Saylor’s Strategy Announces It May Sell $1.25B Bitcoin

Almost a month after Michael Saylor’s Strategy helped push bitcoin down about 20% in a week by selling just 32 bitcoins for $2.5 million, the company announced it may sell far more aggressively.

In an 8-K filing with the U.S. Securities and Exchange Commission, Strategy on June 29 announced its Digital Credit Capital Framework, allowing it to sell as much as $1.25 billion worth of bitcoin to build its cash reserve, pay dividends, and fund stock buybacks.

Despite that, Strategy plans to maintain its long-term strategy of aggressively building its bitcoin treasury, currently at 847,363 BTC.

While the sale of 32 bitcoins represented just 0.004% of its holdings, the shock of Strategy’s sale after a long-held strategy of buying weekly at any price proved too much for the market to bear. Strategy’s purchases have propped up the market after several months of record-setting outflows from Bitcoin ETFs, representing institutional sales.

More broadly, institutional buying by bitcoin treasury firms like Strategy and ETFs has been the main support of bitcoin’s price for some time now.

“Strategy remains committed to bitcoin as its primary treasury reserve asset,” said Michael Saylor, founder and executive chairman of Strategy, in a statement. “At the same time, Digital Credit requires liquidity, discipline, and active capital management. This framework is designed to strengthen credit quality and enable the company to reduce expected preferred stock dividend payments when accretive.”

He added that Strategy would maintain its “commitment to long-term Bitcoin exposure.”

Saylor has long been the strongest and loudest of bitcoin bulls, adding to his company’s holdings almost every week for years. Strategy did not buy any bitcoin last week.

The news of Strategy’s new plans did not shock the market as its first sale did. Bitcoin was up 1.3% as of press time, but down 6.4% on the week, trading below $60,000. Strategy’s STRC shares were up 9.5%.

Strategy’s stock is down almost 80% over the past year. On June 26, its mNAV, a metric comparing the company’s overall market value with the value of its bitcoin holdings, dropped below parity, emphasizing the need to control its stock price more aggressively.

Strategy has traditionally relied on the sale of common and preferred shares to fund its bitcoin purchases, which are often north of $1 billion on a weekly basis.

Still, it remains to be seen how any more sales of Strategy’s bitcoin holdings will impact the price of BTC. It may be that the initial shock of Saylor’s sale in early June will not be repeated if and when Strategy sells more bitcoins. Or it might.