Strategy Sold Bitcoin for the First Time Since 2022. Here’s Why Michael Saylor Did the Unthinkable

Strategy (MSTR) sold off a small portion of its major bitcoin holdings, fueling speculation that the world’s largest corporate bitcoin holder might soon sell more. It could be a dangerous road for executive chair Michael Saylor to travel down, given the company’s longstanding “never sell” stance.

To be sure, Strategy’s sale of 32 bitcoins for $2.5 million – average price: $77,135 – is peanuts in the context of the company’s 843,706 bitcoins, as of May 31. It makes virtually no difference to Strategy’s balance sheet, with some $58 billion in bitcoin at a recent price of $69,000 a coin.

The real questions are why Strategy sold at all and whether investors can expect more sales to be on the way.

Why Is Strategy Selling Bitcoins?

Saylor gave some clues to his thinking on the company’s first-quarter earnings call in early May, pointing to at least two key issues for why Strategy might sell bitcoins in the future:

• To capture tax losses through the process of tax-loss harvesting.

• To condition the market to avoid seeing a sale as a sign of the company’s distress.

Saylor stated: “We have a, you know, a $2.2 billion tax credit that’s lying on the floor. We ought to go find a way to pick up the $2.2 billion, right?”

Here, Saylor’s referring to the well-established process of tax-loss harvesting, in which investors sell a losing investment to realize a tax write-off. Loss harvesting on bitcoin is especially advantageous.

Normally, the IRS prohibits investors from repurchasing an investment for at least 30 days to claim a tax loss. Otherwise, it’s called a wash sale. In the case of crypto, however, investors can sell a loser and immediately repurchase it, while avoiding a wash sale. They can claim the tax benefit without meaningfully ever having been out of the cryptocurrency.

So, it could make sense to recapture some of those tax losses for investors’ benefit. Strategy last sold bitcoins in 2022, according to Bloomberg, liquidating $11.8 million for a tax benefit.

Saylor’s other rationale is more about getting investors used to the idea that Strategy can sell bitcoins in the normal course of business and that they shouldn’t see it as a distress signal. In this case, those proceeds are intended to pay part of the dividends on its preferred stock.

In the first-quarter call, Saylor said:

We’ll probably sell some Bitcoin to fund a dividend just to inoculate the market, just to send the message that we did it. Look, the company’s fine. The bitcoin’s fine. The industry’s fine. The world didn’t come to an end.

Saylor’s use of the word “inoculate” here is particularly important, since it shows his intent to prevent the market from freaking out if and when Strategy sells more than a paltry 32 coins.

That’s the real reason for ripping the Band-Aid off slowly – so that Saylor can show that the company is not under duress. A large sale may have created panic in the bitcoin market. And that would be seriously detrimental to Strategy, which relies heavily on investor confidence.

Strategy owns about 4% of the total bitcoin issuance of 21 million coins. With up to 20% of coins estimated to be lost forever, Strategy owns an even larger portion of the future available supply.

The company’s heavy leverage means its stock price moves even more than the highly volatile bitcoin’s. So, anything that might cause a run on the thinly traded bitcoin – such as fears that a large holder may be forced to sell coins – could quickly create a self-fulfilling prophecy.

If investors foresee that Strategy will need to sell coins in the future, they’ll attempt to front-run it, pushing the price down and creating the type of panic situation that Saylor wants to avoid. So, Saylor must take a hardline here, showing that investors should retain confidence in the company.

“If you’re a short seller and your thesis is the company’s got to sell equity in order to fund the dividends, I would like nothing better than to, you know, rip your wings off,” Saylor said during the first-quarter earnings call with analysts.

Strategy has been a fairly active bitcoin buyer this year, such as its $1 billion buy in mid-April.

Strategy’s Finances Raise the Risk of a Bitcoin Run

A key part of the appeal of investing in Strategy is that it tends to be more volatile than bitcoin itself – rising faster when bitcoin rises, but falling faster when it declines, too. That’s due to the company’s use of debt and debt-like financing for its purchases of the world’s largest coin.

Strategy doesn’t use cash generated from its operating business to buy bitcoins, since it usually doesn’t earn a profit. Instead, it issues debt, several series of preferred stock, and its common stock to raise cash, which Strategy then plows into bitcoin.

If the company’s common stock trades at a sufficient premium to its bitcoin holdings, it can issue new stock and immediately buy more bitcoins, increasing the number of bitcoins per share.

If not, Strategy can issue preferred stock, which acts much like a bond. However, a key difference is that the company can defer payment of preferred stock dividends without being in default. It’s authorized to issue more than $25 billion in preferreds, and it can do this whenever it finds the timing attractive, in what’s called an “at-the-money” offering.

In addition, it’s able to issue more than $26 billion in common stock in at-the-money offerings. So, the company could buy more than $51 billion in bitcoins, given its current authorizations.

Using debt or preferred stock, the company’s net asset value per share will appreciate faster than bitcoin itself when the cryptocurrency is rising, just like with a margin loan on a stock portfolio. But like a margin loan, it will lose net asset value faster if bitcoin declines.

Bitcoin Remains a High-Risk Trade

Strategy’s game plan was working well when bitcoin was ascending like a rocket through 2024. It even fared well through much of 2025, with the coin hitting an all-time high above $126,000. But the price has plummeted in 2026 and now sits at less than $69,000, a decline of more than 45%.

Bitcoin is feeling the pressure from bitcoin exchange-traded fund outflows that have accumulated billions in assets, making it easier for investors to jump in and out of the market. The price decline and “risk off” posture of investors have also hurt this highly speculative trade.

It’s important to remember that bitcoin is the ultimate market sentiment trade. Its price is largely speculative and driven by the belief that traders will be able to sell it on to someone else for an even higher price. This fact makes the coin highly susceptible to changes in sentiment.

And this fact is also at the root of Saylor trying to condition the market not to panic when it needs or wants to sell some bitcoins. If sentiment turns too hard and too quickly, it can put Strategy into a death spiral that it can’t get out of. That would likely send bitcoin’s price tumbling, too.

So, don’t be surprised to see Strategy continue to sell more bitcoins if the price falls. After all, the tax benefit helps Saylor “spin” the sales as desirable. But this reason will serve as a great “fig leaf” if and when Strategy needs to liquidate a much larger position during a “crypto winter” period when prices stay low for a while.

It all adds up to a volatile crypto cocktail for Strategy investors and bitcoin traders, who may feel the brunt if Strategy needs to hit the exit in a thinly traded market.

Regards,

James Royal, Ph.D.

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