Strategy’s Bitcoin Sale Didn’t Go Towards USD Reserves? MSTR Stock In Pressure

Key Insights

• MSTR stock remains under pressure after VanEck warned about the recent $135 Bitcoin sale.
• According to Sigel, the full $1.25 billion Bitcoin sale authorization for USD reserve building remains available.
• Despite recent volatility, analysts remain constructive on MSTR stock future.

Strategy sold 3,588 Bitcoin for approximately $216 million under its treasury monetization program. The transaction reduced the company’s holdings while supporting obligations tied to its preferred securities.

The disclosure marked Strategy’s largest disclosed Bitcoin sale to date. It also showed how recurring preferred payouts increasingly influence the company’s treasury decisions.

Strategy Uses Bitcoin Sale for Preferred Payouts

Matthew Sigel, the head of Digital Assets at VanEck, commented on Strategy’s $135 million Bitcoin sale earlier this week. He noted that the BTC sale didn’t come from the $1.25 billion Bitcoin Monetization Program announced by the firm earlier this month.

Citing Strategy’s latest Form 8 K filing, Sigel said the monetization program applies only to Bitcoin sales used to fund the company’s USD Reserve. As of July 5, the full $1.25 billion allocation remained available under the program.

Strategy Bitcoin Monetization Program | Source: Matthew Sigel

According to Sigel, the Bitcoin sold last week was used to fund preferred stock dividend payments. Thus, it falls outside the scope of the monetization program. Sigel also added that this suggests Strategy’s potential capacity to sell Bitcoin could be greater than the $1.25 billion limit.

Strategy’s Michael Saylor Flashes Important Metric to Pay STRC Dividends

In his post on Tuesday, Strategy Chairman Michael Saylor stated that the company’s “BTC Breakeven ARR” metric is frequently misunderstood. He clarified that this metric represents the annualized Bitcoin appreciation required to sustainably fund dividends on STRC.

Saylor said that if Bitcoin’s long-term annualized appreciation exceeds 3.3%. This would, in turn, allow Strategy to support STRC dividend payments indefinitely through capital gains generated from its Bitcoin holdings.

Bitcoin ARR Strategy | Source: Strategy

Saylor’s comment comes as major concerns around Strategy’s ability to pay STRC dividends emerged after the STRC stock tanked to $80 last week. Following its recovery to $90, it is once again on a downward journey to $86.

However, some market experts have slammed Strategy over this financial arrangement. Responding to Saylor, Crypto Kaleo wrote:

“Strategy is literally saying they are willing and ready to dilute you infinitely. You need BTC to perform > 3.3% APR to see ANY upside in the equity. They have shifted their Strategy from “never sell” to celebrating the idea of continuously selling.

They don’t actually care about Bitcoin anymore. They’ll continue to cook the books and make up whatever useless metrics they want to continue to justify erasing shareholder value and enriching themselves”.

Bullish Calls on MSTR Stock Continue

Analysts at Japan’s Mizuho Financial Group lowered their price target on MSTR to $213 from $264. Besides, they continue to maintain an “outperform” rating on the Bitcoin Treasury company. Despite the target reduction, the revised forecast still implies approximately 110% upside from current levels.

Separately, CNBC contributor and Benchmark analyst Mark Palmer reaffirmed his “Buy” rating on MSTR and maintained a $570 price target. Palmer said the primary catalyst for Strategy’s long-term performance remains the appreciation of its Bitcoin holdings. He argued that continued gains in Bitcoin’s price would be the key driver of further upside in MSTR stock.

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