Strategy's strategy of reducing Bitcoin holdings to raise dividends

Author: Cooper Duschang, Research Assistant at Coin Metrics; Translated by: Shaw, Jinse Finance

Key Takeaways

• Between June 29 and July 5, 2026, Strategy sold 3,588 bitcoins to pay preferred stock dividends and increase its dollar reserves. This is the company's third and fourth bitcoin sale since it launched its bitcoin accumulation program in August 2020.

  

  Source: Talos CM Asset Overview and SEC Filings

  MSTR Tiered Capital Structure

  Strategy issues multiple structured products to fund Bitcoin purchases. By issuing convertible bonds, MSTR can raise funds for Bitcoin purchases without immediately diluting its common equity. Convertible bonds combine the characteristics of fixed-income securities with the capital gains from equity conversion, essentially functioning as a call option: If MSTR's stock price rises above the strike price, bondholders can convert their bonds into shares, earning additional returns. Of all convertible bonds, only the 2032-maturity bond has a coupon rate higher than 1%, at 2.25%; the remaining five convertible bonds have interest rates below 1% or are zero-coupon bonds. This significantly reduces the company's interest costs, allowing more funds to be used for continuous cryptocurrency accumulation. In October 2024, Strategy announced the "21/21 Plan," proposing to continuously purchase Bitcoin through the issuance of $21 billion in debt and $21 billion in equity financing. Based on this financing plan, the company subsequently launched four types of dollar-denominated perpetual preferred shares: STRF, STRC, STRK, and STRD.

  

  Source: Strategy
  

  Strategy's preferred stock, codenamed STRC and commonly known as "Stretch," has attracted much market attention due to its variable dividend mechanism. STRC is a perpetual preferred stock, paying dividends twice a month. The company readjusts the STRC dividend rate monthly to guide the preferred stock price to trade around its par value of $100.

  

  Source: Strategy
  

  Strategy's preferred stock, codenamed STRC and commonly known as "Stretch," has attracted much market attention due to its variable dividend mechanism.

  

  Source: Talos CM Market Data Pro

  If STRC trades below $95, the company recommends increasing the dividend yield by 50 basis points; if the price is between $95 and $99, it recommends increasing it by 25 basis points; and if the price is above $101, it recommends decreasing it by 25 basis points.

  Source: Talos CM Market Data Pro

  If STRC trades below $95, the company recommends increasing the dividend yield by 50 basis points; if the price is between $95 and $99, it recommends increasing it by 25 basis points; and if the price is above $101, it recommends decreasing it by 25 basis points.

  

  Source: SEC filing
  

  At the end of June, STRC's price fell to a low of about $73, a discount of nearly 27% to its par value. Since then, its annualized dividend yield has been recently raised to 12.00%. Based on the current outstanding shares of 105 million, the company will need to bear $1.26 billion in dividend payouts annually.

  If STRC's remaining issuance quota is fully utilized, the total issuance will reach 275 million shares. STRC also faces competition from Strive's SATA preferred stock, which currently boasts an annualized dividend yield of 13%. This competition may force Strategy to further increase dividends to retain investors. Convertible bonds and preferred stock have priority in asset liquidation in the event of bankruptcy. Because these products offer stronger bankruptcy protection, their risk is lower, and their corresponding returns are relatively limited. MSTR common stock has the greatest upside potential, stemming from the company's leveraged exposure to Bitcoin: common stock investors bear the highest risk while being at the bottom of the capital recovery tier.

