Saylor's "Never Sell Bitcoin" promise has shattered, how does 1.7 billion annual dividends + 4 billion debt pressure trigger a confidence crisis?

Written by: Kaleo (@CryptoKaleo)

Translated by: AididiaoJP, Foresight News

In the fall of 2022, FTX was still the king of the industry. That summer, it repeatedly intervened to rescue struggling competitors, seen as the savior of the industry. SBF was celebrated as an altruistic genius, the spokesperson for cryptocurrency. Yet, within just a few days, everything changed. His empire collapsed in an instant. Those bold investments were actually backed by the funds of exchange customers. He operated FTX as a bank without the corresponding license. If it weren't for that bank run, he could have likely gotten away with it.

"FTX is already insolvent." "Hurry and withdraw your money, or you'll never see it again." "It's all over." Ironically, those who said these words were basically right - but it was precisely because everyone believed these words that things truly went wrong. They created the reality of insolvency with their own hands. The illiquid assets that SBF had invested in during the bear market should have increased in value by tens of billions of dollars today if there had been no bank run. Here are just a few examples: Anthropic: $75 billion (150 times), SpaceX: $15 billion (75 times), Robinhood: $5 billion (10 times), Solana: $5 billion (10 times), Cursor: $3 billion (15,000 times).

And what was the result? Bankruptcy lawyers liquidated these assets at severely underestimated prices. From an investment perspective, SBF was a very competent investor. But he was too greedy, thinking he was invincible. He believed that only an extremely improbable disaster could bring him down, and then the disaster truly occurred. Despite the immense suffering it caused at the time, looking back now at how successful those investments could have been - yet most still view the collapse of FTX as a good thing. Because everyone understands that if FTX were allowed to continue playing this way on a larger scale, the consequences would only be worse.

This brings us to today. MicroStrategy is the king of Bitcoin. They have purchased billions of dollars in Bitcoin, holding 4.2% of the circulating supply. Saylor is a leader in the industry with a cult of personality. His motto has always been "never sell Bitcoin." At least until recently, he changed his slogan to "the rate of buying Bitcoin must exceed the rate of selling."

Most of MicroStrategy's buying capital comes from issuing common stock (ATM) and convertible bonds at market value. This mechanism is effective because the stock trades at a price higher than its Bitcoin net worth: for every $1 of stock sold, $1 can be used to buy Bitcoin, but only about $0.40 of Bitcoin corresponds to it, with the rest being pure appreciation. Early borrowings were designed almost entirely as convertible bonds to ensure that debt would ultimately convert to equity naturally. The key premise is: the stock must maintain a high premium. If MSTR's stock price falls below the convertible bond's conversion price, holders won't convert their bonds, and the company will have to repay the principal in cash - at that point, they'd have to issue more stock, issue bonds again, or sell Bitcoin in extreme circumstances.

In July 2025, things began to change. MicroStrategy launched five perpetual preferred stocks (IPOs), with trading codes including STRK, STRF, STRD, with the most famous being STRC. These preferred stocks pay fixed/variable dividends, allowing the company to finance without directly diluting common stock. At least that’s the external explanation. In 2025, MicroStrategy also issued several billion dollars in 0% interest convertible preferred notes (due in 2030). By 2026, the financing structure shifted from common stocks to preferred stocks and debt, due to a significant compression of the stock's premium over Bitcoin. But the dividends on preferred stock must have sources. If the stock's premium continues to compress, that debt must eventually be repaid (it's not urgent yet, but it will be soon).

First, where does the income from preferred stocks like STRC actually come from? After the LUNA/UST collapse, I heard a saying that I remember to this day: "If you don't know where the income comes from, then you are the income." MicroStrategy has to pay about $1.7 billion in interest and dividends annually, almost entirely in preferred stock dividends. Currently, cash reserves are only $870 million, barely enough for 6 months of turnover. A few weeks ago, they had $2.2 billion in cash, but they just spent $1.38 billion to buy back $1.5 billion in convertible bonds...

Does that sound like a good thing? They cleared future debt at an 8% discount and reduced leverage! But the problem is: this is MicroStrategy's first large-scale cash buyback of convertible bonds. Previously, all reductions in convertible bonds were accomplished through conversions or refinancing, with no large cash outflow. Why is this important? Because the previous mechanism of "convertible bonds ultimately converting to equity naturally" is failing due to the compression of the premium of the stock over NAV (net asset value). The "excess cash" that could have been used to pay dividends has now turned into new liability pressure.

