One month that shook the market: Saylor’s struggles over bitcoin strategy yields big losses

Strategy’s (MSTR) machinations of the past few weeks at a minimum suggest a company attempting to find its footing as bitcoin’s $BTC$62,984.84 bear market raises questions about its, ahem, strategy.

The bottom line thus far has been a dramatic decline in the price of bitcoin from $74,000 in late May — when Strategy sold a tiny 32 bitcoin — to below $58,000 last week. A bounce back to about the $64,000 over the July 4 weekend was cut short Monday by the sale of 3,558 bitcoin. In between, Michael Saylor and team purchased 3,657 bitcoin at sizably highger prices.

The sequence left the company with a net increase of only 69 bitcoin despite deploying roughly $20 million in additional capital, remarked KALEO on X. Because the company sold coins below the prices it had recently paid, the implied average cost of those additional holdings exceeded $289,000 per bitcoin, KALEO added.

Today’s move seems to suggest that Strategy will go to whatever lengths necessary to protect the dividends on its high-yielding preferred stock STRC (now 12% after a recent 50 basis point increase).

Indeed, while $BTC and MSTR (Strategy’s common stock) are lower on Monday, STRC continues to rebound from last week’s low below $75, higher by another 2.1% and just shy of $90.

Strategy now holds 843,775 bitcoin purchased at an average price of $75,476, maintaining its position as the largest publicly traded corporate holder of the cryptocurrency.

Alongside today’s news of the sizable bitcoin sales, the company also disclosed that it had booked an $8.32 billion loss on its $BTC holdings in the second quarter as the price fell from about $68,000 on April 1 to close June at roughly $60,000.

Going forward

Given the zig zags in strategy over the past few weeks, it’s anybody’s guess as to what comes next. It’s a big assumption, but assuming relatively stable prices for $BTC, MSTR, and STRC, it’s probably safe to say that bitcoin buys are off the table for the foreseeable future.

As for sales, Strategy now has cash reserves exceeding 17 months of dividend coverage. Among preferred stock cognoscenti, companies with 18 months or more of coverage are considered to be in a good spot. While there may be more bitcoin sales, they would seem to need to be limited in size in the coming weeks.

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