Strategy, the world’s largest Bitcoin corporate holder led by Michael Saylor, spent around $950 million to buy back 9.96 million STRC shares from July 20 to September 13, accounting for nearly 18% of trading volume. The move pushed STRC’s price from a low of around $70 to nearly $99, approaching its $100 face value.
Selling Bitcoin to save the Bitcoin-buying tool
The notable point lies in the source of funds. Of the $950 million spent, $765 million came from selling MSTR stock and $161 million came from selling Bitcoin. In other words, Strategy is selling the very asset around which its entire strategy revolves to save another financial vehicle.
STRC is a perpetual preferred stock designed to raise capital to buy Bitcoin. But to issue new STRC shares and use the funds to buy BTC, STRC’s market price must trade at or above its $100 face value. When STRC fell to $70, this mechanism broke down, leaving Strategy unable to re-issue shares to raise capital.
Bitcoin down 40% from peak, pressure mounting
Saylor’s strategy rests on the hypothesis that Bitcoin will continue to rise over the long term. But currently, BTC is trading around $76,700, down about 40% from its peak of $126,000. The Fed just raised interest rates for the first time in 3 years, Brent crude passed $106/barrel, and the market is pricing in an additional 75 basis points over the next 6 months.
In this environment, Strategy faces a paradox: the more Bitcoin it sells to save STRC, the more its BTC holdings decrease, weakening the core investment thesis itself. If BTC continues to drop, the company may have to sell more to maintain other financial vehicles.
The key question is whether Strategy will succeed in restoring STRC to its $100 face value. If not, fundraising through STRC will remain blocked, forcing the company to seek other capital sources or sell additional Bitcoin.