging at cycle peaks. According to Moreno, end-to-end sales discipline is the second half of active capital management, without which the turnaround remains incomplete.
My expert assessment: Strategy demonstrates a willingness to adapt and listen to the market, which is positive in itself. However, for an institutional investor holding nearly 850,000 BTC, passive management of such an asset without a clear entry and exit algorithm is an anachronism. Until the company implements a systematic approach to bitcoin trading, its strategy will remain vulnerable to the volatility it itself creates.