Sell only" iron rule completely ended! Strategy (MSTR.US) launched an epic reform, or cash out up to $1.25 billion in Bitcoin to defend cash flow.

Michael Saylor's Bitcoin Treasury company Strategy (MSTR.US) announced a comprehensive overhaul of its Bitcoin strategy pillar - the financing model. Faced with increasing pressure on its radical coin-hoarding structure over the years, the company has given itself broader powers to sell this cryptocurrency, repurchase securities, and maintain liquidity to adapt. The company stated that it may sell up to $1.25 billion worth of Bitcoin to bolster its cash reserves and has set up repurchase plans of up to $1 billion each for common stock and preferred stock. Strategy also stated that it will become more disciplined when issuing common stock, especially when its stock price is at or near the value of the Bitcoin it holds. Its common stock rose by about 5% in early trading. Bohan Jiang, Senior Derivatives Trader at FalconX, stated, "While this brings more selling pressure to Bitcoin, it is definitely a positive for stockholders of stocks and common and preferred stock, as they are essentially saying, 'We will support shareholders by selling Bitcoin.'" Strategy's common stock and preferred stock have plummeted along with Bitcoin, weakening its years-long financing advantage - previously, this advantage allowed Saylor to issue securities and invest the proceeds in larger-scale Bitcoin purchases. This selling frenzy has raised more questions about whether this self-reinforcing financing model that supports the company's Bitcoin strategy can continue to work in a prolonged downturn. The company is now no longer primarily relying on issuing new securities to fund larger Bitcoin purchases, but is giving itself more flexibility to maintain liquidity, repurchase discounted securities, and liquidate Bitcoin when the attractiveness of raising new funds declines. The board has also established a policy to maintain a minimum cash reserve equivalent to the expected dividends and interest expense of at least 12 months of preferred stock. Strategy stated that after selling common stock last week, its reserve is currently at $2.55 billion and raised the dividend rate of its STRC preferred stock to 12%. Last Friday, a valuation metric that once supported bullish arguments turned negative, indicating that the company's financing advantage has evaporated. Strategy's mNAV (i.e., the ratio of enterprise value including debt and preferred stock to its Bitcoin value holdings) fell below parity (1.0). The stock has dropped nearly 80% in the past year. This timing is especially significant as demand for Bitcoin has increasingly relied on institutional buyers like Strategy. With growing concerns about the company's ability to continue raising funds on favorable terms, investors are not only reassessing Saylor's acquisition strategy but also reevaluating one of the cryptocurrency's largest sources of new demand. In early June, Strategy disclosed that it had sold 32 bitcoins, its first sale since 2022. This amount is insignificant compared to its holdings worth about $51 billion, but its symbolism is extraordinary. For years, Saylor had built Strategy around a simple core premise: raise funds to buy Bitcoin and never sell. This disclosure challenged that narrative and exacerbated the cryptocurrency world's shivering downturn. This move seems to indicate that as the largest corporate holder of this cryptocurrency, they are willing to use Bitcoin to support the dividend payments of their preferred stock debt. However, this has raised new doubts about the sustainability of this structure. Perpetual preferred stock issued by Strategy starting in 2025 once provided Saylor with a way to continue buying Bitcoin without penalizing common stockholders. However, the price of this preferred stock has dropped below $75, far below the $100 face value threshold necessary to avoid making Strategy's purchases unprofitable.