Up despite Strategy (MSTR) selling...Bitcoin (BTC), can it do without Saylor?

▲ Bitcoin (BTC)/AI generated image

Strategy (MSTR) stopped buying Bitcoin (BTC) and sold 3,588 BTC at a low point, but the price rebounded by 14%. This puts the bearish argument that Bitcoin relies on one person, Michael Saylor, to the test.

Louis Raskin, host of the cryptocurrency YouTube channel Coin Bureau, stated in a video released on August 4 (local time) that Strategy stopped additional purchases for five weeks after buying 520 BTC on June 22. Strategy net sold 3,588 BTC for approximately $216 million from June 29 to July 5, immediately after Bitcoin formed a low point below $59,000. However, Bitcoin rebounded by about 14% from its low point, rising from $58,500 on June 30 to approximately $66,000 on July 21.

Strategy's move is less a simple halt in buying and more a shift in capital management policy. The company decided to secure dollar reserves equivalent to 12 months of preferred stock dividends and debt interest in its digital credit capital framework, unveiled on June 29. It also approved the sale of up to $1.25 billion worth of Bitcoin and the repurchase of $1 billion each in preferred and common stock. The STRC preferred stock dividend rate was raised to 12% annually. Andrew Kang, Strategy's Chief Financial Officer, stated, "Bitcoin is capital."

The company continued to issue shares but did not allocate the raised funds to Bitcoin purchases. Strategy sold 5,429,160 common shares from July 20 to 26, securing $544 million. The previously raised $466 million in July also did not lead to Bitcoin purchases. Instead, it repurchased 288,930 STRC preferred shares for a total of $25 million at an average price of $86.5. Its dollar holdings increased from $2.55 billion on June 28 to $3.75 billion at the end of July.

Strategy's void was filled by ETFs, other companies, and long-term holders. In US Bitcoin spot ETFs, approximately $4.5 billion was net outflowed in June, but about $981 million flowed back in over seven trading days from July 14 to 23. IBIT accounted for approximately 71% of the total inflows. Metaplanet purchased 2,823 BTC for $170 million in the same week Strategy was selling, increasing its holdings to approximately 43,000 BTC. Matt Hougan, Bitwise's Chief Investment Officer, assessed that the era of Strategy acting as Bitcoin's most dominant buyer has ended, and institutions are likely to share that role.

However, the risk of forced selling by Bitcoin-holding companies with weak capital remains. Satsuma Technology decided to dispose of all 668 BTC, and Frenetics decided to dispose of all 510 BTC. Genius Group liquidated its assets to repay $8.5 million in debt, and Empyre Digital sold 1,400 BTC to cover debt and legal expenses. Strategy's approved Bitcoin sale limit is approximately 20,800 BTC, which is about 2.5% of its total holdings, and approximately 17% has been used as of the video's release. Dollar reserves have expanded to cover dividends and interest for 24 to 28 months. Strategy's enterprise value multiple relative to Bitcoin net asset value dropped to 0.72 and then recovered to approximately 1.03.

[Article Key Summary]

-Strategy sold 3,588 BTC near Bitcoin's low point, but Bitcoin subsequently rebounded by approximately 14%.

-Strategy shifted from a Bitcoin accumulation-focused strategy to a capital management strategy that includes dollar reserves and share repurchases.

-ETFs, other companies, and long-term holders stepped in to buy, diversifying the demand base in the Bitcoin market.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*