Selling Scale Up a Hundredfold: Under the Strategy, Selling BTC at a Loss Still Can’t Stop the Bleeding

Author: Nancy, PANews

Just over a month ago, Strategy tested the waters by selling 32 BTC for the first time. Although the scale was negligible, both Bitcoin and MSTR stock prices took a double hit. Now, Strategy has struck again, selling 3,588 BTC at a loss of over $55 million. The scale of the sell-off has increased a hundredfold, but the market reaction has been much milder.

In fact, faced with an annual dividend bill of over $1.7 billion and a stalled equity issuance financing flywheel, the world's largest Bitcoin hoarder is bidding farewell to its "only buy, never sell" era, shifting to a defensive phase prioritizing cash flow and liquidity.

Strategy Sells Bitcoin at a Loss, Hoarding Model Faces Dividend Payment Pressure

On July 5, Michael Saylor once again released a Bitcoin holdings tracker. Following past惯例, Strategy typically disclosed new Bitcoin accumulation plans the day after releasing such information.

However, this time, just as Bitcoin prices were recovering, the market was met not with "continued buying" but with Strategy's first large-scale Bitcoin sale.

According to the latest disclosure, Strategy sold a total of 3,588 BTC between June 29 and July 5, 2026, cashing out approximately $216 million. Among them, 1,363 BTC were sold at an average price of about $59,256 on June 29-30 (valued at approximately $80.8 million), and 2,225 BTC were sold at an average price of about $60,773 on July 1-5 (valued at approximately $135.2 million).

The proceeds from this sale were primarily used to pay preferred stock dividends, including quarterly dividends for STRF, STRE, STRK, and STRD, as well as the full month dividend for STRC in June, while further bolstering dollar reserves. Currently, Strategy's dollar reserves can cover approximately 17.4 months of dividend payments.

Following the announcement, Bitcoin briefly declined, and Strategy's stock price also dipped during the trading session, but both rebounded to recover the losses.

In fact, this is not the first time Strategy has sold Bitcoin. On June 1, Strategy sold 32 BTC, breaking its long-standing "only buy, never sell" practice for the first time since 2022. That move directly caused Bitcoin to plunge, MSTR stock to drop sharply, and STRC preferred shares to accelerate below par value, triggering market panic.

Compared to the initial symbolic test, this sale expanded to 3,588 BTC, more than a hundred times larger, and it was a genuine loss-making sale. Based on Strategy's average cost basis of approximately $75,651, this transaction resulted in a realized loss of about $55.45 million. In contrast, the 32 BTC sold in June were still transacted slightly above the cost basis.

The fundamental reason driving the surge in this sale is the rising pressure from dividend payments.

Since its launch, Strategy has repeatedly raised the STRC dividend rate, reflecting changing market perceptions of its risk profile and increasing fixed cash expenditure pressure. Not long ago, Strategy also switched STRC to a semi-monthly dividend mechanism and raised the dividend rate to 12%.

Based on the current total notional amount of nearly $10.49 billion, STRC alone requires approximately $1.26B in annual cash dividends. Combined with other preferred shares, Strategy's annual dividend expenditure has reached about $1.76B. Currently, with $2.55 billion in dollar reserves, and assuming no reliance on external financing and neutral cash flow from its traditional software business, these funds can only cover about 24.3 months of STRC dividend payments.

From a capital allocation perspective, this partial Bitcoin sale appears more like a more deterministic capital optimization decision at this stage. The current trading price of STRC is around $88.5, which has recovered significantly from its lows but still has some room to reach the $100 target.

According to Wall Street investment bank Cantor, Strategy's top priority is to drive STRC back to its $100 par value, which is central to restarting the Bitcoin acquisition engine and stabilizing the overall capital structure. Strategy has also explicitly stated that its goal is to maintain the long-term trading price of STRC in the $99-$100 range, supported by measures such as variable dividend rates, continuously increasing dollar reserves, improving Bitcoin credit ratings, removing convertible bonds, implementing stock buybacks, and product feature upgrades.

