CryptoQuant says Strategy still needs disciplined bitcoin buying and selling framework

Quick Take

• CryptoQuant said Strategy's new capital management strategy addresses the company's liquidity concerns by rebuilding cash reserves and pausing bitcoin purchases.
• However, the firm said Strategy still needs a systematic framework for timing bitcoin purchases and a disciplined plan for selling bitcoin during the next bull market.

Strategy's recently announced capital management strategy has addressed the company's immediate liquidity concerns, but it still needs clearer rules for when to buy and sell bitcoin, according to CryptoQuant.

"The Digital Credit Capital Framework is a genuine course correction," Julio Moreno, CryptoQuant's head of research, said in a report. "To complete that shift, Strategy still needs to define two things: a systematic model for timing bitcoin purchases, and a disciplined framework for selling into strength. Until then, the pivot still has room to improve."

Strategy announced the five-part digital credit capital framework on June 29. It includes a U.S. dollar reserve that can be used only for preferred dividends and interest, with a minimum coverage target of 12 months. It also raised the dividend on STRC preferred shares to 12%, subject to monthly review, as Strategy seeks to bring the preferred stock closer to its $100 stated par value.

The framework also authorizes up to $1 billion in preferred-share repurchases, with STRC the first priority when the company considers a buyback accretive, and up to $1 billion in MSTR common-stock repurchases when management considers the shares undervalued. A separate bitcoin monetization program allows Strategy to raise up to $1.25 billion through bitcoin sales to replenish its dollar reserve, fund dividends and interest, or finance buybacks. The framework also calls for more disciplined equity issuance when Strategy trades near one times its multiple to net asset value, or mNAV.

Strategy announced the framework just days after CryptoQuant offered some "unsolicited advice" to the company. CryptoQuant had recommended that Strategy pause bitcoin purchases until it rebuilt its cash reserve and dividend coverage, adopt a systematic approach to timing future purchases, and develop a plan for selling part of its holdings during future bull markets.

Moreno now said Strategy has substantially addressed the first recommendation. The company sold about 3,588 bitcoin for roughly $216 million from June 29 through July 5 to fund preferred dividends and replenish its reserve. It then raised $466.7 million by selling MSTR shares from July 6 through July 12, while making no further bitcoin sales or purchases that week.

Those actions increased Strategy's U.S. dollar reserve from $1.44 billion to $3 billion and roughly doubled its dividend coverage from about 14 months to 29 months, Moreno noted. Strategy's bitcoin holdings remained unchanged at 843,775 bitcoin, while the company had not yet carried out any preferred- or common-share repurchases.

The STRC stock also recovered from a record low of around $75 in late June to around $88 following the framework's introduction and the dividend increase. However, Moreno said it remains well below its $100 par value.

"The persistent discount signals the market wants to see the reserve rebuilt and the new discipline sustained before fully re-rating the security," Moreno said.

Two questions remain unanswered

Despite the progress, Moreno said Strategy has yet to address two important parts of its bitcoin strategy.

The first is how the company will decide when to resume buying bitcoin. Pausing purchases addresses the immediate liquidity issue, but the new framework does not provide a systematic, model-driven rule for when accumulation should restart, Moreno said.

"Its 'equity issuance discipline near 1x mNAV' governs how Strategy raises capital, not when it should deploy it into bitcoin. Without an explicit, valuation-aware model, the company risks repeating the 'always buys the local top' pattern once conditions improve," Moreno said.

The second question is how Strategy will sell bitcoin during the next bull market. Moreno said the current bitcoin monetization program is defensive by design, allowing sales to fund dividends, interest, and buybacks, but it does not establish a plan for partial sales or hedging near cycle highs.

"It is not a framework for strategic, partial sales or hedging at cycle highs to deleverage the balance sheet, realize shareholder value, and build dry powder to re-accumulate at lower prices," Moreno said. "That through-cycle selling discipline is the other half of active capital management, and it remains undefined."

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