Written by: Deep Tide TechFlow

On July 6, Michael Saylor tweeted something completely opposite to his persona of the past six years on X: Strategy sold 3,588 BTC, cashing in approximately $216 million to pay dividends on digital credit securities. As of July 5, the company still held 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. Prior to this, Strategy's average holding cost was $75,651. In other words, this was a cut loss of over $15,000 per coin, totaling an realized loss of about $55.45 million. The Saylor who once said "never sell coins" and "Bitcoin is an exit, not an entrance" chose to sell at a loss as the coin price approached a cyclical low.

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

From 32 coins to 3,588 coins in just 35 days

Let's rewind to the end of May.

From May 26 to 31, Strategy sold 32 BTC, totaling about $2.5 million, marking the company's first sale since 2022. The 32 coins accounted for 0.004% of total holdings, which was financially insignificant. At the time, the market generally interpreted it as a "desensitization test": Saylor was probing how painful the market would be when coin sales happened.

The answer was indeed very painful. Combined with macro pressures, Bitcoin fell below $61,000 on June 5, hitting a new low since February. Strategy's perpetual preferred stock STRC dropped to a historical low of $73.77 on June 25, trading at over 26% below its $100 par value; MSTR common stock also fell below $90 on the same day, retreating nearly 80% from its peak, deeper than Bitcoin's approximately 50% decline over the same period.

The real turning point came on June 30.

Strategy's board approved a bundled plan: authorize the sale of up to $1.25 billion in Bitcoin, with proceeds only usable for repurchasing securities, paying dividend interest, or replenishing dollar reserves; establish a $2.55 billion dollar reserve to cover 17.4 months of annual obligations; launch a $2 billion dual-track repurchase plan; and raise the annual dividend rate for STRC to 12% starting July 1.

This announcement effectively turned "selling coins to pay interest" from a taboo into part of the company’s charter. Five days later, the sale order for 3,588 BTC was executed. From desensitization testing to routine operations, Strategy took only 35 days.

The flywheel reverses: according to Saylor's own formula, selling coins is the optimal solution

Strategy's growth engine over the past six years has relied on a premium flywheel: as long as MSTR's market value is significantly higher than its Bitcoin net asset value (i.e., mNAV greater than 1), the company can issue new shares to finance Bitcoin purchases, increasing the Bitcoin content per share, thereby driving up the stock price to support the next round of issuance. In a bull market, this flywheel was so sharp that MSTR's trading volume once exceeded that of Nvidia.

Management defined a critical value for this flywheel in the first quarter earnings call: 1.22 times mNAV. If the premium is above 1.22 times, it is cost-effective to issue new shares for buying coins; if it falls below 1.22 times, issuing common stock is net harm to existing shareholders, and at this time, selling Bitcoin to pay interest or buy back is a better choice for increasing the Bitcoin content per share.

Now all three cogs of the flywheel are jammed.

The first financing channel, STRC, was designed to anchor the price around the $100 par value through dynamic adjustment of the dividend rate, to continuously fund at par value. When the secondary market only needed $75 to buy the same STRC, no one would subscribe for new shares at $100, effectively closing the preferred stock financing channel; the 90-day correlation between STRC and Bitcoin rose to about 0.70, a historical high, and the stability that income-focused investors sought was also lost.

The second channel, common stock ATM, dilutes faith with each share issued as mNAV approaches the critical value.

The third channel, convertible bonds, with $8.2 billion in outstanding debt maturing from 2028 onwards, will only compress future flexibility by continuing to add debt.

With all three financing routes blocked, the bills on the spending side are rigid.

The five series of preferred stocks issued by Strategy (STRF, STRE, STRK, STRD, STRC) correspond to annual dividend and interest obligations of about $1.7 billion to $1.76 billion, of which just STRC alone, based on an issuance scale of about $10.5 billion and a dividend rate of 12%, results in annual expenditures exceeding $1.2 billion. Preferred stock dividends can legally be deferred, but once missed, penalty rates and damage to credit reputation will directly destroy future financing capabilities. For a company reliant on capital market infusions, this money differs little from debt interest.

Therefore, the true nature of this coin sale is: under the constraints set by Saylor himself, this is a rational solution given the current conditions, perhaps even the only solution. When the market was willing to offer a premium, he securitized faith and sold it to income investors; after the premium disappeared, the securitized faith began to collect interest, and interest could only be paid with Bitcoin.

The world's largest buyer has become a seller with a timetable

The subsequent impact can be traced along three lines.

For the Bitcoin market, this is a historic switch in the buy-sell order structure. Strategy holds about 840,000 BTC, accounting for 4% of total supply, and for the past six years, it has been the market's most stable and price-insensitive marginal buyer. At the current price of about $60,000, if the annual obligation of $1.76 billion is fully covered by coin sales, it would correspond to selling approximately 29,000 BTC per year, averaging about 2,400 BTC per month. This volume is not fatal relative to the average daily transaction of spot ETFs; what is truly fatal is the expectation: the market now knows that at the end of each quarter and each month, there could be a price-insensitive sell order waiting there. The once-believed anchor point of faith has turned into a looming timetable.

For the DAT (Digital Asset Treasury) sector, Strategy is the valuation anchor for all imitators. When the ancestors start selling coins to pay interest, the valuation rationality of dozens of companies using the same template to issue preferred stock and buy BTC or ETH will have to be reassessed. The credit spread in this sector will likely widen systematically.

For Strategy itself, the situation is not as desperately painted by emotions. The $2.55 billion cash reserve can cover about 17 months of obligations, and the concentration of debt maturity is post-2028. Pressure tests by analysts indicate that even in extreme scenarios where the coin price is halved and the capital markets are closed, the main risk remains the continued compression of Bitcoin content per share, rather than an immediate liquidation spiral. The essential difference from a LUNA-like death spiral is that preferred stock dividends won't trigger automatic issuance, and holders have a priority claim over the 840,000 BTC upon liquidation. Strategy won't die abruptly, but it may fall into a state that consumes faith more, where it has to choose a less bad answer between "selling stock" and "selling coins" each month.

There is only one breaking point: STRC needs to return to around the $100 par value to reopen the preferred stock financing channel, and then the flywheel can turn positively. The precondition for STRC to re-anchor is likely that the Bitcoin price first stabilizes and rebounds.

In other words, Strategy has turned its fate 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.