MicroStrategy, which never sells Bitcoin, plans to sell 1.2 billion BTC to survive.

Saylor spent four years telling the market that Strategy would never sell Bitcoin. Then he broke that promise in one month. On June 29, Strategy released a document titled "Digital Credit Capital Framework," officially authorizing the sale of up to $1.25 billion in Bitcoin.

After the news came out, MSTR rose nearly 7% in pre-market trading and closed up 12.6% overnight. A company built on the belief of "never selling" announced a plan to sell Bitcoin, and the market treated it as good news. This is worth studying.

From 32 BTC to $1.25 Billion

In late May, Strategy quietly sold 32 Bitcoin, worth about $2.5 million — its first sale since 2022, used to pay preferred stock dividends. MSTR subsequently fell, as investors felt Saylor's promise had been broken.

A month later, MicroStrategy increased the sale limit by 500 times. At the current price, this limit is equivalent to about 20,000 Bitcoin, or 2.5% of total holdings.

But the change in scale is only superficial. The real shift lies in the nature. May's sale was characterized as "temporary and incidental." The new framework is a systematic pipeline, establishing four clear purposes: to bolster dollar reserves, pay preferred stock dividends and interest, repurchase its preferred stock, and buy back MSTR common stock. Selling Bitcoin is no longer a temporary fix but has become part of operations.

Saylor's wording in the announcement was direct: the company is moving from one-way capital issuance to active capital management. From exception to institution, only one month passed in between.

STRC is a perpetual preferred stock issued in July 2025, with a face value of $100 and an issuance size of about $8.5 billion. It has a unique mechanism: the coupon rate is not fixed but resets monthly. In practice, it has been rising steadily — the one-year rate increased from 9% to 12%, with 8 adjustments, averaging once every six weeks.

But the rate hikes did not stabilize the price; instead, the more they raised, the more it fell. STRC dropped from face value to $74.57, losing over 25% of its peg. Every time the rate went up, Strategy had to pay more per share; every time the price dropped, it meant the market didn't believe it could afford the payments. Rate hikes were supposed to be a stabilizer but turned into an accelerator.

This means STRC's principal is $8.5 billion, with a current rate of 12%, and just this one item's annualized dividend exceeds $1 billion. Combined with three other preferred stocks — STRK, STRF, STRD — and about $6.7 billion in convertible bonds, the total annualized fixed obligations of the entire capital structure amount to $1.76 billion. That's roughly $4.8 million burned per day.

Bitcoin itself does not generate cash flow. The previous approach of solving problems by issuing new securities is no longer viable.

The Flywheel Stops Spinning

Over the past few years, Strategy's model relied on the premium of its stock price over its Bitcoin holdings' net asset value, continuously issuing stock and preferred securities, and converting all the raised funds into Bitcoin. This model worked smoothly when Bitcoin was strong.

But now, the most direct signal is that mNAV has fallen below 1x. This metric measures the relationship between the company's overall value and the value of its Bitcoin holdings. Falling below 1 means the market no longer gives it any excess valuation and even considers its associated debt and preferred stock obligations as negative assets. Over the past year, the stock price has dropped nearly 80%, and common stock fell 30% in a single week last week. STRC's price dropped from $100 face value to around $80, and funding channels are nearly closed.

If the company cannot obtain cheap money from the market, the entire model faces a practical problem: how to pay nearly $1.76 billion annually in preferred stock dividends and debt interest?

How Long Can the New Framework Last?

Strategy's dollar reserves are currently about $2.55 billion, which can support roughly 17 months of preferred dividends and interest payments. If the Bitcoin sale authorization is added, liquidity coverage can extend to about 26 months.

But how long the framework lasts depends on Bitcoin's price. At the current price, the framework's limit would require selling about 20,000 Bitcoin, or 2.5% of total holdings. This ratio seems manageable. However, if Bitcoin drops by 40%, the same dollar amount would require nearly double the quantity.

The essence of the whole matter is that Strategy is forced to shift from relying on external financing to internal resource allocation. Selling some Bitcoin, raising dividends, and repurchasing discounted securities are all efforts to maintain the capital structure and avoid a forced liquidation spiral.

MicroStrategy's pivot this time is not a betrayal of Bitcoin faith but a response to its balance sheet. However, whether the final outcome can achieve a soft landing still depends on how Bitcoin's price changes.