Strategy is selling bitcoin again: emergency support for STRC or a forced measure?
Strategy retains 840,447 BTC — the largest corporate stockpile of the leading cryptocurrency in the world. However, the current market conditions are forcing the company to sell coins below their average cost basis to keep its securities' prices afloat.
Details of the latest deal
The sales were carried out between August 3 and 9, with an average selling price of $64,262 per coin. The transaction was disclosed in an 8-K filing with the U.S. Securities and Exchange Commission (SEC). The proceeds went toward repurchasing 1,152,020 STRC shares — perpetual preferred securities with a floating rate that Strategy issued to finance its bitcoin investments. Their dividend is reviewed monthly and currently stands at 12% annually, which should keep the price near the $100 par value.
The market, however, is not rushing to believe in the effectiveness of this scheme. On Friday, STRC closed at $95.01 (+1.16% for the day), but over the past year, the security has dipped to $71.25. In premarket trading on Monday, the share ticked up slightly to $95.55.
Dollar reserve grows, but bitcoin appetite fades
In parallel, Strategy sold 6,585,682 common MSTR shares through an at-the-market (ATM) program, raising $653.1 million. Of that amount, $650 million was directed into the dollar reserve, which now stands at $4.65 billion. CEO Michael Saylor described this week as a "credit operation" rather than a retreat from bitcoin.
Nearly all of the remaining quota for purchasing preferred shares has been used up on the buyback — only $785.2 million is now available. For comparison, the limit on issuing new MSTR shares remains virtually untouched: about $22 billion is still available.
On Friday, MSTR closed at $100.01 (+3.26%), but in premarket trading on Monday, the stock slipped slightly by 0.21%.
Strategy or necessity?
The company's current actions are directly tied to the Digital Credit Capital Framework plan approved in late June. It permits limited bitcoin sales to fund dividends on preferred shares, buybacks, and replenishing cash reserves when issuing new shares looks less advantageous.
Since the plan's launch, Strategy has paused bitcoin purchases and has been building up cash reserves almost weekly. The company claims this reserve will be enough to cover dividends across its entire line of preferred securities for several years ahead. The recovery measures have partially worked: STRC has regained about 33% from its lows. However, even the 12% dividend and $109 million in buybacks have not yet brought the price back to par.
On Monday, bitcoin was trading around $65,019, up 1.5% over the day. Nevertheless, the market is still roughly 13% below Strategy's average purchase price.
New reports will clarify whether the current pace of sales continues or the company returns to accumulation. In any case, shareholders face a tough choice: their bitcoin proxy now functions as a treasury with active management in the interests of its own capital structure.
My analysis: Selling bitcoin below cost is an unprecedented move for Strategy that undermines confidence in the "hold forever" model. Saylor appears to be balancing between preserving the bitcoin reserve and salvaging the reputation of his preferred securities, but such a policy could deter institutional investors who viewed MSTR as a pure bitcoin proxy.