Strategy's recent bitcoin sales should restore market confidence in the company's financing structure, help bitcoin find a more durable price bottom, and reduce bitcoin tail risks, according to Grayscale.
"On the surface there is nothing wrong with Strategy's balance sheet. The company owns ~$52 billion worth of Bitcoin and has just ~$7 billion worth of debt," Zach Pandl, Grayscale's head of research, said in a note on Monday. "Its annual dividend obligations on its preferred equities are less than $2 billion. Strategy clearly has sufficient financial resources to service its debt and dividend obligations."
The rebound in the price of STRC, Strategy's preferred stock, suggests investors are now more confident about the instrument, according to Pandl.
The comments came as Strategy (MSTR) announced Monday that it sold about 3,588 bitcoin worth about $216 million last week. The sale follows the company's recently introduced bitcoin monetization program, which allows Strategy to sell bitcoin when needed to build its cash reserves, fund preferred stock dividends and interest expenses, or support capital structure optimization. Strategy also set a minimum cash reserve target covering 12 months of preferred dividend and interest obligations.
