Strategy Stock Drops After $2.5 Million Bitcoin Sale

Strategy’s stock price dropped to a 45-day low after disclosing a $2.5 million Bitcoin sale.

The liquidation "amplified an already compelling dislocation," according to TD Cowen.

The sale was ultimately unavoidable, given Bitcoin's lack of cash flows, according to Grayscale.

Strategy’s stock price plunged on Monday after it disclosed a Bitcoin sale, indicating that the company’s decision to shave its stockpile sparked jitters among investors.

The Tysons Corner, Virginia-based firm’s shares fell to their lowest point in a month and a half before staging a partial recovery. As of this writing, the company’s stock price had slid 5.3% to $150.68, nearly erasing year-to-date gains, according to Yahoo Finance.

The fall comes as Strategy Executive Chairman and co-founder Michael Saylor intensifies the firm's focus on Stretch (STRC). Strategy has offered an 11.5% annual dividend in monthly cash installments for four straight months on its $10.48 billion flagship preferred stock.

“Our goal is to make STRC the best credit instrument in the world,” Saylor said in an X post, without addressing the sale, not long after Monday’s opening bell.

Strategy indicated in its corresponding SEC filing that proceeds raised from the sale of 32 Bitcoin—totaling $2.5 million—would go toward STRC’s recurring costs. Currently, the firm faces a burden of around $100 million per month to maintain faith in the product.

With 843,706 Bitcoin worth $60 billion on its balance sheet, the sale is negligible, TD Cowen analyst Lance Vitanza shared in a note. Indeed, at 32 Bitcoin, the liquidation represented just 0.0038% of the company’s overall stockpile.

“Confusion around Strategy’s de minimis Bitcoin sale appears to have amplified an already compelling dislocation,” he wrote. “Headlines suggesting that Strategy has meaningfully reduced its Bitcoin position are, in our view, misleading.”

The bank left its $400 MSTR price target untouched, noting that the liquidation did not affect analysts’ perception of Strategy’s ability to incrementally increase Bitcoin owned per share.

Last month, Saylor signaled during the company’s first-quarter earnings call that the world's largest corporate holder of Bitcoin would “probably sell some Bitcoin to fund a dividend just to inoculate the market—just to send the message that we did it.”

The inoculation raises questions about whether future sales could be on the horizon. Following Strategy’s disclosure, Bitcoin turned lower, hitting its lowest price in nearly two months. The digital asset recently changed hands around $71,400, a 2.8% decrease over the past day, according to CoinGecko.

Monday’s move stood in contrast with the buy-and-never-sell attitude that Saylor had used to cultivate a rockstar-like reputation among Bitcoin’s diehards. But according to Zach Pandl, head of research at crypto asset manager Grayscale, liquidations were unavoidable.

“In our view, a smaller share of Bitcoin supply held by DATs may be positive for the longer-term outlook,” he told Decrypt, referring to digital asset treasuries (aka crypto-buying firms). “Bitcoin does not produce cash flows, so sales were inevitable at some point to cover dividend obligations.”

“Strategy’s decision reflects a shift among Bitcoin-buying firms more broadly toward diversified businesses,” he said. As companies move away from simply being a way for investors to get exposure to the digital asset, “the transition may involve more Bitcoin sales,” Pandl added.

Monday’s sale was prefaced by Strategy’s leadership as a one-time shot. However, Gerry O’Shea, head of global markets insights at crypto asset manager Hashdex, told Decrypt that expectations of future sales, obviously, will be tethered to market conditions.

“I do think the market may read into it a bit, [...] but I don’t see any change to their structural thesis,” he said. “If this market we’re in persists, maybe you see a little bit more selling, but I think, generally speaking, they seem to be pretty well capitalized and financially sound.”