Will Sell Coins Despite a $55 Million Loss; Strategy's Faith Hits Interest Payment Date

Written by: TechFlow

On July 6, Michael Saylor posted a tweet on X completely contrary to his persona of the past six years: Strategy has sold 3,588 BTC, cashing out approximately $216 million to pay dividends on digital credit securities. As of July 5, the company still holds 843,775 BTC and $2.55 billion in cash reserves.

This transaction occurred between June 29 and July 5, at an average price of $60,197. Strategy's previous average holding cost was $75,651. In other words, this was a sale at a loss of over $15,000 per coin, with a total realized loss of approximately $55.45 million. Saylor, who once said "Never sell coins" and "Bitcoin is an exit, not an entry," chose to sell at a loss as the coin price approached cycle lows.

To understand this, two questions need to be answered: Why did he have to sell? How long will this coin selling continue?

From 32 Coins to 3,588 Coins, It Took Only 35 Days

Let's rewind to the end of May.

From May 26 to 31, Strategy sold 32 BTC, totaling approximately $2.5 million, marking the company's first sale since 2022. 32 coins accounted for 0.004% of total holdings, financially insignificant. The market generally interpreted this as a "desensitization test": Saylor was testing how much pain the market would feel when coin selling occurred.

The answer was indeed painful. Combined with macro pressure, Bitcoin briefly fell below $61,000 on June 5, hitting a new low since February at the time. Strategy's perpetual preferred stock STRC fell to a historical low of $73.77 during intraday trading on June 25, representing a discount of over 26% from the $100 par value; MSTR common stock also fell below $90 on the same day, retracing nearly 80% from its high, deeper than Bitcoin's approximately 50% retracement during the same period.

The real turning point came on June 30.

Strategy's Board of Directors approved a package plan: authorizing the sale of up to $1.25 billion worth of Bitcoin, with proceeds used only for repurchasing securities, paying dividend interest, or replenishing USD reserves; establishing a $2.55 billion USD reserve fund to cover 17.4 months of annual payable obligations; launching a $2 billion dual-track buyback plan; and increasing STRC's annual dividend rate to 12% starting July 1.

This announcement effectively turned "selling coins to pay interest" from a taboo into part of the company bylaws. Five days later, the sell order for 3,588 BTC was executed. From desensitization test to routine operation, Strategy took only 35 days.

Flywheel Reversal: According to Saylor's Own Formula, Selling Coins is the Optimal Solution

Strategy's growth engine over the past six years has been a premium-dependent flywheel: as long as MSTR's market cap was significantly higher than its Bitcoin net asset value (i.e., mNAV greater than 1), the company could issue additional stock to raise funds for buying coins, keeping Bitcoin per share from falling but rising, driving the stock price higher, and supporting the next round of issuance. In a bull market, this flywheel was so sharp that MSTR's trading volume once exceeded NVIDIA's.

During this year's Q1 earnings conference call, management set a threshold for this flywheel: 1.22x mNAV. If the premium is higher than 1.22x, issuing stock to buy coins is cost-effective; if it falls below 1.22x, issuing common stock is net harmful to existing shareholders, and selling Bitcoin to pay interest or buy back shares is instead a better choice to increase Bitcoin per share.

Now all three gears of the flywheel are jammed.

The first financing channel, STRC, was designed to anchor the price near the $100 par value by dynamically adjusting the dividend rate, allowing continuous fundraising at par value. When the secondary market allows buying the same STRC for just $75, no one will subscribe to new shares at $100; the preferred stock financing channel is effectively closed. Furthermore, the 90-day correlation coefficient between STRC and Bitcoin has risen to a historical high of around 0.70, and the stability income investors seek is also eroding.

The second channel, common stock ATM, dilutes conviction with every share issued when mNAV approaches the threshold.

The third channel, convertible bonds, has $8.2 billion outstanding that will mature sequentially starting from 2028; continuing to add debt will only compress future room for maneuver.

All three paths on the financing side are blocked, yet the bills on the expenditure side are rigid.

The five preferred stock series issued by Strategy (STRF, STRE, STRK, STRD, STRC) correspond to annual dividend and interest obligations of approximately $1.7 billion to $1.76 billion in total. Among them, STRC alone, based on an issuance size of approximately $10.5 billion and a 12% dividend rate, has annual expenditures exceeding $1.2 billion. Preferred stock dividends can be legally deferred, but once a payment is missed, the penalty interest rate and loss of credit reputation will directly destroy all future financing capabilities. For a company relying on capital market blood transfusions, this money is no different from debt interest.

So the true nature of this coin sale is: Within the rules set by Saylor himself, this is the rational solution, even the only solution, under current constraints. When the market was willing to give a premium, he securitized conviction and sold it to income investors; after the premium disappeared, the securitized conviction started collecting interest, and the interest can only be paid with Bitcoin.

The World's Largest Buyer Has Become a Seller with a Schedule

The subsequent impact can unfold along three lines.

For the Bitcoin market, this is a historic switch in the buy/sell order structure. Strategy holds approximately 840,000 BTC, accounting for 4% of total supply; over the past six years, it has been the most stable, price-insensitive marginal buyer in this market. Roughly calculated based on the current coin price of about $60,000, if the $1.76 billion annual obligation is fully covered by selling coins, it corresponds to selling pressure of approximately 29,000 BTC per year, averaging about 2,400 per month. This volume is not fatal relative to the average daily trading volume of spot ETFs; what is truly fatal is the expectation: the market now knows that at the end of every quarter and every month, there may be a price-insensitive sell order waiting there. The former faith anchor has become a hanging overhead schedule.

For the DAT (Digital Asset Treasury) sector, Strategy is the valuation anchor for all imitators. When the pioneer starts selling coins to pay interest, the rationality of the mNAV premium for dozens of companies using the same template to issue preferred stock and buy BTC or ETH must be re-examined. The credit spread of this sector will likely widen systematically.

For Strategy itself, the situation is not as desperate as emotional hype suggests. The $2.55 billion cash reserve can cover approximately 17 months of payable obligations, with debt concentrating maturity after 2028. Analyst stress tests show that even in extreme scenarios where the coin price halves and capital markets close, the main risk is continuous compression of Bitcoin per share, rather than an immediate liquidation spiral. The essential difference from a LUNA-style death spiral is: preferred stock dividends do not automatically trigger additional issuance, and holders have priority claim on the 840,000 BTC during liquidation. Strategy will not die suddenly, but it may fall into a state that consumes more conviction, where every month it must choose the lesser of two evils between "selling stock" and "selling coins."

There is only one breakthrough point: STRC returns near the $100 par value, the preferred stock financing channel reopens, and only then can the flywheel conditionally turn forward. The premise for STRC re-anchoring is most likely that the Bitcoin price stabilizes and rebounds first.

In other words, Strategy has turned its destiny into a circular argument: If the coin price is good, all models hold; if the coin price is bad, the model itself is putting pressure on the coin price.