Michael Saylor, co-founder of Strategy, publicly defended the company’s financial model after the preferred shares of STRC fell below their $100 par value and sparked a wave of criticism, including allegations of possible market pressure.
Who Is Michael Saylor and Why Is He Betting on Bitcoin
Michael Saylor is the co-founder of Strategy and a crypto entrepreneur. In this situation, he is defending the model in which the company raises capital and directs it toward buying bitcoin.
Since 2022, according to Saylor, Strategy has raised tens of billions of dollars and invested these funds in bitcoin. His main argument for this strategy is the margin of safety: reserves in bitcoin and cash, he claims, exceed outstanding debt by about $48 billion.
Because of the scale of the bitcoin position, the decisions of Saylor and Strategy have a noticeable impact on the discussion of corporate investments in cryptocurrencies: their moves are analyzed by analysts, investors, and market critics.
Saylor Insists That Strategy Has a Margin of Safety
The crypto entrepreneur stated that Strategy’s reserves in bitcoin and regular cash now exceed the company’s outstanding debt by about $48 billion. According to him, since 2022, Strategy has raised tens of billions of dollars and directed these funds to purchase bitcoin.
What Numbers Did Saylor Cite About the Previous Bear Market
As an argument, Saylor recalled the previous bear market:
- Bitcoin reserves: about 130,000 coins.
- Reserve valuation: about $2.6 billion.
- Average purchase price: about $20,000 per coin.
- Bitcoin drawdown: below $16,000.
- Debt exceeding reserves: about $300 million.
- MSTR stock dynamics: from $24 to $13.
“We did not lose focus then either, we strengthened the company and continued to follow our chosen strategy. Since then, Strategy has raised more than $60 billion in additional capital and invested it in bitcoin, increasing the position by more than 716,000 BTC,” Saylor said.
Saylor described the result of these actions with two numbers:
- Additional capital: more than $60 billion.
- Increase in bitcoin position: more than 716,000 BTC.
Analysts Debate Whether the Company Has Enough Money for Payouts
Earlier, analysts from market maker QCP estimated that Strategy’s available funds might be enough for about seven and a half months of preferred stock dividend payments. After that, experts believe, the company will be left with one obvious option — selling part of its bitcoin.
Arca Chief Investment Officer Jeff Dorman suggested that Strategy may need to sell $3–4 billion worth of bitcoin to reduce capital pressure and support STRC shares.
Dorman estimated the probability of this scenario at 25%. He considers continued small sales of MSTR shares more likely, at about 70%.
In this case, the bitcoin reserves would be almost unaffected, but for shareholders, the risk of further declines in share value would increase.
Critics Suggest Strategy Abandon the Controversial Instrument
Bloomberg senior ETF analyst Eric Balchunas believes Strategy should shut down the STRC project and move on. In his opinion, this instrument has become a problem not only for the company but also for the entire community around it.
“I would end this project and move on. Right now, it looks like a thorn in the side of the company and the whole community. The company did just fine without it,” Balchunas noted.
Market analyst Andre Dragos sees two possible options for Strategy:
- Increase dividends.
- Wait for the US Federal Reserve to ease monetary policy and for Treasury yields to fall.
Crypto analyst Ali Martinez went even further and compared STRC to the structure of the collapsed Luna token from Terra. Later, economist Peter Schiff stated that Saylor may have violated US Securities and Exchange Commission rules when promoting the placement of preferred shares.
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