What are the consequences? If MSTR's stock price continues to fall below the conversion prices of these notes, the cash debt repayment pressure will quickly accumulate: about $1 billion around 2027, about $4.9 billion around 2028, and about $800 million around 2029. Most conversion prices are far above the current MSTR stock price (the lowest being $149, the next $183, and higher thereafter). Although some debts might be negotiated down or refinanced, the debt is tangible and cannot be easily resolved as in the past.

When these debt obligations are annualized from now until the end of 2028, plus the $1.7 billion in preferred stock dividends, total obligations will exceed $4 billion annually. In the next 30 months, MicroStrategy will need to raise on average $338 million in cash each month. Currently, the cash is only enough to last less than 3 months. Of course, the debt does not expire today, but every month the pressure on the remaining months increases.

What are their options? The more Bitcoin prices fall, the lower the confidence investors have that MicroStrategy can continue to pay dividends on preferred stocks like STRC. They can delay dividend payments, but that will only accumulate obligations and further destroy confidence. Recently, they voted to continue paying dividends, indicating their priority. The result is: the reference price of STRC at $100 and its liquidation priority have started to show cracks. Last week, STRC fell to $91. If STRC continues to trade at a significant discount, it will completely lose its financing function - no one will want to buy something worth $70 for $100.

The remaining two options will dilute MSTR common stock shareholders: sell Bitcoin, or continue to issue MSTR stock. Saylor mentioned in the Q1 2026 earnings call that a market net asset value multiple of 1.22 times is the watershed: above this level, selling stock to buy Bitcoin adds value; below it, selling Bitcoin is more profitable. MSTR's stock price has recently weakened, significantly decreasing the attractiveness of financing through stock issuance - but they have already proven they are willing to do so (they did this in December 2025). The difference is, selling stock now might be to pay STRC dividends or repay debt, rather than to buy more Bitcoin. Each time they sell, the amount of Bitcoin held by common stock shareholders (sats/share) will be further diluted.

Another option is to sell Bitcoin. Saylor had promised to "never sell Bitcoin," but selling 32 BTC at the end of May has already broken that promise. Although the amount is small, the symbolic significance is enormous. What happens when an entity that holds 4% of the world’s Bitcoin supply begins to show financial pressure? It will be hunted by the market - at least be preyed upon by fear. Just like during the FTX bank run, everyone wants to run first, and no one wants to be left holding the bag. Once panic sets in, it can come quickly.

One thing needs to be clarified: MicroStrategy's debt is unsecured, and no Bitcoin is collateralized; no one can force them to sell coins. But to save the entire flywheel, they may have no choice. The ultimate question is: if you don't believe you can actually receive those high dividends and a $100 liquidation priority, who would still be willing to hold STRC? If you think the only financing method for MSTR is extreme dilution of common stock, who would still be willing to hold MSTR? Who would want to refinance a company with multiple mechanisms that are failing? Who would want to hold a significant amount of Bitcoin in a "problem company" that accounts for 4% of the total supply, until it cleans up the mess, while Bitcoin prices are under pressure?

The biggest difference between Saylor and SBF is: everything Saylor does is completely legal. SBF was using other people’s money to make diversified investments in illiquid assets, and although those investments performed exceptionally well later, he didn’t have the right to do so at the time, while FTX itself had billions in real income annually. Saylor continuously uses other people's money to buy a single asset, but he has the right to do so; he just hasn’t generated real income. But legality does not mean that structural risk is diminished. The greed driving system fragility, once fully unleashed, can be at least as destructive, if not more so, than FTX.

Currently, it seems that the most realistic path to escape the predicament is to pray for a significant rise in Bitcoin prices, restarting the premium flywheel. But if the flywheel starts again, it will only become larger and more complex, and if problems arise again, the consequences will be even worse. So, please ask yourself a question with the perspective of FTX/SBF: is it better to clean up this mess sooner, or to wait until it explodes at a larger scale with a wider impact?

I am personally very optimistic about Bitcoin, but I would rather endure the pain now. If you are also optimistic about Bitcoin, then just buy more Bitcoin directly.