Strategy’s Phong Le Explains Why They Sold Bitcoin at $60K, Bought at $80K

Sell Low, Buy High? Le Says That Is the Wrong Question

This summer, Strategy sold astir 7,000 BTC successful the $60,000 to $65,000 scope but then, betwixt Aug. 24 and Aug. 30, paid $369.7 cardinal for 4,603 bitcoin astatine an mean of $80,318. On paper, it seemed similar the implicit worst trade, but Phong Le does not spot it that way.

Speaking connected Bloomberg Crypto this week, Strategy’s main enforcement called the sale “the close commercialized astatine the clip to merchantability bitcoin to money immoderate of our Stretch dividends,” referring to STRC, the company’s variable-rate preferred stock. He further noted:

“It’s the close commercialized astatine this constituent successful clip to merchantability MSTR astatine a premium to bargain bitcoin. We don’t truly marque decisions specifically connected bitcoin’s price.”

The company’s regularisation seems to beryllium astir outgo of capital, i.e. merchantability equity erstwhile the banal trades astatine a premium to its coins, and interaction the bitcoin lone erstwhile equity is the much costly option. Selling what Le called a “minuscule” slice, little than 1% of the stack, covered the preferred dividends without inexpensive stock issuance.

What the Pause Bought

The 10-week buying frost was not idle, and Le revealed that Strategy’s net indebtedness went from astir $7 cardinal to zero implicit that stretch, portion the steadfast built astir $7 cardinal successful cash. Bitcoin.com News reported connected Aug. 24 that Strategy had stockpiled $6.69 billion with holdings frozen astatine 840,447 BTC.

A week later, the institution announced the 4,603-coin purchase, funded by a $602.8 cardinal at-the-market (ATM) banal sale, and said it present runs astatine 0.0% nett leverage. It besides repurchased $151.8 cardinal of STRC.

Le has called the effect a “bullet-proof equilibrium sheet,” and his statement is that a institution with zero nett indebtedness and $7 cardinal successful the slope tin ne'er beryllium a forced seller, careless of immoderate bitcoin’s terms does next.

The Math

• The circular trip: Selling 7,000 BTC astatine a $62,500 midpoint raises astir $437 million. Buying the aforesaid coins backmost astatine $80,318 costs astir $562 million. The spread is astir $125 million, oregon astir 1,500 bitcoins’ worthy of purchasing powerfulness astatine today’s price.
• The stack: After the August purchase, Strategy held 845,050 BTC bought for $63.73 billion, an mean of $75,412 per coin. At bitcoin’s existent terms of astir $79,700, the heap is worthy astir $67.3 billion, a insubstantial summation adjacent $3.6 billion.
• The illustration everyone is sharing: A profit-and-loss visualization, drawn erstwhile bitcoin traded supra $81,000, puts the unrealized summation astatine $4.93 billion. That is the plaything from a insubstantial nonaccomplishment of much than $10 cardinal earlier this twelvemonth to a greenish fig successful astir six weeks. It flips that accelerated due to the fact that each $1,000 determination successful bitcoin present shifts Strategy’s equilibrium expanse by $845 million.
• The ratio: Le said successful August the institution had bought astir 175,000 BTC successful 2026 and sold astir 7,000, a buying gait 25 times higher than its selling. The merchantability looks ample successful isolation and tiny adjacent to the year’s accumulation.

In sum, Strategy gave up astir $125 cardinal to debar diluting shareholders astatine a atrocious terms and to zero retired its debt. Whether that was worthy it depends connected what a cleanable equilibrium expanse is worthy erstwhile the adjacent drawdown arrives.

Looking ahead, Le said helium does not foresee Strategy selling bitcoin arsenic the steadfast enters into what helium considers “a beauteous dense bull market,” and repeated that the steadfast is “a nett accumulator.” Investors are little convinced. MSTR is down astir 22% twelvemonth to day aft an $8.22 cardinal second-quarter loss tied to fair-value accounting connected its coins.