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For six years, Michael Saylor had one rule for the company he founded…
Buy bitcoin, hold bitcoin, never sell bitcoin.
The message was crystal clear. And Saylor’s faith seemed unwavering.
He founded MicroStrategy as a software company in 1989. During the COVID-19 pandemic in 2020, it became the first publicly traded company to adopt a bitcoin reserve. And in February 2025, it fully embraced this new way and rebranded as Strategy (MSTR).
Strategy became known in the investment world for stockpiling bitcoin the way a central bank accumulates gold. The company would never trade it, never pledge it as collateral, and never sell it to cover costs.
Investors believed Saylor. And they piled into the company’s stock as an indirect way to own leveraged bitcoin exposure.
For a while, it worked. MSTR soared from $12 in August 2020 to $473 in November 2024, that’s a 3848.6% increase.
But everything changed on July 6, 2026…
The Financial Mechanism Forcing Strategy’s Bitcoin Sale
That day, Saylor filed an 8-K with the U.S. Securities and Exchange Commission (“SEC”)…
Strategy disclosed the sale of 3,588 bitcoin for $216 million.
This shift didn’t happen overnight…
For more than a year, Strategy has been issuing preferred securities. It has issued five series of preferred shares overall. And each pays cash dividends – not bitcoin.
The premier tier trades under the ticker STRF. It pays a fixed 10% annual dividend on a $100 face value. Another tier, STRC, recently yielded 11.5%.
An analyst at crypto-asset manager Grayscale estimated the total annual dividend load at $1.5 billion. Strategy’s original software business – the one Saylor ran long before the bitcoin era – doesn’t come close to covering that number.
For two years, the company funded itself by selling new MSTR shares and putting the proceeds into bitcoin. This method worked as long as the company’s stock traded at a premium to the value of its bitcoin holdings.
Rising bitcoin prices lifted the stock. That made it easier to sell more shares. And in turn, that funded more bitcoin purchases.
When the premium held, the loop ran cleanly.
But that premium is now gone…
Strategy’s stock is hovering around $94 per share today. And unfortunately for the company, selling shares no longer raises enough capital to justify the dilution.
Strategy reported zero share sales in the week before its decision to sell the bitcoin.
The old funding loop is closed.
On June 29, Strategy launched what is called a Bitcoin Monetization Program. This framework allows the company to sell up to $1.25 billion in bitcoin to fund its cash reserves. The sale of 3,588 bitcoin was the first major draw on that program.
Strategy posted about the move on social media platform X…
Strategy has sold 3,588 BTC for $216 million to fund dividends on our Digital Credit securities.
The Crack in the Thesis: Why Strategy’s ‘HODL’ Model Broke
Now, here’s where things get intriguing…
Strategy’s entire thesis rested on the idea that Saylor was a permanent, aggressive buyer of bitcoin with no exit. But that idea breaks down as soon as bitcoin becomes a source of cash for operating costs.
Jeff Dorman, the chief investment officer at asset manager Arca, said it best back in May…
[Strategy], [bitcoin], and [preferred share] holders are really in [a] bind. Someone is going to lose badly here, and it will happen in the next 4 months.
Even worse, the sale was underwater…
Strategy’s average purchase price sits around $75,700 per bitcoin. And the 3,588 bitcoins sold went for an average of $60,200. So the company lost money overall.
Strategy reported an $8.32 billion unrealized loss on digital assets for the quarter ending June 30, 2026.
None of the five preferred series is backed by bitcoin. Each one holds only a claim on residual assets. And STRC dropped 25% below its $100 par value just weeks ago.
A managing director at investment bank JPMorgan Chase (JPM) warned that Strategy has shifted from the world’s largest corporate bitcoin buyer into a potential net seller. The math behind its preferred structure is showing real strain.
Covering 24 months of dividends from cash alone would require about $2.8 billion. Strategy held $2.55 billion in cash as of July 5. That means the gap between what it has and what it needs is narrow – but real.
Michael Saylor’s Defense: Flexibility vs. Market Realities
Saylor called the sale a show of flexibility, not distress…
“Strategy has the flexibility to fund strategic transactions using cash, Digital Equity, Digital Credit, or Digital Capital, giving us multiple levers to optimize our balance sheet and respond to market conditions,” he stated in the SEC filing. “We remain focused on increasing Bitcoin Per Share for our common shareholders over the long haul.”
By his own measure, the 3,588 bitcoin represent just 0.42% of the company’s stockpile. Strategy still holds 843,775 bitcoin worth roughly $53.8 billion.
The company won’t collapse overnight. But as we’ve discussed today, Strategy just crossed a line that Saylor had publicly sworn never to cross.
So now, the question for investors becomes…
How much trouble is Strategy in?
This question hits at whether the thesis that justified the stock’s premium is still intact.
Six years ago, Saylor said he would never sell.
But last week, he did.
Good investing,
John Evelius
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