Following the recent drop of Strategy's STRC preferred stock below $100 par value, the market has begun to re-examine the company's Bitcoin treasury model. Debate is rapidly intensifying in the crypto market regarding the sustainability of the financing structure and whether the company needs to sell Bitcoin to alleviate pressure.
Thaler emphasized that reserves still exceed debt.
Michael Thaler stated on X on June 20th that Strategy's current Bitcoin and cash reserves exceed the company's outstanding debt by approximately $48 billion. He also stated that the company has raised over $60 billion in additional funds since 2022 and has used these funds to purchase Bitcoin.
Thaler also reviewed the 2022 bear market. At that time, Strategy held approximately 130,000 Bitcoins, worth about $2.6 billion at the time. As Bitcoin briefly fell below $16,000, the company's debt briefly exceeded the total value of its Bitcoin and cash by about $300 million, and MSTR's stock price also fell from about $24 to about $13 (on a post-split basis).
Market discussion on whether to sell Bitcoin
Following the weakening of STRC, some market participants have begun to propose alternative solutions. Arca's Chief Investment Officer, Jeff Dorman, previously stated that Strategy may ultimately need to sell $3 billion to $4 billion worth of Bitcoin to alleviate capital structure pressures and provide support for STRC holders.
However, he assessed the probability of this scenario at only 25%. In his view, the more likely outcome is that Strategy will continue to raise funds through small-scale sales of MSTR common stock, with a probability of approximately 70%. If this proceeds, the company's Bitcoin holdings could remain largely unchanged, but common shareholders may face further dilution pressure.
Another key focus is liquidity. Market maker QCP previously estimated that, based on current resources, Strategy could cover its preferred stock dividend obligations for approximately seven and a half months. If existing financing channels become less attractive, the company may need to seek other funding sources, and selling some Bitcoin remains one of the alternative paths.
Controversy surrounding legal risks and structural analogies intensifies
Peter Schiff, a longtime critic of Bitcoin, further amplified market concerns. He stated that investors might take legal action against Strategy and Thaler over related issues, and questioned whether Thaler crossed the boundaries of the SEC's marketing rules in promoting its preferred stock offering.
Meanwhile, supporters have publicly defended Strategy. Commentator David Gokhshtein stated on X that Bitcoin's current market capitalization is not driven by a single individual, and blaming Thaler for market volatility is untenable. He also objected to comparing Strategy to the already collapsed Terra ecosystem.
These comparisons have gained momentum because analyst Ali Martinez pointed out similarities between STRC and Terra's LUNA structure. In response, Bitcoin advocate Samson Mow stated that STRC is a "cleverly designed tool," and unless investors believe Bitcoin will not appreciate in the long term, he sees no obvious structural flaws in this security.
