Last week, Bitcoin rose 13%, reclaiming the $70,000 level over five trading days for the first time since June. By Monday this week, the price was already above $78,000.
Strategy, the world's largest corporate buyer of Bitcoin, did not buy a single coin during this week.
Instead, it did another thing: it sold 18.26 million shares of its own common stock, raising approximately $2 billion, and turned this money into US dollars. As of August 23, the company's USD liquidity on its books totaled $6.69 billion.
Where did this $2 billion go?
$300 million went into the "USD Reserve"—a dedicated pool the company established in June, which can only be used to pay preferred stock dividends and debt interest. Using it for other purposes requires board approval. This pool now holds $5.1 billion.
$136.4 million was used to repurchase 1.43 million shares of STRC preferred stock.
The remaining money went into a newly established pool with a straightforward name: "USD Cash," currently holding $1.59 billion. Unlike the previous one, this pool's use is entirely open—it can be used to buy Bitcoin, repurchase common or preferred stock, repay convertible bonds, replenish the USD Reserve, or be used for other corporate purposes.
The company's stated reason is that the added flexibility allows management to respond faster to market changes, "including price dislocations in Bitcoin or the company's own securities."
The same filing also shows that for the week ending August 23, Strategy did not buy or sell any Bitcoin, with its holdings remaining at 840,447 coins for the second consecutive week. In fact, it hasn't bought a single coin since the week of June 22.
Why is a company that buys Bitcoin hoarding cash?
To understand how abnormal this is, one must first know how many times Michael Saylor has repeated that analogy over the past few years: Holding cash is like holding a melting ice cube. Strategy's entire narrative was built on this sentence—converting every cent on the balance sheet into Bitcoin, as quickly as possible.
Now it has two labeled US dollar pools, totaling $6.69 billion.
The reason lies in the cost basis line.
Strategy's 840,447 Bitcoins cost a total of $63.36 billion, averaging $75,385 per coin (including fees and related costs). This line is the key to the whole matter: on August 14, when Bitcoin fell to $62,600, the company reported unrealized losses on its Bitcoin holdings as high as $8.2 billion.
It wasn't until last week when the price recovered to $78,000 that the company finally moved back above its cost basis line, with a floating profit of $1.4 billion.
The problem is, paper losses don't need to be repaid, but dividends and interest must be paid on time.
The STRC preferred stock issued by Strategy promises a 12% annual dividend on a face value of $100. It can be understood as a high-interest IOU from the company—market confidence in this IOU is directly reflected in its price.
Throughout the summer, STRC traded below its face value; the company's CEO Phong Le publicly stated in early August that the 12% dividend would be maintained and that the goal was for STRC to stay in the $99 to $100 range long-term.
To prop up this price, they need to buy back. And when Bitcoin is in a deep correction and the stock price isn't rising either, where does the money come from?
The answer lies in the new capital management framework established in June—it for the first time allowed Strategy to sell Bitcoin to repurchase preferred stock that had fallen below face value.
On August 3, the company sold 1,638 Bitcoins, cashing out $104.73 million; by August 5, the 5,226 Bitcoins sold had raised $321 million, used to repurchase $106 million worth of STRC. On August 17, it raised another $334 million by issuing shares, also for repurchasing preferred stock.
This recent $2 billion share issuance is an amplified version of the same playbook. To date, the $1 billion preferred stock repurchase plan has used approximately $483.4 million, with $516.6 million remaining; another $1 billion common stock repurchase authorization hasn't been touched.
What went wrong with the flywheel?
The model Strategy has followed in recent years, the market calls it the "flywheel": issue new shares to raise capital → buy Bitcoin → Bitcoin price rises → stock price rises faster than Bitcoin → the higher the premium, the more money can be raised by issuing the same number of shares → buy more Bitcoin.
The fuel is the premium—how much more the market is willing to pay for each dollar's worth of Bitcoin Strategy holds.
Now that premium is gone. MSTR has fallen about 66% over the past year. Bloomberg's phrasing is that this financing flywheel "remains impaired, with a valuation premium well below levels seen in previous cycles." Once the premium disappears, issuing shares goes from "using other people's money for free leverage" to pure dilution.
Nansen senior research analyst Nicolai Sondergaard lays out this calculation clearly: "For MSTR shareholders, this trade-off is dilution for flexibility. The recent equity offering strengthens the balance sheet but does not immediately increase the Bitcoin exposure per share."
His assessment of the new pool is equally sober: "The new USD Cash pool gives Strategy more time and optionality, but it does not eliminate those underlying obligations."
In other words: dividends still need to be paid, interest still needs to be paid, and convertible bonds still need to be repaid when they mature. Cash buys time, not an escape.
So, how should we understand this week's moves?
In mid-August, index provider MSCI initiated a consultation proposing to exclude "non-operating companies" from its global investable market indices. The determination uses a two-step screening process, looking at the proportion of operating assets and five financial metrics. Under this proposal, Strategy, Japan's Metaplanet, and uranium-holding Yellow Cake could all be affected.
For a company with significant passive fund holdings, being removed from an index means a batch of sell orders regardless of price. On the day the news broke, MSTR fell 4.3%.
Strategy's rebuttal was fiery: the duty of index providers is to measure the market, not to decide what assets a company can hold.
This round of Bitcoin's rise has a clear driver: Trump urging Congress to pass legislation regulating digital assets, while the US Treasury doubled the size of its long-term Treasury buybacks, pushing yields lower—lower yields make risk assets more attractive.
The price has returned, unrealized losses have turned into unrealized gains. MSTR rose 3% in Monday's early trading to $122.79, and STRC traded at $96.49, still over three dollars away from the range Phong Le mentioned.
And what this company did this week was convert $2 billion into US dollars and place it in two pools.
The once-thought-to-be-melting ice cube is now the most flexible thing in its hands.
