Zach Pandl, head of research at Grayscale, said he hopes Strategy will sell at least $3 billion of Bitcoin to cover most of the company’s cash obligations for the next two years.
In Saturday’s post X Pandl he argued that this move could restore market confidence in the company’s capital structure.
Despite his hopes, Pandl said he expects a 50-basis-point boost in the dividend rate on Strategy’s preferred stock, STRC, which would boost annual liabilities by about $100 million over two years. Pandl added that this scenario “probably does not improve market confidence.”
The strategy faces an annual preferred dividend obligation of approximately $1.2 billion, primarily sourced from STRC.
STRC is Strategy’s flagship “digital credit” preferred stock, which has a face value of close to $100, but has been failing in price for weeks. On Friday, it dropped to just $71.25, a 28.75% discount from face value. Strategy’s MSTR common stock performed slightly better and closed Friday at $82.31, down 26.86% for the trading week.
Pandl said he expects Strategy to raise STRC’s dividend rate, but hopes the company will sell Bitcoin instead. Source: Zach Pandl
Strategy’s cash reserve under pressure
Strategy is the world’s largest publicly traded corporate holder of Bitcoin, putting its 847,363 BTC and financial decisions under the industry’s microscope.
According to Strategy’s latest 8-K filing together with the US Securities and Exchange Commission acquired 520 Bitcoins for $34.9 million between June 15 and 21.
Blockchain analytics firm CryptoQuant argued on Tuesday report this strategy should stop Bitcoin purchases and focus on replenishing the cash reserve, which will decline by 38% in 2026.
Related: Bitcoin doesn’t need Ethereum-style yields, says Michael Saylor of the strategy
The 8-K filing also revealed that Strategy increased its U.S. dollar reserves by $300 million to $1.4 billion. This means the company will have a dividend for about 14 months, a significant drop from what was once a seven-year reserve.
Strategy he said on Monday that it plans to continue replenishing its cash reserves to support the credit quality of its “digital” securities.
Alternatives to selling Bitcoin
CryptoQuant added that the company has no obligation to sell Bitcoin to support STRC’s price as it can exploit other methods to defend its stock, such as increasing its current dividend rate of 11.5%.
Bitcoin supporter Samson Mow he argued in X’s Monday post that STRC has a built-in “self-healing mechanism.” When the stock price falls below the $100 reference price, Strategy stops issuing modern ATMs, cutting off the supply of modern shares.
At the same time, the lower price mechanically increases the profitability of modern buyers compared to what they paid, which Mow believes should stimulate modern demand and, over time, bring the price back to par.
Source: Samson Speech
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