Strategy, formerly known as MicroStrategy, has taken a notable pause in its Bitcoin acquisition spree. The company, widely known for its massive corporate Bitcoin holdings, has not purchased any Bitcoin since June 22. On that date, it acquired just 520 BTC for approximately $35 million. Since then, the firm has shifted its immediate focus from accumulating more Bitcoin to strengthening its liquidity position.
During the week ending July 5, Strategy sold 3,588 BTC in two separate transactions. It first sold 1,363 BTC for roughly $80.8 million on June 30, followed by another 2,225 BTC for $135.2 million. These sales generated about $216 million in total, reducing the company’s total holdings to 843,775 BTC. The company stated that the proceeds would help fund distributions on its preferred stock and replenish part of its U.S. dollar reserve used for those payments. Following the sales, the reserve stood at approximately $2.55 billion.
Building a $3 billion liquidity buffer
By Monday, Strategy increased its U.S. dollar reserve to about $3 billion. Based on annualized preferred-stock dividends and debt interest of roughly $1.76 billion, the reserve now provides approximately 20.4 months of coverage. This liquidity buffer should give the company enough flexibility to navigate an extended Bitcoin downturn without being forced to sell significant amounts of Bitcoin at lower prices or raise capital under unfavorable conditions.
The move seems prudent, I think, especially given the cyclical nature of Bitcoin markets. If Bitcoin follows its historical four-year cycle, a cyclical low could arrive later this year, potentially around October. But this remains a scenario rather than a reliable forecast. Nobody really knows how long the bear market will last.
Part of a broader capital management strategy
Expanding the USD reserve is also part of Strategy’s Bitcoin monetization and capital-management framework. One objective is to reinforce the perceived creditworthiness of its perpetual preferred securities, particularly Stretch (STRC). By showing that cash distributions can continue during periods of Bitcoin weakness, the company hopes to maintain investor confidence. Strategy can also sell up to $1.25 billion worth of Bitcoin to fund dividend payments if needed.
STRC currently trades at around $87, down about 0.5% on Monday. Still, it has recovered from a late-June low near $70. Its continued discount to the $100 stated value suggests investors still require a higher yield to compensate for Bitcoin-related and liquidity risks. Meanwhile, MSTR’s multiple to net asset value (mNAV) on an enterprise basis is approximately 1.02, meaning the shares are trading at only a slight premium to the company’s net assets. So, the larger cash reserve gives Strategy more flexibility if the bear market persists and access to accretive equity financing remains limited.
