Strategy has introduced a new capital management approach that eases immediate liquidity pressures but calls for more structured Bitcoin trading rules, according to CryptoQuant's latest analysis.
Digital Credit Capital Framework Details
Announced on June 29, the framework creates a US dollar reserve strictly for preferred stock dividends and interest, ensuring at least 12 months of payment coverage. The dividend rate for STRC preferred shares increased to 12%, with monthly adjustments possible, aiming to align STRC's market price closer to its $100 nominal value.
The plan permits repurchasing up to $1 billion of preferred shares when deemed value-enhancing, prioritizing STRC shares. It also authorizes buying back up to $1 billion of MSTR common shares during periods of perceived undervaluation.
A Bitcoin cash-out program allows selling up to $1.25 billion worth of Bitcoin to boost dollar reserves, fund dividends, interest payments, and share repurchases. Strategy will issue shares cautiously if its market value/net asset value ratio nears 1.
CryptoQuant's Assessment and Recent Activity
CryptoQuant Research Director Julio Moreno called the framework a significant course correction but highlighted the need for a clear, systematic strategy for timing Bitcoin purchases and disciplined selling during bullish markets.
Following CryptoQuant's prior advice to pause Bitcoin buying until reserves and dividend coverage improve, Strategy sold approximately 3,588 Bitcoin between June 29 and July 5, raising around $216 million.
