CryptoQuant analysts have recognized the new capital management program of Strategy as a step in the right direction to reduce liquidity risks. However, in their view, the updated strategy still has critical gaps that prevent it from being called a complete turnaround.
Five Steps to Stability
As a reminder, at the end of June, Strategy presented a plan with five key points. These include forming a dollar reserve exclusively for paying dividends on preferred shares and interest on debt with a minimum coverage of 12 months, increasing the dividend on STRC to 12% per annum with monthly review, as well as share buyback programs for both preferred and common shares worth up to $1 billion each. Separately, a bitcoin monetization program of up to $1.25 billion was announced to replenish the reserve and finance buybacks.
CryptoQuant's lead researcher Julio Moreno notes that the first point of the plan has already been largely fulfilled. 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 29 months. Meanwhile, the bitcoin reserve remained at 843,775 BTC. No share buybacks have been conducted yet.
Two Unresolved Issues
Despite the obvious progress, Moreno highlights two key issues that remain unaddressed. First, Strategy has not defined a systematic timing model for resuming bitcoin purchases. The current share issuance rule at the 1x mNAV mark regulates capital raising but not its deployment. Without a clear valuation system, the company risks buying again at local peaks.
Second, the program lacks a disciplined approach to selling in a rising market. The current monetization program is purely defensive and does not provide for partial realization or hedging at cycle peaks. According to Moreno, such a comprehensive sales discipline is the second half of active capital management, without which the turnaround remains incomplete.
Market Reaction and Prospects
Interestingly, after the launch of the program and the dividend increase, STRC shares recovered from a low of around $75 to approximately $85, but they are still trading noticeably below the par value of $100. This suggests that the market is not yet fully confident in the sustainability of the new strategy.
My opinion: Until Strategy resolves the fundamental dilemma between aggressive bitcoin accumulation and financial discipline, the company will remain a hostage to crypto market volatility. Creating clear rules for buying and selling is not just a recommendation but a necessary condition for the long-term sustainability of the business model.