Key Takeaways
- Grayscale said Strategy’s $216M bitcoin sale lifted dollar reserves to cover about 17 months of dividends.
- Strategy sold 3,588 BTC between June 29 and July 5, leaving 843,775 BTC and $2.55 billion in cash on hand.
- Grayscale’s Zach Pandl said the shift cuts tail risk and could help bitcoin find a more durable bottom.
A ‘Positive’ Verdict on a Controversial Sale
Grayscale Research has offered one of the most upbeat institutional assessments yet of the first large bitcoin sale by Strategy Inc. (Nasdaq: MSTR). The firm laid out its case in a research note titled “Shifts by Strategy Reduce Bitcoin Tail Risks,” published as the market digested the disposal. The asset manager wrote on X on Monday:
“Grayscale Research believes Strategy’s bitcoin ( BTC) sale last week may reduce financing risk and support bitcoin price stability. The recent ~$216M sale boosted dollar reserves to cover ~17 months of dividend payments. The rebound in STRC suggests investors are responding positively.”
Grayscale Head of Research Zach Pandl went further, arguing that Strategy’s willingness to sell bitcoin as needed for its U.S. dollar reserves “reduces tail risk and could help bitcoin find a more durable bottom.”
Inside the $216 Million Disposal
Strategy disclosed in a regulatory filing on July 6 that it sold 3,588 BTC for approximately $216 million across two tranches. The company sold 1,363 BTC for $80.8 million between June 29 and 30 at an average price of $59,256, then another 2,225 BTC for $135.2 million between July 1 and 5 at an average of $60,773.
The proceeds fund distributions on the company’s preferred securities and replenish its dollar reserves to $2.55 billion. As Bitcoin.com News reported, executive chairman Michael Saylor confirmed the payouts covered the STRF, STRE, STRK, STRD and STRC preferred shares, which together carry a dividend burden of roughly $1.2 billion per year.
The sale was executed under Strategy’s new bitcoin monetization program, which permits sales of up to $1.25 billion to build reserves, fund dividend and interest payments, or support share repurchases. Even after the disposal, the company holds 843,775 BTC (more than 4% of bitcoin’s 21 million supply cap) acquired at an average cost of $74,476 per coin, leaving it with a paper loss of roughly $11.4 billion at current prices.
The market’s initial reaction was negative as Bitcoin slid to a Monday low of $61,246 following the disclosure, before rebounding to $64,000.
Why Grayscale Sees Less Risk, Not More
Grayscale’s argument centers on tail risk, i.e. the danger of a low-probability but severe event, such as a forced liquidation of Strategy’s stack if the company ran out of cash to meet its obligations. By demonstrating it will sell measured amounts of bitcoin rather than let dollar reserves run dry, the firm contends, Strategy has made that worst-case scenario less likely.
STRC, the company’s variable-rate preferred stock that pays a dividend near 12%, had recently traded well below its $100 par value as doubts about the dividend’s sustainability grew. Its rebound following the sale is the signal Grayscale highlighted as evidence the approach is working.
Pandl had already staked out this position before the disposal, saying he hoped Strategy would sell at least $3 billion in bitcoin to cover most of its cash obligations over the next two years. Not everyone shares the optimism, however, as economist Peter Schiff warned that Strategy’s remaining holdings could bring “much greater” losses if bitcoin’s decline deepens.