Author: Deep Tide TechFlow
On July 6, Michael Saylor posted a tweet on X that was completely contrary to his persona of the past six years: MicroStrategy had sold 3,588 BTC, cashing out approximately $216 million to pay dividends for its Digital Credit Securities. As of July 5, the company still held 843,775 BTC and $2.55 billion in cash reserves.
This transaction occurred between June 29 and July 5, with an average price of $60,197 per BTC. MicroStrategy's previous average holding cost was $75,651. This means it was a loss-cutting sale, incurring a loss of over $15,000 per coin and a total realized loss of approximately $55.45 million. The Saylor who had once said "never sell" and "Bitcoin is an exit, not an entry" chose to sell at a loss while the price was approaching a cycle low.
To understand this event, two questions need to be answered: Why did he have to sell? And how long will this selling continue?
From 32 to 3588 Coins in Just 35 Days
Let's rewind to late May.
From May 26 to 31, MicroStrategy sold 32 BTC, totaling about $2.5 million, marking the company's first sale since 2022. Thirty-two coins, accounting for 0.004% of the total holdings, were financially insignificant. The market widely interpreted this at the time as a "desensitization test": Saylor was testing how painful the market's reaction would be when selling occurred.
The answer was indeed quite painful. Combined with macroeconomic pressures, Bitcoin briefly fell below $61,000 on June 5, hitting a new low since February at that time. MicroStrategy's perpetual preferred stock, STRC, plunged to a historic 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, down nearly 80% from its high, a steeper decline than Bitcoin's roughly 50% pullback over the same period.
The real turning point came on June 30.
MicroStrategy's board of directors approved a package of measures: authorizing the sale of up to $1.25 billion worth of Bitcoin, with proceeds to be used solely 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 STRC annual dividend rate to 12% effective July 1.
This announcement effectively transformed "selling Bitcoin to pay interest" from a taboo into a part of the company's charter. Five days later, the sell order for 3,588 BTC was executed. It took MicroStrategy only 35 days to move from a desensitization test to a routine operation.
The Flywheel Reverses: By Saylor's Own Formula, Selling 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 capitalization was significantly higher than its Bitcoin net asset value (i.e., mNAV > 1), the company could issue more shares to raise funds for buying Bitcoin, increasing the Bitcoin per share and driving the stock price higher, which in turn supported the next round of issuance. During bull markets, this flywheel was so effective that MSTR's trading volume once surpassed Nvidia's.
In the Q1 earnings call this year, management set a critical threshold for this flywheel: 1.22x mNAV. When the premium is above 1.22x, issuing shares to buy Bitcoin is advantageous. Falling below 1.22x, issuing common stock becomes a net detriment to existing shareholders. In such a scenario, selling Bitcoin to pay interest or repurchase shares becomes the better choice for increasing Bitcoin per share.
Now, all three teeth of this flywheel are jammed.
The first funding channel, STRC, was designed to anchor its price around the $100 face value through dynamic dividend rate adjustments, enabling continuous fundraising at face value. When the same STRC can be bought in the secondary market for only $75, no one would subscribe to new shares at $100. The preferred stock funding channel is effectively closed. Additionally, the 90-day correlation coefficient between STRC and Bitcoin has risen to around 0.70, a historically high level, eroding the stability sought by yield-focused investors.
The second channel, the common stock At-The-Market (ATM) program, dilutes the "faith" with every share issued when mNAV is near the critical threshold.
The third channel, convertible bonds, involves $8.2 billion in outstanding debt maturing sequentially starting in 2028. Adding more debt would only constrain future maneuvering room.
With all three funding paths blocked, the expense side presents rigid bills.
MicroStrategy's five series of preferred stock (STRF, STRE, STRK, STRD, STRC) collectively incur annual dividend and interest obligations of approximately $1.7 billion to $1.76 billion. For STRC alone, based on an issuance scale of about $10.5 billion and a 12% dividend rate, the annual expense exceeds $1.2 billion. Preferred stock dividends can be legally deferred, but once skipped, penalty interest rates and damage to credit reputation would directly destroy all future financing capabilities. For a company reliant on capital markets for survival, this money is no different from debt interest.
Therefore, the true nature of this Bitcoin sale is: Within the rules Saylor himself set, this is the rational, even the only, solution under the current constraints. When the market was willing to pay a premium, he securitized the faith and sold it to yield investors. After the premium vanished, the securitized faith started accruing interest, and that interest must 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 represents a historic shift in the buyer/seller structure. MicroStrategy holds about 840,000 BTC, roughly 4% of the total supply. Over the past six years, it has been the most stable, price-insensitive marginal buyer in this market. Roughly estimating with the current Bitcoin price around $60,000, if the $1.76 billion annual obligation were entirely covered by selling Bitcoin, it would create selling pressure of about 29,000 BTC per year, averaging around 2,400 BTC per month. This volume is not fatal compared to the daily turnover of spot ETFs. What is 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 suspended timetable.
For the Digital Asset Treasury (DAT) sector, MicroStrategy is the valuation anchor for all imitators. When the founding father starts selling Bitcoin to pay interest, the justification for the mNAV premium of dozens of companies using the same template to issue preferred stock and buy BTC or ETH will be re-evaluated. The credit spreads in this sector are likely to widen systematically.
For MicroStrategy itself, the situation is not as desperate as the emotional narrative suggests. The $2.55 billion cash reserve can cover about 17 months of obligations. Debt maturities are concentrated post-2028. Analysts' stress tests show that even in extreme scenarios like a halved Bitcoin price and closed capital markets, the primary risk is the continuous compression of Bitcoin per share, not an immediate death spiral. The key difference from a LUNA-style death spiral is that preferred stock dividends do not auto-trigger issuance, and holders have priority claim on the 840,000 BTC in liquidation. MicroStrategy won't die suddenly, but it might enter a state more taxing to faith: having to choose the lesser of two evils between "selling shares" and "selling Bitcoin" every month.
There is only one way out: STRC returning to around its $100 face value, reopening the preferred stock funding channel, allowing the flywheel to spin forward again. And the prerequisite for STRC's re-anchoring is likely Bitcoin's price stabilizing and recovering first.
In other words, MicroStrategy has turned its own fate into 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.
