STOCKS | Galaxy Digital’s Thorn Analyzes Strategy’s Digital Credit Capital Framework

Strategy (MSTR) announced a “digital credit capital framework” on Monday after market concerns emerged about its U.S. dollar liquidity and ability to cover preferred stock dividends. According to Foresight News, Galaxy Digital research head Alex Thorn said Strategy’s preferred stock STRC had briefly fallen below par to a new low following a Bitcoin decline, fueling worries about insufficient dollar liquidity to meet dividend obligations. Thorn said the new framework includes a U.S. dollar reserve policy, changes to STRC’s dividend policy that raise the dividend rate to 12%, a $1 billion authorization to repurchase preferred shares, a $1 billion authorization to repurchase MSTR shares, and a plan to monetize Bitcoin holdings. After the announcement, both MSTR and STRC rebounded sharply. Thorn said the measures provide the company with short-term breathing room, but he noted that longer-term obligations remain unresolved, including $6.7 billion in convertible bonds maturing in 2027-2028. He expressed reservations about the Bitcoin monetization provision, saying that selling Bitcoin could weaken the company’s long-term narrative and potentially trigger negative feedback effects. However, he said he understands the board’s intent to maintain flexibility. Thorn suggested Strategy could also consider generating returns from its Bitcoin holdings through lending or options strategies as an additional alternative beyond selling Bitcoin or diluting shareholders.