Strategy’s Bitcoin Sale Plan Splits Industry Opinion

Strategy, the company led by Michael Saylor, won backing from some Wall Street firms after unveiling a new capital-management framework that allows Bitcoin sales. The move also reignited debate over whether its long-term strategy is sustainable.

Cointelegraph reported on June 30 that Strategy revised its capital structure a day earlier to allow fundraising through Bitcoin sales of up to $1.25 billion, breaking from its previous reliance on stock and bond issuance. At current prices, that would equal about 21,082 BTC, or roughly 2.5% of its total holdings of 847,363 BTC.

Strategy’s common stock, MSTR, closed 12.6% higher at about $92.70, while preferred shares STRC rose 12.2% to about $83.70. Both stocks slipped slightly in Tuesday premarket trading, indicating investors were still taking a wait-and-see approach.

Benchmark Equity Research welcomed the overhaul. The firm kept its buy rating on MSTR and reaffirmed its 12-month price target of $570, saying Strategy had shifted to actively managing both sides of its capital structure, a meaningful positive for shareholders.

Simon Dedic, founder and chief executive officer of Moonrock Capital, said the announcement could mark a short-term bottom. He added that some of the recent selling pressure may have come from Strategy securing liquidity ahead of the announcement.

Skepticism, however, remains. Trader Scott Melker said the revamp was in line with what investors had wanted, but it would take time to determine whether it could restore confidence. Jeff Dorman, chief investment officer at Arca, said Strategy may need to sell $2 billion to $3 billion of Bitcoin to relieve persistent selling pressure in the market.

Ripple Chief Executive Officer Brad Garlinghouse, speaking on CNBC, criticized the move. Financial engineering does not create long-term value, he said, adding that Saylor’s team was not focused on the right direction and that the strategy had harmed the broader market.