  

  Source: Talos CM Network Data Pro and Yahoo Finance
  

  Strategy's core tracking metric is Bitcoin satoshis per share (BPS). This metric converts all convertible bonds, convertible preferred shares, stock options, and other equity incentives into the total number of Bitcoin satoshis corresponding to each outstanding share after all convertible bonds, convertible preferred shares, stock options, and other equity incentives have been fully exercised. MSTR's stock price return shows only a weak positive correlation with Bitcoin's price fluctuations, with a correlation coefficient of 0.09. Such a low correlation fails to reflect the company's exposure to Bitcoin, indicating that other core factors are driving the stock price movement. One major variable is the company's operational risk. Strategy needs to perpetually pay preferred stock dividends while simultaneously repaying outstanding convertible bonds. The company's core objective is to continuously increase its Bitcoin holdings, but Bitcoin assets themselves cannot generate operating cash flow, making it difficult to reliably cover the ever-expanding debt expenditures. In the first quarter of 2026, the company's software services business only generated $124 million in revenue. How will the company balance its funding gap while continuously raising funds to accumulate Bitcoin and repaying various creditors? "Never Sell Bitcoin" In February 2025, Strategy CEO Michael Saylor posted on the X platform, stating, "Never sell Bitcoin." Prior to this, the company had only sold 704 Bitcoins once, in December 2022, to offset capital gains tax. However, from May 26 to May 31, 2026, the company announced a reduction of 32 Bitcoins; and from June 29 to July 5, 2026, it sold another 3,588 Bitcoins. These two sales represented 0.42% of the company's total Bitcoin holdings, realizing a total of $218.5 million. This complete departure from the company's previous strategy raises the question: what are the reasons behind this move?

  

  Source: Strategy Purchases and SEC filings
  

  The proceeds from this Bitcoin sale will be used partly to pay dividends to preferred shareholders and partly to replenish the US dollar reserve pool. The US dollar reserve is a cash buffer held by Strategy specifically for paying preferred stock dividends. The scale of this Bitcoin sale is small and does not necessarily indicate that the company is in financial distress. In June, the company also disclosed three Bitcoin purchases, totaling 3,657 Bitcoins. The company established a US dollar reserve pool in December 2025, specifically for paying preferred stock dividends. The US dollar reserve funds primarily come from issuing new MSTR common stock through an on-exchange offering. As of June 28, Strategy estimated its US$2.55 billion in US dollar reserves, sufficient to cover all preferred stock dividends and bond coupon payments over the next 17.4 months. Last week, the company officially approved its Bitcoin monetization plan, authorizing the sale of up to US$1.25 billion worth of Bitcoin to replenish its US dollar reserve pool. This means the company will need to actively manage its balance sheet going forward, simultaneously raising funds through both stock issuance and Bitcoin sales. In June 2026, Michael Saylor delivered a speech at the Goldman Sachs Digital Asset Summit in London, emphasizing the increasing value of Bitcoin as collateral in creating "digital credit." Saylor stated that by relying on Bitcoin-backed lending, the company has accumulated the acquisition of 175,000 Bitcoins during multiple market downturns. Currently, Strategy is exploring new models, using Bitcoin as collateral or as a source of funds for shareholder dividends. How Strategy Optimizes Bitcoin Trading Operations: If the company continues to pay dividends by selling Bitcoin, selling in batches at different times and on different exchanges can increase actual transaction revenue. This Bitcoin monetization plan allows the company to sell up to $12.5 billion worth of Bitcoin; at a price of $63,500 per Bitcoin, this equates to approximately 20,000 Bitcoins, representing 2% of the company's current total holdings. Distributing sales across multiple exchanges reduces the impact of price dumps. Trading Bitcoin across multiple exchanges can reduce price shocks and slippage costs. Differences in median prices and market depth across different exchanges create arbitrage opportunities. Arbitrageurs buy Bitcoin on exchanges with lower prices and sell it on exchanges with higher prices to profit from the price difference.

  

  Source: Talos CM Market Data Pro
  

  We retrieved market data during Strategy's sale of 32 Bitcoins. The average transaction price was $77,135. We also captured snapshots of the order books from four of the most liquid Bitcoin exchanges. The statistical range is within a 1% price difference above and below the midpoint. The order book structures of the four exchanges differ significantly. ...>

  

  Source: Talos CM Market Data Pro
  

  Comparing the median prices across various exchanges reveals that the market price in USDT is approximately $77,188, while the market prices in USD and USDC are approximately $77,112 and $77,115 respectively. Both the price of Bitcoin itself and the price of the underlying asset will affect the trading volume.