Strategy's management's latest statement indicates that the company, known as the Bitcoin Treasury, will not resume its purchases in the short term. The company is currently focusing on supplementing dollar liquidity and facilitating the return of priority shares to $100 nominal value to restore their financing capacity.

The company disclosed that debt-related risks would need to be carefully assessed only if Bitcoin fell between $800 and $10,000. In an interview with Bloomberg TV, CEO Phong Le stated that the company still had “a great deal of confidence” over this price.

It's recently suspended.

Strategy has not held bitcoin since late June. Over the past few weeks, companies have raised $467 million through the sale of common shares, raising cash reserves to $3 billion, large enough to cover about two years of dividends payments.

Le describes this adjustment as part of a corporate capital strategy. He claims that Strategy is moving from a single Bitcoin Treasury to a more complete digital capital platform. At this stage, the maintenance of United States dollar liquidity is given higher priority.

STRC Return Value is key

One of the current core objectives of management is to return the priority unit Stratch (code STRC) to a nominal value of $100. The security has been below nominal value since mid-May, with a Wednesday price of approximately $89.

For Strategy, when STRC prices are below nominal value, the attractiveness of reissuing such priority shares will be significantly reduced, thus limiting companies from continuing to finance bitcoin through the tool. Le indicates that an increase in the United States dollar reserve is one of the main means of driving up the price recovery of STRC.

  • General share financing at $467 million
  • Cash reserves have increased to $3 billion.
  • STRC current price is about $89.

Le further states that, with the increase in reserves, the STRC has recovered from its earlier low point near $75 to close to $90. Once the securities return to their nominal value, the company may continue to issue and use part of the funds to buy bitcoin, and may continue to replenish the United States dollar reserve.

Management responses to market concerns

Recent market concerns about Strategy have come from two main sources: the company’s moratorium on the purchase of currency, and the co-founder, Michael Saylor, who began to reduce the share of bitcoin held by the company last year, raising questions as to whether its “debt-weighted” financing cycle remains sustainable.

Le stated that the company had not withdrawn from the Bitcoin market. He claims that Strategy is still one of the largest businesses known to hold a warehouse, holding more than 840,000 bitcoin, or about 4 per cent of the final total of 21 million bitcoin. He also indicated that the value ofbitcoin-day transactions was usually between $30 billion and $40 billion, and that the recent sale of $216 million by companies had not contributed to significant market volatility.

Two weeks ago, Strategy published a new capital framework that gave management more room to sell bitcoin, buy back securities and protect liquidity. The influence of recent currency sales has also previously been diluted by scum bank analysts, who consider it more noise.

The worst points to 8000 to $10,000.

When asked about the worst-case scenario, Le gave a risk range well below the bitcoin price of about $6.47 million at the time of the interview. He indicated that only when bitcoin was close to $800 to $10,000 would the company need to consider debt risk.

To date, Strategy's currency purchase plan remains suspended. Over the past year, the cumulative decline in corporate equity was over 77 per cent, while the decline in bitcoin was about 45 per cent over the same period. Priority equity financing mechanisms that support the continued purchase of bitcoin have not resumed for the time being, in the face of a marked fall in the price of bitcoin over historical highs and the failure of the STRC to return to nominal value.

Additional information:The STRC mentioned in the text is an important priority equity tool for Strategy for financing. The focus of the management statement was not to give a new time frame for the purchase of currency, but to indicate that the company would give priority to ensuring cash and dividends coverage until the instrument was back on track.