Detailed explanation of MicroStrategy's digital credit framework: including a plan to sell $1.25 billion in Bitcoin, can it save the market or accelerate its demise?

MicroStrategy Announces New "Digital Credit Capital Framework," Authorizing Sale of $1.25 Billion in Bitcoin for Dividends and Buybacks. This move breaks its long-standing no-sell stance but boosts market confidence, earning support from Wall Street institutions.

MicroStrategy announces Digital Credit Capital Framework, includes authorization to sell $1.25B worth of Bitcoin

Bitcoin ($BTC) has been in a price slump recently. MicroStrategy (ticker: MSTR), the publicly listed company holding the most Bitcoin globally, saw its preferred stock STRC continuously fall below par value, raising market concerns.

Yesterday (June 29), MicroStrategy unexpectedly did not announce additional Bitcoin purchases. Instead, it announced a new Digital Credit Capital Framework, which includes a plan authorizing the sale of $1.25 billion in Bitcoin to pay preferred stock dividends, among other things.

Subsequently, MicroStrategy's stock rebounded after falling for nine consecutive trading days, surging 12.60% that day to close at $92.68. Preferred stock STRC also rose 12.2% to $83.67, but still some distance from its $100 par value.

Meanwhile, according to CoinGecko data, Bitcoin's price briefly returned to around $60,700, but as of writing today, it is slightly below $60k.

Source: Google Finance. MicroStrategy preferred stock STRC rose 12.2% to $83.67, but still some distance from its $100 par value

What is the MicroStrategy Digital Credit Capital Framework?

What exactly is this "Digital Credit Capital Framework" and why did it cause MicroStrategy to surge? According to the 8-K official filing submitted to the U.S. Securities and Exchange Commission (SEC), the MicroStrategy Digital Credit Framework mainly includes four core elements:

1. U.S. Dollar Cash Reserve Policy: As of June 28, 2026, the U.S. dollar reserve has been replenished to approximately $2.55 billion. The board requires maintaining a cash level covering at least 12 months of preferred stock dividends and interest (current reserves cover approximately 17.4 months).
2. Preferred Stock Dividend Increase: The annual dividend on STRC preferred stock will be raised to 12.00%, effective July 1.
3. Buyback Plan: A Digital Credit Securities buyback plan of up to $1 billion and a common stock buyback plan of up to $1 billion have been established.
4. Bitcoin Cash-Out Plan: Management is authorized to sell up to $1.25 billion in Bitcoin to bolster the U.S. dollar reserve, pay interest, or fund stock buybacks. MicroStrategy emphasizes this is an optional tool, not a forced sale.

Delphi Digital Analysis: Three Paths Testing the Capital Structure

Regarding MicroStrategy's Digital Credit Capital Framework, there are varying interpretations in the market. Crypto analysis firm Delphi Digital stated that MicroStrategy's various stakeholders are currently in a path-testing phase under different Bitcoin price scenarios:

• Recovery: Only when Bitcoin rises and the net asset value premium ratio (mNAV) is above 1.3x can the interests of all parties be fully balanced.
• Sideways: Under a price consolidation path, common shareholders will face asset dilution of $1.4 billion per year to pay preferred stock dividends.
• Decline: If prices drop significantly, common equity will face severe cascading dilution. If MicroStrategy's dollar reserve used for dividend payments is depleted before September 2027 or March 2028, it could even trigger a cross-default.

Source: Delphi Digital. MicroStrategy's various stakeholders are currently in a path-testing phase under different Bitcoin price scenarios

Delphi Digital analyzes that when mNAV falls below 1x, the channel of using common equity financing to support preferred stock dividends becomes ineffective, forcing a shift to using reserves and selling Bitcoin. MicroStrategy had already sold 32 Bitcoins in late May 2026 to pay STRC dividends, and the new framework normalizes this practice.

Facing pressure, MicroStrategy ultimately chose to authorize buybacks and Bitcoin sales, while refusing to suspend dividends and instead raising them. Although current cash reserves are still sufficient to cover about 17 months of dividends, so immediate Bitcoin sales are not necessary, the authorization plan sends a strong signal that the 12% dividend will continue to be supported.

Crypto KOL VirtualBacon: A Constrained and Optional Tool

Prominent overseas crypto KOL VirtualBacon also believes that Michael Saylor, who has always claimed he would never sell Bitcoin, obtaining the sale authorization is an inevitable result when the net asset value premium ratio (mNAV) compresses to 1x.

Given that MicroStrategy's current average Bitcoin holding cost is $75,653, with Bitcoin near $60,000, the position is in an unrealized loss state. The disappearance of the premium space renders the previous equity issuance financing channel ineffective, thus requiring Bitcoin as a regulating valve.

VirtualBacon analyzes that the authorized $1.25 billion in sales represents approximately 21,000 Bitcoins, only about 2.5% of the total holding of 847,363 Bitcoins. This is a controlled adjustment rather than panic selling:

Saylor is using a constrained and optional tool to defend MicroStrategy's dividend and credit system. However, when actual sales are executed, the market may still experience short-term panic. Going forward, the market will face a dual test of interpreting this as either "eliminating liquidation risk" or "losing structural buying support."

Wall Street Institution Reiterates Buy Rating and $570 Price Target

Despite varying market opinions, one Wall Street institution is quite positive about MicroStrategy's new plan.

According to a report from Decrypt, Benchmark-StoneX Senior Analyst Mark Palmer, in his latest report, described MicroStrategy's new capital management framework as a "robust response plan," reiterated a Buy rating on MicroStrategy, and set a target stock price of $570.

Palmer noted that MicroStrategy has now become an active manager on both sides of its capital structure, which is clearly beneficial for shareholders. He further emphasized that the new Digital Credit Capital Framework is a direct, point-by-point response to the various concerns and questions investors have recently raised, helping to boost market confidence in MicroStrategy's Digital Credit Securities.

Further Reading:
MicroStrategy Preferred Stock Drops to $75! Reserves Enough for 10 Months of Dividends, Why Are Retail Investors Still Unconfident?

Bitcoin Unrealized Loss of $10.6 Billion! Analyst Warns: MicroStrategy Should Stop Adding and Replenish Cash Instead