The strategy Bitcoin has come under renewed scrutiny after Grayscale Research Head Zach Pandl argued that selling more than $3 billion worth of Bitcoin could be a better option than raising dividends on STRC preferred stock.
His comments have intensified debate over the sustainability of the company’s treasury strategy as investors closely monitor its growing cash obligations and funding model.
According to Pandl, an increase in STRC’s dividend by 50 basis points next week would result in about $100 million obligation during the next two years. While the move could improve investor returns, he said it would likely fail to restore market confidence because it would not address concerns surrounding Strategy’s future liquidity requirements.
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Strategy Bitcoin Sale Could Reduce Obligations
Instead, Pandl suggested that selling more than $3 billion in Bitcoin could cover nearly all projected cash obligations over the next two years.
Strategy, formerly MicroStrategy, remains the world’s largest corporate Bitcoin holder after building its business around accumulating BTC through debt, equity offerings, and preferred shares.
The strategy Bitcoin treasury of the company has always been seen as a leveraged bet on future price increases of BTC, every conversation related to Bitcoin sales is especially relevant for shareholders and market participants.
The debate centers on STRC, Strategy’s variable-rate preferred stock, designed to trade near $100 while currently offering an annual dividend yield of 11.5%. However, the shares of STRC have recently fallen below the intended price due to fears about the sustainability of dividend payments.
Meanwhile, Bitcoin is currently trading at $60,346, with a 24-hour trading volume of $21.73 billion and a market capitalization of $1.21 trillion.
Bitcoin Holdings Remain Central to Investor Confidence
These fears have risen after the announcement from Strategy regarding its recent BTC sellings of 32 BTC for about $2.5 million from May 26 to May 31. Although it was an insignificant deal compared to the total BTC holdings, it raised the question of the possible need for the company to sell BTC in order to manage its funding problems.
Also, market observers have noticed that STRC fell to $82.50 and thus increased its effective yield up to 13.2%, while CryptoQuant estimated annual dividend obligations reached approximately $1.2 billion. The dividend coverage reduced to about 14 months, explaining the relevance of liquidity management as one of the key concerns for investors evaluating the financial condition of the Strategy.
However, Strategy Bitcoin recently bought another 520 BTC for about $34.9 million, bringing the BTC holdings to 847,363 and increasing the company’s cash balance by almost $300 million. Now it remains to observe how management will deal with the issues regarding dividend payment, funding, and strategic sells of BTC.
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