Michael Saylor’s Bitcoin treasury company, Strategy, abruptly dumps a portion of its massive BTC stack for the first time since 2022.
The News
In a new 8-K filing with the U.S. Securities and Exchange Commission (SEC), Strategy discloses that it sold 32 BTC worth $2.5 million between May 26th and May 31st.
According to the company, proceeds from the sale will be used to pay the dividends to investors of its preferred shares.
During the same period, Strategy also sold 801,994 shares of its common stock (MSTR) worth $128.3 million.
Following the news, Bitcoin dropped to $70,678, its lowest level since April 13th. Meanwhile, MSTR fell 5.85% on Monday’s trading session, closing at $148.78.
As of May 31st, Strategy still holds 843,706 BTC worth $63.87 billion at an average purchase price of $75,699. Data from Bitcoin Treasuries shows that Strategy remains the largest public company holder of BTC.
The move represents Strategy’s first Bitcoin sale in over three years, following the December 2022 sale of roughly 704 BTC for cash proceeds of about $11.8 million.
What It Means for Investors
While many investors focus on the news that Strategy sold Bitcoin while BTC struggles to hold $70,000, they seem to miss the massive drop in the firm’s USD Reserve, which was established to support dividend payments to investors of its preferred shares.
In February, Strategy reported that its USD Reserve had climbed to $2.25 billion, enough to cover 2.5 years of dividend and interest payments. As of the latest SEC filing, the figure plummeted to $900 million, representing a 60% collapse in just a few months.
During Strategy’s Q1 earnings call, Saylor grabbed headlines when he said that Strategy is open to selling BTC, even as he had urged investors to “never sell” their Bitcoin holdings.
“We will probably sell some Bitcoin to fund a dividend just to inoculate the market — just to send the message that we did it.”
At face value, it appears that Saylor used the word “inoculate” to send a message to the market to get used to the company selling some of its BTC holdings from time to time. The word takes on a different meaning after the USD Reserve collapsed by 60% in three months, even though it was supposed to fund more than two years of dividend payments.
Bitcoin does not generate cash flow, and Strategy funds its USD Reserve “using proceeds from the sale of shares of class A common stock (MSTR) under Strategy’s at-the-market offering program.”
Strategy has yet to provide details about the sudden collapse in the value of its USD Reserve, leaving keen-eyed investors to wonder whether the company will sell more MSTR, more BTC or both to support dividend payments.
With BTC hovering just above $70,000 and no widely cited solid bullish catalyst in sight, it is within the realm of possibility for Strategy to announce larger BTC sales in the coming months, a scenario that would introduce additional selling pressure on an asset already underperforming broader risk markets.
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