For Strategy, before the capital market fully recovers its financing capacity, prioritizing dividend commitments and supplementing dollar reserves over adding more Bitcoin holdings may be more effective in enhancing market confidence in preferred shares and the overall capital structure. Grayscale also noted that Strategy's Bitcoin sale should help restore market confidence in its financing structure, while helping Bitcoin find a more sustainable price bottom and reducing Bitcoin tail risks.

Paper Losses of Tens of Billions of Dollars, Strategy Begins Entering Defensive Mode

Despite the sizable sale, the 3,588 BTC represents only about 0.42% of Strategy's total holdings of 843,775 Bitcoin, and it has not shaken its core strategy of long-term Bitcoin holding. As of now, Strategy still holds over $53 billion worth of Bitcoin, remaining the world's largest corporate Bitcoin holder.

However, the sustained low Bitcoin price is also putting greater operational and financing pressure on Strategy. Based on an average cost basis of approximately $75,476, Strategy currently has an unrealized loss of about $11.34 billion, with a floating loss of nearly 18%.

More importantly, the market's valuation logic for Strategy is shifting.

In the past, investors were willing to pay a premium for Strategy's growth story of "continuous financing and continuous buying of Bitcoin," allowing it to raise funds through common stock issuance and form a capital flywheel. However, as Bitcoin prices fell, MSTR stock premiums narrowed, and the market expectation of "never selling Bitcoin" was broken, investors began to reassess Strategy's business model, and its capital flywheel has hit the brakes.

To address this change, Strategy recently officially released a Digital Credit Capital Framework, attempting to enhance digital credit securities, improve liquidity, and support long-term shareholder value while maintaining its long-term Bitcoin holding strategy.

Under this framework, Strategy will establish dedicated dollar reserves to pay preferred stock dividends and debt interest; it will also set up a total repurchase authorization of $2 billion, with $1 billion for preferred stock repurchases and $1 billion for Class A common stock repurchases. In addition, the board has approved a Bitcoin monetization plan of up to $1.25 billion, used to replenish dollar reserves, pay dividends and interest, or fund repurchases.

This means Strategy is transitioning from a model that relied on continuous financing expansion to an active capital management model that places greater emphasis on liquidity management, capital structure optimization, and cash flow stability. By building more ample cash reserves while retaining its core Bitcoin position, Strategy hopes to provide a larger safety buffer for future market volatility.

However, the market is divided on this strategy. Galaxy Research head Alex Thorn pointed out that while this capital strategy has temporarily alleviated market concerns about Strategy's liquidity and preferred stock payment pressure, it is more about "buying time" than truly solving its structural problems. Strategy still shoulders huge preferred stock payment obligations. The market's real concern is not a lack of assets, but whether it has sufficient dollar liquidity to continuously fulfill payment obligations without harming common shareholders, preferred shareholders, and Bitcoin holders. The most controversial aspect is the Bitcoin monetization plan, which means Strategy may sell some Bitcoin in the future based on funding needs, and its identity and MSTR premium are built on its narrative as a long-term Bitcoin exposure tool. Selling Bitcoin would weaken this story.

Alex Thorn suggested that Strategy should explore how to generate returns from its Bitcoin holdings, including lending out a small amount of segregated Bitcoin in a conservative manner to earn interest, or using options strategies to capture volatility returns, rather than selling directly.

Judging from the scale of the current sale, Strategy may continue to sell some Bitcoin in the future depending on market conditions. Investors need to pay close attention to the scale, frequency, and triggering conditions of Strategy's future Bitcoin sales. If selling Bitcoin becomes a norm or even continues to increase, market confidence in its long-term Bitcoin holding strategy and capital operation model may be tested again. What is more noteworthy is that Strategy's change may be just the beginning. If, amid Bitcoin price pressure and rising financing costs, more and more Bitcoin DAT companies begin to emulate Strategy by selling Bitcoin to ease liquidity pressure, this could further suppress coin prices and weaken market confidence in the DAT model.

Strategy's Bitcoin hoarding faith has been shattered, not just a temporary stopgap, but a real test of this high-leverage financial experiment in a down cycle. Whether a business model that relies on constant capital market infusions can successfully navigate a bear market cycle—the answer may just be beginning to unfold.