Strategy's recently announced capital management strategy has addressed the company's immediate liquidity concerns, but it still needs clearer rules for when to buy and sell bitcoin, according to CryptoQuant.
"The Digital Credit Capital Framework is a genuine course correction," Julio Moreno, CryptoQuant's head of research, said in a report. "To complete that shift, Strategy still needs to define two things: a systematic model for timing bitcoin purchases, and a disciplined framework for selling into strength. Until then, the pivot still has room to improve."
Strategy announced the five-part digital credit capital framework on June 29. It includes a U.S. dollar reserve that can be used only for preferred dividends and interest, with a minimum coverage target of 12 months. It also raised the dividend on STRC preferred shares to 12%, subject to monthly review, as Strategy seeks to bring the preferred stock closer to its $100 stated par value.
The framework also authorizes up to $1 billion in preferred-share repurchases, with STRC the first priority when the company considers a buyback accretive, and up to $1 billion in MSTR common-stock repurchases when management considers the shares undervalued. A separate bitcoin monetization program allows Strategy to raise up to $1.25 billion through bitcoin sales to replenish its dollar reserve, fund dividends and interest, or finance buybacks. The framework also calls for more disciplined equity issuance when Strategy trades near one times its multiple to net asset value, or mNAV.
