Shares of Strategy, Inc. (MSTR) plunged 45.4% in June, according to data from S&P Global Market Intelligence.
Bitcoin’s price decline has weighed on Strategy, which operates with a large Bitcoin position financed by debt and preferred stock. Year-to-date, Bitcoin’s price has fallen about 28.5%, with an 18.4% decline in June alone. Gold has also declined, down about 4% for the year and roughly 20% since its late‑January peak. Bitcoin is often described as "digital gold," touted as a hedge against inflation and geopolitical turmoil, though its price movements have tracked broader risk sentiment and other macro factors.
Investors may have sold Bitcoin to fund AI stock purchases as part of the market rally for technology and AI-related bets. In a June 1 filing, Strategy disclosed it had sold 32 BTC between May 26 and May 31, along with substantial equity sales through its at-the-market program, to fund the bi-monthly dividend on its preferred shares. This marked the company’s first Bitcoin sales in 41 months, since December 2022. Such moves could signal to the market that Strategy could become a forced seller if Bitcoin continues to decline.
Late in the month, Strategy disclosed an updated liquidity strategy to reduce pressure on its balance sheet. Under the plan, the company may sell some Bitcoin to partly fund a larger liquidity reserve of roughly $3.8 billion, exceeding the prior reserve, to cover dividends on the preferred stock and interest payments. Strategy also authorized a $1.0 billion share repurchase program, as well as a program to potentially repurchase the preferred stock. Repurchases would likely occur only if these securities trade at a material discount to the stock’s net asset value or to the preferred stock’s face value. The new, more conservative liquidity plan appeared to reassure investors somewhat, as the stock briefly recovered on the announcement.
Strategy remains a levered bet on a Bitcoin recovery. The company says it will continue to buy Bitcoin as long as it can sell its stock above net asset value and then buy Bitcoin for less. It resumed some Bitcoin purchases later in June, despite selling pressure in late May. By holding more U.S. dollar liquidity, Strategy aims to limit forced selling and support dividends and interest payments. The price of Bitcoin rose into month-end and into early July, providing some relief for holders.
For long‑term Bitcoin bulls, the recent drawdown in Strategy could create a good opportunity to play a Bitcoin recovery, now that Strategy appears more conservative with its balance sheet. Still, investing in any cryptocurrency carries risks, given the intangible nature of this recently invented asset.
Analysts note that Strategy’s updated liquidity stance — holding more USD reserves and moderating Bitcoin purchases — may reduce near-term forced selling risk if Bitcoin’s price remains under pressure, even as the firm continues to operate as a significant Bitcoin holder. The situation highlights the sensitivity of Strategy’s earnings and distributions to Bitcoin’s price and the availability of liquidity to cover dividends and interest payments.
