Strategy halts Bitcoin buying for five weeks, eyes asset sales
Strategy has halted its unprecedented Bitcoin purchasing streak for five weeks and opened the door to selling the cryptocurrency to fund preferred stock buybacks, marking a significant shift in the corporate buyer's capital allocation strategy.
Strategy has not purchased any Bitcoin for five weeks, marking its longest pause in nearly two years. Instead of adding to its cryptocurrency reserves, the company deployed capital to buy back its STRC preferred stock.
Between July 20 and 26, the company repurchased 288,930 STRC shares at an average price of $86.52, well below the $100 stated value. This transaction represents the initial deployment of a $1 billion repurchase programme authorised in June. That leaves $975 million in remaining capacity for future buybacks.
The strategic shift extends well beyond merely pausing acquisitions. Management explicitly stated that future preferred stock repurchases could be funded by selling its common equity or, depending on market conditions, by selling Bitcoin itself. This represents a notable departure from the company's long-held doctrine of never selling its digital asset holdings.
The financial rationale for prioritising the preferred stock is rooted in its high cost of capital. STRC carries a 12% annual dividend, making it an expensive obligation. Management intends to recommend that the board maintain this yield until the preferred stock trades consistently near its $100 stated value.
To secure its balance sheet against these dividend obligations, Strategy bolstered its dollar reserves by $525 million through recent common stock sales. This lifted its total cash reserves to an all-time high of $3.75 billion. The company estimates this cash pile covers roughly 25 months of expected preferred dividend payments.
Throughout this period, Strategy's underlying Bitcoin holdings have remained entirely static at 843,775 coins. However, the position carries a significant paper loss. The coins originally cost $63.68 billion to acquire but are currently valued at approximately $53.9 billion, leaving the company roughly $9.8 billion underwater on the investment.
For market participants, these developments suggest the firm is shifting its focus toward liability management rather than aggressive accumulation. The explicit willingness to potentially liquidate Bitcoin to retire expensive preferred equity introduces a new risk calculus for investors tracking the world's largest corporate holder of the token.
