Strategy Offloads $216M in Bitcoin to Fund Preferred Dividends
On July 6, Michael Saylor’s company Strategy disclosed that it has sold off 3,588 BTC, which works out to approximately $216 million worth of Bitcoin. The transaction was conducted so that the company could make dividend payments for its Digital Credit preferred shares. This transaction was communicated via the filing of a Form 8-K as well as posting on Saylor’s X account, as per which the company changed its Bitcoin holdings to:
- 843,775 BTC
- $2.55 billion worth of cash
The timing was baffling as the day before, Saylor had shared the traditional “orange-dot” Bitcoin chart, which signifies that the company would buy Bitcoin.
From 33 Coins to 3,588 in Six Weeks
Strategy’s sale wasn’t the company’s first liquidation of Bitcoin. Back in May, Strategy was quick to note that selling just 33 Bitcoin (approximately $2.1 million) was statistically unimportant because it was done solely to fund a tax obligation. That said, this latest dump is nearly a hundred times that number.
Both sales come as the result of Strategy’s new “Digital Credit Capital Framework” passed at the end of June that explicitly allows the company to sell up to $1.25 billion in Bitcoin, specifically to satisfy dividend payments related to its STRC and STRK preferred stocks.
Simply put
Strategy has bought debt against Bitcoin, which, when the value of the cryptocurrency dips, means more coins need to be sold.
Bitcoin Shrugged Off the Sale
Despite the size of the dump, Bitcoin held its price. Key market signals after the sale:
- BTC Support at $59,000 Holds
- Price found a recovery above its 20 day Bollinger Band around $63,800
- Inflows into exchanges slid to the lowest in almost two weeks, indicating holders weren’t in a rush to sell with Strategy
Price action was one thing, sentiment was another. The event’s coverage noted social-data tracking that indicated:
- ~68% bearish commentary
- ~29% bullish commentary
Analysts pointed to $65,500 as the next resistance level to watch, with a break above that potentially opening the way towards $69,000, while a slide back under $59,000 would undermine the recovery narrative.
STRC Secures Binance Listing
Meanwhile, the company saw its shares of perpetual preferred stock, STRC, traded on Binance Stocks. The exchange listed the security for the first time on the same day, joining other tokenized equities offered via the platform for around-the-clock trading.
In addition, the company raised its yearly dividend for STRC holders by 12% to put pressure on the price, which climbed higher over the past week despite the reduction in Bitcoin holdings. The shares of MSTR rose in the pre-market after the news was released.
A System Rather Than a One-Off
Several expert publications described the sale as proof that Strategy had successfully started a three-way cycle:
- Sell Bitcoin to fund dividends
- Obtain additional funds by issuing shares.
- Purchase more Bitcoin later
According to the outlet, Strategy’s average purchase price ranges from $66,000 to $75,000 per coin, depending on the data source. This means that, at current prices around $63,000, the firm is sitting on a sizable unrealized loss, which increases the size of each dividend-driven sale.
At least one significant bank has already expressed concern about this dynamic, claiming in June that the new framework introduces two-way risk to a market used to Strategy acting just as a buyer.
It’s unclear if the July sale will be the beginning of a trend that could happen again or if it was a one-off response to an immediate cash need, but it will likely be determined by how Bitcoin’s price fares in the lead-up to the company’s next dividend cycle.