Strategy sold 6,916 bitcoins at an average price of around $62,200 between late June and mid-August. A few weeks later, the company bought back 4,603 at $80,318 each. An operation that resembles a classic “sell low, buy high”. Its CEO Phong Le, however, has no regrets: the price of Bitcoin was not the priority. It was first necessary to strengthen the balance sheet.
In brief
- Strategy sold 6,916 BTC at around $62,200 on average.
- The company has just bought back 4,603 at $80,318.
- Its reserves now reach 845,050 bitcoins.
Bitcoin at $62,200, a definite sale
Strategy no longer hides its sales. In August, we already returned to a sale of 1,690 bitcoins intended to strengthen its financial structure. In total, the company sold 6,916 BTC in four transactions between the end of June and mid-August.
Average price: around $62,200. Then bitcoin rose again. Last week, Strategy spent $369.7 million to purchase 4,603 BTC at an average price of $80,318.
The spread exceeds $18,000 per bitcoin. Phong Le assumes. The CEO explains that Strategy doesn’t decide whether to sell or buy when trying to predict BTC’s next move. At the time of the sales, the company needed to fund dividends from its STRC preferred stock.
Selling bitcoin then cost less than raising new capital under bad conditions. For Le, it was therefore “the right trade” at that moment.
Strategy has above all repaired its balance sheet
For almost two months, bitcoin purchases slowed significantly. Strategy has focused on its liquidity and financial obligations. Its balance sheet now represents around $72 billion in assets: nearly $65 billion in bitcoin and around $7 billion in dollar-denominated reserves.
Net debt, which hovered around $7 billion, fell to around zero according to Phong Le. This accumulation of cash was already visible at the end of August, when Strategy increased its dollar reserves to 6.69 billion while temporarily freezing its bitcoin purchases.
STRC explains a lot of the change. This perpetual preferred stock pays a variable dividend and Strategy seeks to maintain its price around a benchmark of $100. By June, STRC had fallen below this level. Issuing more titles became less interesting. The company therefore used other levers, including the sale of bitcoin.
The situation has since changed. With a stronger balance sheet and better terms on MSTR, Strategy can once again sell its common stock to fund its BTC purchases. That’s exactly what she just did.
Strategy no longer promises to keep every bitcoin
The change goes beyond just this summer’s sales. For years, Michael Saylor repeated that Strategy had no intention of selling its bitcoins. This doctrine has evolved. Since May, the company has mainly promised to remain a net buyer of bitcoin over time. It no longer guarantees that each BTC acquired will remain in its treasury forever.
Phong Le now speaks of“two-way” management. Strategy can sell bitcoins, issue MSTR shares, use its preferred securities and then buy back BTC when the cost of capital becomes attractive again. The 6,916 bitcoins sold also represent less than 1% of its current reserves. Strategy now holds 845,050 BTC. His bitcoin holdings have further grown by around 25% to 30% this year according to Le.
The company therefore remains very far from disengaging from bitcoin. It simply agrees to sell occasionally if its balance sheet requires it. A flexibility which becomes all the more important as the premium formerly granted to MSTR has reduced and Arthur Hayes now sees three difficult choices for Strategy when its accumulation mechanism seizes up.
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