Strategy CEO Phong Le said part of the reason for establishing a $1.44 billion USD reserve was to alleviate investor concerns over the company’s health amid a Bitcoin slump.
“We’re very much are a part of the crypto ecosystem and Bitcoin ecosystem. Which is why we decided a couple of weeks ago to start raising capital and putting US dollars on our balance sheet to get rid of this FUD,” said Le during CNBC’s Power Lunch on Friday.
On Monday, Strategy announced the $1.44 billion US dollar reserve, funded through a stock sale. The reserve is intended to maintain an amount sufficient to cover at least 12 months of dividends, and will eventually expand to cover a runway of 24 months, the firm said.
Strategy’s Phong Le says there was dividend ‘FUD’
The new raise came amid concerns over whether Strategy could continue to service its debts and dividend payment obligations should the stock price fall too far.
“And it’s really this FUD,” Le said on Friday.
“We weren’t going to have an issue to be able to pay our dividends, and we weren’t likely going to have to tap into selling our Bitcoin, but… There was FUD that was put out there that we wouldn’t be able to meet our dividend obligations, which causes people to pile into a short Bitcoin bet,” he said.
“We just addressed that in eight and a half days we raised $1.44 billion — 21 months’ worth of dividend obligations, and we did it 1) to address the FUD, but 2) to show people that we’re still able to raise money in a Bitcoin downcycle.”
Related: Cantor slashes Strategy target by 60%, tells clients forced-sale fears are overblown
Last week, Le said that Strategy would only consider selling Bitcoin if its stock fell below net asset value and the company no longer had access to fresh capital.
The company also launched a “BTC Credit” dashboard, which claims it currently has enough assets to service dividends for more than 70 years.
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Source: https://cointelegraph.com/news/strategy-raised-1-44-billion-beat-fud-amid-bitcoin-down-cycle?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
