A Turning Point for Strategy Inc.’s Bitcoin Holdings
The change in Strategy Inc.’s approach is important in terms of ending the company’s cycle of issuing low-cost equity and debt to finance additional Bitcoin purchases. The said strategy was already showing signs of failure, with the company’s stock losing nearly 80% of its value over the past year. As the key valuation metric, mNAV, fell below 1.0, the company’s enterprise value was lagging behind the market value of its held Bitcoins.
Key Changes to Strategy Inc.'s Capital Allocation Model
According to an X post by Michael Saylor, Strategy Inc. has authorized the sale of up to $1.25 billion in Bitcoin, roughly 21,000 BTC, which corresponds to about 2.5% of its holdings at current prices. The company plans to use the proceeds to strengthen cash reserves, support the balance sheet, meet financial obligations, and fund share buybacks.
The board also approved two separate buyback programs totalling $1 billion: one for Class A common stock (MSTR) and one for the company’s preferred shares (Digital Credit Securities).
Another policy recently adopted by Strategy Inc. requires the company to maintain cash reserves equal to at least 12 months of expected preferred stock dividends and interest payments.
To support investor confidence and improve the attractiveness of its preferred securities, Strategy increased the annual dividend rate on its STRC preferred shares from 11% to 12%, effective July 1, 2026.
A New Playbook for a Changing Bitcoin Market
For years, Strategy Inc. has served as one of the largest sources of Bitcoin demand. The company has used repeated equity and debt offerings to increase its BTC assets, and enhance the upward price momentum during bull markets. However, with Bitcoin trading near $60,000, which is well below the company’s average purchase price of $75,651, Strategy Inc. is now faced with billions of dollars of unrealized losses.
The company’s most recent strategy change can be summarized as follows:
- Previous Bull Market Model: Issue shares at a premium → Buy Bitcoin → Stock price rises → Repeat
- New Bear Market Strategy: Valuation premium disappears → Sell Bitcoin → Fund share buybacks and strengthen liquidity → Support the stock price
Most crypto analysts consider the company’s strategic shift to be a response to the weaker market performance, and not necessarily a change in Strategy Inc.’s overall approach to Bitcoin. Although the move breaks Michael Saylor’s long-term narrative of “Never sell your Bitcoin,” analysts think that the company will become better positioned to withstand prolonged price declines and reduce risk for investors by managing its capital more actively.
Strategy Inc. is building a financial cushion in two ways: slowing down its aggressive Bitcoin accumulation, and adopting a new policy that requires enough cash to cover 12 months of preferred stock dividends and interest payments. This will allow the company to significantly extend its liquidity, especially combined with its current cash reserves and the authorization to sell up to $1.25 billion of Bitcoin if needed.
From Buy-and-Hold to Active Capital Allocation
The adoption of the Digital Credit Capital Framework signals that Strategy Inc. will no longer rely solely on passively accumulating Bitcoin. As investor interests are shifting towards alternative cryptocurrencies, companies with large BTC treasures, such as Strategy Inc., find themselves in a position where they are required to operate with a more conventional capital allocation and risk management model.
Strategy Inc. is now treating its Bitcoin holdings as a flexible corporate funding tool rather than an untouchable reserve. The success of the strategy will depend on how it is executed. If management can sell Bitcoin selectively to repurchase discounted shares, strengthen its balance sheet, and maintain liquidity without significant market disruption, the company can preserve its position as the leading publicly traded vehicle for institutional Bitcoin investments.
