Strategy Bitcoin sale may be the confidence move markets actually want, Grayscale says

Michael Saylor's Strategy may need to sell billions of dollars worth of Bitcoin to restore market confidence, according to Zach Pandl, head of research at Grayscale.

Pandl made the comment in a June 27 reply to an X thread by crypto journalist Laura Shin, who argued that Strategy is running into a funding problem.

• Shin's point is that MSTR common stock has fallen hard, Strategy's preferred shares are trading below par, and the company may have a harder time raising fresh money to keep paying dividends, let alone buying more Bitcoin.

And the pressure is already showing up across Strategy's securities. As Shin noted, STRC, Strategy's variable-rate preferred stock, had slipped below par, while MSTR common stock had fallen to a two-year low.

Pandl argues the likely move next week would be a 50-basis-point increase in the STRC dividend.

• But he cautioned that such a move would add about $100 million in extra dividend obligations over the next two years and "probably does not help market confidence."

Pandl said his preferred outcome would be for Strategy to sell at least $3 billion worth of Bitcoin to cover nearly all cash obligations for the next two years.

Broken rule

Saylor has spent years presenting Strategy as a vehicle for accumulating Bitcoin, not selling it. But the market stress now appears to be shifting the debate from Bitcoin accumulation to liquidity.

• If preferred shares trade below par and common stock trades near net asset value, Strategy's usual funding machine becomes harder to run because raising capital gets more expensive and more dilutive.

Strategy has already done the thing its whole mythology was built around avoiding. In a May filing, the company disclosed that it sold 32 BTC for about $2.5 million, with the proceeds expected to help fund preferred-stock payouts.

• Although that sale was tiny next to Strategy's massive Bitcoin pile, it still broke the spell.
• Once the company sells even a little Bitcoin to service its financial machine, a bigger sale stops looking unthinkable.

Pandl now argues that a large sale could remove the near-term cash question. Instead of slowly defending dividends through higher preferred payouts or more equity issuance, Strategy could sell enough Bitcoin to cover most obligations for two years and give investors a clearer liquidity runway.

Especially, after Galaxy Research recently argued that Bitcoin may still be heading toward a $40,000 to $46,000 cycle-bottom range before the bear market is fully done.