Author: Deep Tide TechFlow
On July 6, Michael Saylor posted a tweet on X that was completely opposite to his persona of the past six years: MicroStrategy has sold 3,588 BTC, raising approximately $216 million in cash, which will be used to pay dividends on its Digital Credit Securities. As of July 5, the company still holds 843,775 BTC and $2.55 billion in cash reserves.
This transaction occurred between June 29 and July 5, at an average price of $60,197. MicroStrategy's previous average cost basis is $75,651. This means this was a realized loss of over $15,000 per coin, totaling approximately $55.45 million. Saylor, who once said he would "never sell" and that "Bitcoin is the exit, not the entrance," chose to sell at a loss as the price approached cycle lows.
Understanding this requires answering two questions: Why did he absolutely have to sell? And how long will this selling last?
From 32 to 3,588 Coins in Just 35 Days
Rewind to late May.
Between May 26 and 31, MicroStrategy sold 32 BTC for a total of approximately $2.5 million, marking the company's first sale since 2022. 32 coins, representing 0.004% of its holdings, were financially insignificant. The market largely interpreted it as a "desensitization test": Saylor was testing how painful the market reaction would be when selling occurred.
The answer was indeed painful. Combined with macro pressures, Bitcoin briefly fell below $61,000 on June 5, hitting a new low since February at the time. MicroStrategy's perpetual preferred stock, STRC, fell to a historical low of $73.77 on June 25, a discount of over 26% to its $100 face value. The common stock MSTR fell below $90 on the same day, a nearly 80% decline from its peak, deeper than Bitcoin's approximately 50% pullback over the same period.
The real turning point came on June 30.
MicroStrategy's board approved a comprehensive plan: authorizing the sale of up to $1.25 billion worth of Bitcoin, with proceeds to be used exclusively for repurchasing securities, paying dividends/interest, or replenishing dollar reserves; establishing a $2.55 billion dollar reserve to cover approximately 17.4 months of annual obligations; launching a $2 billion dual-track repurchase plan; and raising the annual dividend rate for STRC to 12% effective July 1.
This announcement effectively made "selling Bitcoin to pay dividends/interest" part of the company's articles of association. Five days later, the sale of 3,588 BTC was executed. It took MicroStrategy just 35 days to go from a desensitization test to routine operations.
Flywheel Reversal: According to Saylor's Own Formula, Selling Bitcoin is the Optimal Solution
MicroStrategy's growth engine over the past six years has been a premium-dependent flywheel: as long as MSTR's market value was significantly higher than its Bitcoin Net Asset Value (i.e., mNAV > 1), the company could issue new shares to raise funds to buy Bitcoin, increasing the Bitcoin-per-share ratio, driving the stock price higher, and supporting the next round of issuance. During the bull market, this flywheel was so sharp that MSTR's trading volume once surpassed Nvidia's.
In the Q1 earnings call this year, management set a critical value for this flywheel: 1.22x mNAV. When the premium is above 1.22x, issuing shares to buy Bitcoin is advantageous. When it falls below 1.22x, issuing common stock becomes detrimental to existing shareholders, and selling Bitcoin for dividends or buybacks becomes the better choice for increasing Bitcoin per share.
Now, all three cogs of this flywheel are jammed.
The first funding channel, STRC, was designed to dynamically adjust the dividend rate to anchor the price near its $100 face value, allowing continuous fundraising at face value. When the secondary market offers the same STRC for only $75, no one will subscribe to new shares at $100. The preferred stock funding channel is effectively closed. Furthermore, the 90-day correlation between STRC and Bitcoin has risen to a historical high of around 0.70, eroding the stability sought by income-oriented investors.
The second channel, the common stock At-The-Market (ATM) program, dilutes conviction with every share issued when mNAV is near the critical threshold.
The third channel, convertible bonds, has $8.2 billion outstanding maturing sequentially starting from 2028. Adding more debt would only compress future maneuvering space.
With all three funding paths blocked, the expense bills are rigid obligations.
MicroStrategy's five preferred stock series (STRF, STRE, STRK, STRD, STRC) correspond to annual dividend and interest obligations totaling approximately $1.7 to $1.76 billion. Of this, STRC alone, with an issuance scale of about $10.5 billion and a 12% dividend rate, requires over $1.2 billion annually. Preferred dividends can legally be deferred, but defaulting would trigger penalty rates and reputational damage, effectively destroying all future financing capabilities. For a company dependent on capital market infusions, this money is no different from debt interest.
Thus, the true nature of this Bitcoin sale is: Under the rules set by Saylor himself, this is the rational solution under current constraints, perhaps even the only solution. When the market was willing to pay a premium, he securitized his faith and sold it to income-oriented investors. When the premium vanished, the securitized faith started accruing interest, and that interest must now be paid with Bitcoin.
The World's Largest Buyer Becomes a Seller with a Timetable
The subsequent impact can unfold along three lines.
For the Bitcoin market, this is a historic shift in supply/demand structure. MicroStrategy holds about 840k BTC, roughly 4% of total supply. Over the past six years, it was the market's most stable, price-insensitive marginal buyer. Roughly estimated at the current ~$60k price, covering $1.76 billion in annual obligations entirely by selling Bitcoin would translate to about 29k BTC in annual selling pressure, averaging about 2,400 BTC per month. This volume is not lethal relative to spot ETF daily turnover. What's truly lethal is the expectation: the market now knows that at the end of each quarter and each month, a price-insensitive sell order might be waiting. The former anchor of faith has become a timetable hanging overhead.
For the DAT (Digital Asset Treasury) sector, MicroStrategy is the valuation anchor for all imitators. When the founding father starts selling Bitcoin to pay dividends, the rationale for mNAV premiums for dozens of companies using the same template (issuing preferred stock to buy BTC or ETH) will need to be re-examined. The credit spread for this sector is likely to widen systematically.
For MicroStrategy itself, the situation is not as desperate as the emotion suggests. Its $2.55 billion cash reserve can cover approximately 17 months of obligations. Debt maturities are concentrated post-2028. Analyst stress tests indicate that even under extreme scenarios (price halving, capital markets closed), the main risk is the ongoing compression of Bitcoin per share, not an immediate death spiral. Its essential difference from a LUNA-style death spiral is that preferred dividends do not automatically trigger dilution, and holders have a priority claim on the 840k BTC in liquidation. MicroStrategy won't die suddenly, but it may be trapped in a more faith-eroding state: forced to choose monthly between "selling shares" and "selling Bitcoin," picking the lesser of two evils.
There's only one way out: STRC returning near its $100 face value, reopening the preferred stock funding channel, and allowing the flywheel to spin forward again. The prerequisite for STRC's re-anchoring is likely Bitcoin's price first stabilizing and rising.
In other words, MicroStrategy has made its own fate a circular argument: If the Bitcoin price is good, the entire model holds; if the Bitcoin price is bad, the model itself puts pressure on the price.
