Strategy Stops Buying Bitcoin and Builds a $3B Dollar Reserve

Strategy has not bought bitcoin since June 22 and has spent the three weeks since stacking dollars instead, lifting its reserve to roughly $3 billion from about $2.55 billion a week earlier. Its last purchase, 520 BTC for about $35 million, went through on that date, and holdings have sat at 843,775 BTC ever since. The company said the reserve is there to cover distributions on its preferred stock and interest on its debt, obligations that run to about $1.76 billion a year, or roughly 20.4 months of coverage at the current balance. The pause caps a fortnight in which the firm sold bitcoin at the fastest pace since it dropped its never-sell stance. Bitcoin traded near $63,000 on Monday, down more than 1% since midnight UTC.

Three weeks without a purchase

For a company whose defining activity has been buying bitcoin every week it could, three weeks of nothing is itself the disclosure. Holdings sit at 843,775 BTC on a cost basis of about $63.69 billion, an average purchase price of $75,476 per coin, well above where bitcoin has traded through the month. Even the 520 BTC bought on June 22 for about $35 million was a token amount by the company's own standards. What replaced the buying was cash. The reserve stood at about $2.55 billion on July 5, and by this week it had reached about $3 billion.

The sales: 3,588 BTC for about $216 million

The reserve was built partly out of bitcoin. In a disclosure put out on July 6 the company said it had sold 3,588 BTC for roughly $216 million at an average price of about $60,000, split into 1,363 BTC for about $80.8 million on June 30 and a further 2,225 BTC for $135.2 million. That was its largest sale since it abandoned the never-sell position, against just 32 BTC sold a month earlier. Proceeds were earmarked for preferred-stock distributions and for replenishing the dollar reserve, and MSTR traded about 2% lower in the pre-market on the day. Separately, the $1.25 billion Bitcoin Monetization Program authorised in June remained fully available, with none of that capacity drawn.

The selling has critics. On July 2, JPMorgan said Strategy's sales policy adds "two-way risk" to crypto markets, the argument being that a holder of this size that both buys and sells removes the one-directional bid the market had learned to expect from it. The average sale price of about $60,000 is itself a product of the drawdown that produced June's low, and it sits roughly $15,000 below the average the company paid. The disposals realized a loss against the cost of the stack.

mNAV back above 1.0

Behind both the sales and the pause sits mNAV, the ratio of a company's market value to the bitcoin it holds. As of this week it stood at about 1.02x, a slight premium, after falling below 1.0 on June 27. The threshold matters. Below it the market values the company at less than its coins, and issuing new shares to buy more bitcoin stops making sense, because dilution at a discount destroys value for existing holders rather than creating it. Above 1.0 the machine works; at 1.02x it barely does. The preferred stock reflects the same pressure, with STRC trading around $87, down 0.5%, against a stated value of $100.

Coverage bought at the cost of accumulation

Twenty months of coverage is a real cushion, but it was assembled by selling the asset the company exists to hold and by not replacing it. Nothing disclosed so far says what would end the pause: the company has named no mNAV level and no price, and put no date on a restart. Traders were watching resistance flagged at $66,000 and $68,900 and support at $58,000, the 0.618 Fibonacci retracement level, and the company's position sits inside that range, not above it. Until buying resumes, the question is whether a treasury that has stopped accumulating is still the same instrument its shareholders bought.