Holds 4% of the world's Bitcoin! The market closely watches MSTR's "selling logic", with its stock price falling 75% in a year.

Strategy is using Bitcoin to pay for its own capital structure. The world's largest corporate Bitcoin holder is facing a mathematical dilemma triggered by its own business model—when the stock premium disappears and financing windows narrow, the "never sell" promise has quietly given way to real-world liquidity pressure.

According to a Wall Street Journal article, Strategy disclosed on July 6 that it sold 3,588 Bitcoin between June 29 and July 5, cashing out approximately $216 million to pay dividends on its preferred stock. This is the largest single Bitcoin sale in the company's history and its third sale since launching its Bitcoin strategy in 2020.

After the announcement, MSTR stock fell more than 5% during trading, and Bitcoin dropped to around $61.8k, below the company's average cost basis of approximately $75.7k. The company recognized a digital asset impairment loss of $8.32 billion in the second quarter, during which Bitcoin fell 14%.

Market apprehension stems not just from the sale itself, but from the underlying logic shift it signals. Strategy holds 843,775 Bitcoin, roughly 4% of the global total, so any large-scale sell-off could significantly impact Bitcoin's price.

According to a Wall Street Journal analysis, Strategy's core valuation metric, mNAV, has fallen below 1, meaning the market values the company at less than its Bitcoin holdings—fundamentally undermining its business logic of "exchanging premium-priced stock for Bitcoin."

The "Never Sell Bitcoin" Promise Cracks, Sale Size Multiplies a Hundredfold

Strategy had long treated "never selling Bitcoin" as the bedrock of its business model, but that promise now shows clear fractures.

In late May this year, the company broke its own convention for the first time, selling 32 Bitcoin for about $2.5 million to pay preferred stock dividends, emphasizing that the move was solely to fulfill commitments to preferred shareholders and did not represent a strategic shift.

However, the latest round of sales has ballooned to 3,588 Bitcoin—roughly 100 times the May volume. According to the company's disclosure, 1,363 were sold at an average price of about $59.3k, and the remaining 2,225 at around $60.8k.

The Wall Street Journal article notes that proceeds from this sale will be used specifically to pay second-quarter dividends on four preferred securities—STRF, STRE, STRK, and STRD—as well as the June monthly dividend on STRC. Selling Bitcoin is no longer a one-off symbolic gesture; it is gradually being integrated into the company's regular financing framework.

Notably, on June 29, Strategy formally announced that its board had authorized the sale of up to $1.25 billion in Bitcoin to repurchase shares and pay interest and preferred dividends. This marks an official abandonment of the "HODL Bitcoin" philosophy at the corporate level.

Importantly, the capital structure supporting this business model is under increasing strain.

Analyst Zach Pandl notes that Strategy's annual preferred stock dividend obligations alone are roughly $1.5 billion, far beyond what its software business cash flow can cover. With insufficient cash reserves, the company must either raise more capital or sell Bitcoin.

As of July 5, Strategy held 843,775 Bitcoin and had $2.55 billion in cash. The company estimates this cash buffer provides about 17 months of runway for interest and preferred dividend payments without touching its crypto holdings.

Strategy's operational logic is becoming increasingly clear: continue buying Bitcoin when financing is smooth, and sell small amounts to pay dividends when financing tightens, maintaining the closed loop of its capital operation.

Although the company quickly bought another 1,550 Bitcoin after its first sale in late May, and completed large-scale purchases of $2.54 billion and $2 billion in April and May respectively, the sustainability of this system is being questioned as Bitcoin's price comes under pressure.

mNAV Drops Below 1, Core Business Logic Faces Fundamental Challenge

The core of Strategy's business model lies in using its stock premium as "currency" to continuously buy Bitcoin. The quantitative anchor for this logic is the company's self-created mNAV metric.

According to a Wall Street Journal analysis, Strategy defines mNAV as the ratio of the company's enterprise value to the value of its Bitcoin holdings. In its heyday, this metric remained at a high premium for a long time, allowing the company to keep issuing stock to buy more Bitcoin—operating similarly to traditional roll-up companies that use their high-valuation stock as currency for serial acquisitions.

However, with MSTR stock down about 75% over the past year, mNAV fell below 1 last month, meaning the market values Strategy at less than the book value of its Bitcoin holdings. The "snowball" logic is now working in reverse.

More alarmingly, this metric itself suffers from systematic overvaluation. The Wall Street Journal notes that Strategy uses the principal amount of debt and the par value of preferred stock in its enterprise value calculation, rather than their market values. However, as the company's bonds and preferred stock prices have fallen sharply alongside the stock price, this calculation method has become severely distorted.

For example, on June 26, Strategy reported mNAV of approximately 0.99, but when debt and preferred stock were valued at market prices, the actual mNAV was only about 0.89. At that time, the company's debt traded at a 7% discount, and its various series of preferred stock traded at a combined discount of roughly 28%.

As of last Thursday's close, Strategy's website showed mNAV at 1.09, but adjusted for market values, the actual figure was only about 1.04—leaving minimal room for premium.

Selling Pressure and Market Chain Reactions

The sheer size of Strategy's Bitcoin holdings makes any sale systemically significant for the market.

Strategy holds roughly 4% of all Bitcoin in circulation. Even its May sale of just 32 Bitcoin for $2.5 million had a noticeable downward impact on Bitcoin's price and MSTR stock.

Analysts believe that while this sale of 3,588 Bitcoin remains a tiny fraction of its holdings, market concerns about potential large-scale liquidations have escalated significantly.

According to Strategy's own logic, when mNAV remains in discount territory, the company should be selling Bitcoin to repurchase its own securities. Investors are closely watching for signs that this could turn into a major action.

To stabilize its preferred stock prices, Strategy on June 29 raised the dividend rate on its largest preferred series, STRC, to 12%, in an attempt to attract buyers and push prices back toward par. This move itself indicates that the company cares far more about preferred stock market prices than its mNAV calculation suggests.

The Wall Street Journal points out that if the market continues to value Strategy at a persistent discount, the company faces a scenario where it exhausts its cash and is forced to tap its Bitcoin reserves on a large scale. Strategy may have bought itself some time, but just how much time remains is unclear to anyone.

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