Strategy’s Bitcoin Stack Raises the Key Question: What Can It Do Instead of Selling BTC?

Why Selling Bitcoin Became the Central Concern

Pressure built after weeks of mounting stress in Strategy’s preferred-stock structure, according to a July 3 research note by Galaxy Digital’s head of firmwide research Alex Thorn. STRC, its main preferred security, was meant to trade near $100 but dropped to $71.25 on June 26 as bitcoin prices fell and the company’s cash reserves declined.

That sharp decline forced investors to confront a difficult and increasingly urgent question about Strategy’s next move. Would Strategy sell $BTC, issue more common stock or reduce preferred dividends? Each option carried risk for a different group of investors. Selling bitcoin could damage Strategy’s long-term $BTC story, while selling common stock could dilute holders of its publicly traded shares (ticker: MSTR).

Strategy responded with a five-part Digital Credit Capital Framework. It includes a U.S. dollar reserve policy, a revised STRC dividend policy, $1 billion in preferred-stock repurchase authorization, $1 billion in MSTR stock repurchase authorization and a $BTC monetization program. Strategy also raised STRC’s annual dividend rate from 11.5% to 12%.

Did Strategy Buy Enough Time?

The market initially liked the move. MSTR rose 12.6% after the announcement, while STRC climbed 12.2%. STRC later traded near $87, still below par but well above its recent low.

Thorn called the overhaul useful but incomplete. He wrote:

“This was a smart move by Strategy, but it may not resolve structural issues forever.”

He added that “in a sense, Strategy’s move Monday simply kicks the can down the road. But Strategy kicked the can pretty far.”

That extra breathing room matters because the issue was liquidity, not total assets. Strategy holds 847,363 $BTC, making it one of the largest bitcoin holders in the world. By raising more than $1 billion through common-stock sales and setting a 12-month minimum cash reserve policy, the company lifted cash coverage to about 17 months.

What Could Strategy Do Instead of Selling $BTC?

The biggest question now is how Strategy will use its expanded flexibility. Thorn said “the most controversial part of the announcement is the ‘ $BTC monetization’ program,” because it gives the company the option to sell bitcoin if needed.

Instead, the Galaxy Digital head of research argued Strategy should pursue other ways to raise cash. “Strategy should explore generating income from the $BTC stack without necessarily selling spot $BTC,” Thorn noted.

He suggested using only a small portion of the company’s holdings through conservative lending or options strategies, stating:

“That could mean lending a small, segregated portion of its bitcoin under conservative terms, or it could mean options strategies that harvest volatility while preserving most of the upside.”

“These could be structured trades that monetize part of the stack while limiting counterparty, custody, and duration risk,” he added.

Why Optionality Could Define Strategy’s Next Move

Those alternatives would not be risk-free. Bitcoin lending introduces counterparty risk, while options strategies could limit some upside. However, a modest, tightly managed program could create recurring dollar income while preserving most of Strategy’s bitcoin exposure.

Strategy’s overhaul gives the company more flexibility and appears to have eased its immediate funding concerns. Still, it faces large preferred obligations and $6.7 billion in outstanding converts due in 2027 and 2028. Thorn concluded:

“All of this said, we do believe Strategy has made a wise decision to increase its optionality.”

Whether that optionality becomes a lasting solution will depend on bitcoin prices, market conditions and whether Strategy can generate liquidity without weakening the long-term bitcoin investment thesis that has defined MSTR.