- Strategy sold $108.6 million worth of BTC and $653.1 million in MSTR stocks over the past week.
- The company used the proceeds to raise its cash reserves to $4.65 billion and repurchase $108.6 million of STRC preferred shares.
Several members of the crypto community were disappointed as they realized that Strategy (MSTR) Executive Chairman Michael Saylor’s social media post on Sunday wasn’t meant to tease an incoming Bitcoin (BTC) purchase. They found that out the hard way when the company instead announced selling more of its supply of the coin to increase its cash reserves and repurchase shares of the Variable Rate Series A Perpetual Stretch (STRC) Preferred Stock.
Strategy Sells More Bitcoin and MSTR Stocks
According to Strategy’s Form 8-K filing this week, it sold 1,690 BTC between August 3 and 9 for an aggregate sum of $108.6 million. The amount translated to an average price of $64,262 per BTC.
The move significantly cut the institution’s portfolio to 840,447 BTC. Meanwhile, it has already invested $63.36 billion in cumulative BTC purchases.
Interestingly, Strategy’s latest batch of Bitcoin transactions slightly reduced its average purchase price from last week’s $75,419 per BTC to $75,385 per BTC. It’s also worth noting that the institution remains the largest publicly traded Bitcoin company as it retains roughly 4.19% control of the digital asset’s approximately 20.07 million circulating supply.
Adding salt to the wound for investors in its common shares was the business’s declaration that it dumped $653.1 million in MSTR stocks.
Strategy’s Cash Reserve Raise and STRC Repurchase
Strategy highlighted that it used the proceeds of its BTC and MSTR sales to reinforce its cash reserves. To date, it has already raised $4.65 billion for its US dollar reserves, which is enough to cover 2.7 years of its annual dividend payments of $1.736 billion out of its $6.754 billion overall debt.
Moreover, the company allocated $108.6 million to repurchase STRC preferred shares. Along the way, it tightened STRC’s BTC credit spread by 10 basis points, reflecting a deleveraging measure.
Critics Strike Back
Not all were happy with Strategy’s decision over the past week, though, after it skipped its Bitcoin purchases for seven weeks in a row. They emphasized that it should capitalize on the dip to acquire more BTC at a discount rather than selling it at a loss.
But then again, it’s worth reminding people that Strategy started buying its first 70,470 BTC in 2020 from an average of $10,419 to $21,925 per coin. It means that despite dumping a minor portion of its holdings this year, the company is still selling substantial unrealized profits that hadn’t even depleted its initial year of Bitcoin purchases.
Excluding the sale of 704 BTC for $11.8 million in 2022 to realize a tax loss, Strategy has sold only 5,258 BTC at an average of $59,256 to $77,135 per coin this year. It’s virtually a small fraction compared to its accumulation in 2020 alone.
Although Strategy is currently sitting on unrealized paper losses on recent acquisitions, its early purchases from 2020 keep its long-term cost foundation intact while managing liquidity demands.
