Written by: Dingdang (@XiaMiPP)
The CEO of Strategy (formerly MicroStrategy), Michael Saylor, posted on Sunday, stating: 'Some weeks you just need to HODL.' The market interpreted this as a hint to pause Bitcoin purchases.
As the largest publicly traded company in terms of Bitcoin holdings globally, Michael Saylor's consistent investment philosophy is 'Bitcoin first', and investors have become accustomed to him writing 'buy' into their DNA. Therefore, every pause by Strategy will trigger the most sensitive nerves in the market, especially after the previous consecutive 13 weeks of increasing BTC holdings.
The weight of Bitcoin's treasury: How Strategy influences the market
As of July 8, Strategy's total Bitcoin holdings have reached 597,000 coins, accounting for 2.84% of the total supply, far ahead of other listed companies, and its holdings are even 2.3 times that of the combined holdings of the top 100 listed companies (excluding Strategy).
According to the 8-K filing submitted by Strategy to the US SEC, as of June 30, the value of Strategy's (MSTR.O) digital assets was $64.36 billion, with an average cost of $70,982 per coin, where the total fair value appreciation of Bitcoin in the second quarter of 2025 was $14 billion.
In other words, Strategy is not only a big whale in Bitcoin but also a lever for market price sentiment; every move by Strategy touches sensitive points in the market. Looking at the several pauses in purchases since 2025, almost all have indicated short-term market corrections; will this time be an exception?
The correlation between Strategy's purchase pauses and Bitcoin price trends
Fundraising flywheel: The capital game of preferred stock
Strategy originally started as a company focused on enterprise analytics software, but since 2020, its core strategy has shifted to making Bitcoin its primary reserve asset, aiming to hedge against inflation and achieve asset appreciation. Strategy has also gained fame due to its massive investments in Bitcoin.
To continue purchasing Bitcoin, Strategy needs a large amount of capital. Therefore, it has chosen to raise funds by issuing preferred stock. Since February 2025, Strategy has issued three types of preferred stock: STRF, STRK, and STRD, corresponding to different income mechanisms and risk priorities:
STRF: 10% cumulative dividends, highest priority. If unpaid, dividends will compound at an additional rate of 1% per year, up to a maximum of 18%.
STRK: 8% cumulative dividends, accompanied by convertible options.
STRD: 10% non-cumulative dividends, low priority, more for broad distribution to the market.
The core design of this structure is to enable Strategy to continuously leverage new capital without severely diluting the equity of common shareholders, providing ammunition for its ongoing Bitcoin purchases, thereby maintaining the 'issue stock - buy Bitcoin - raise stock price' flywheel closed loop.
From the market performance perspective, MicroStrategy (MSTR) has significantly outperformed Bitcoin itself, especially under the recent 'crypto US stock' fever. STRK and STRF, as earlier-issued preferred stocks, have also performed exceptionally well, while the later-issued STRD has shown remarkable potential. From the price trend perspective, STRK and STRF have performed particularly well recently, even significantly surpassing MSTR's stock performance.
It is worth noting that in March, this preferred stock issuance plan attracted top executives to personally participate. According to disclosures from the US SEC, several internal insiders of Strategy purchased its newly issued preferred stock, including the company CEO, CFO, and other executives. The CEO Phong Le purchased 6,000 shares at $85 each, CFO Andrew Kang bought 1,500 shares, and Chief Legal Counsel Wei-Ming Shao acquired 500 shares. This 'self-purchase' behavior serves as a signal and demonstrates the company's strong expectations for future returns.
On June 5, Strategy announced a public offering of 11,764,700 shares of 10.00% Series A perpetual Stride preferred stock, with an issuance price of $85 per share, completing the deal on June 10, raising approximately $980 million. Today, Strategy announced that it has signed a new sales agreement. Under this agreement, it intends to issue STRD shares to raise $4.2 billion and plans to prepare 'on-demand, phased' continuous financing according to the ATM plan. This flywheel is turning faster and faster.
The other side of leverage: a growth engine, but also a risk trigger?
According to the financial report for the first quarter of 2025 released by Strategy on May 1, it has raised nearly $10 billion through ATM issuances of preferred stock, convertible bonds, and common stock, almost all of which have been invested in Bitcoin. This high-leverage operation amplifies the paper gains from Bitcoin's rise but also increases the cash flow burden, especially with annualized interest expenses of 8% to 10% from preferred stock.
As of now, MSTR's market capitalization is approximately $112.9 billion, with an enterprise valuation of around $120 billion, corresponding to a net asset multiple of 1.7. Although it is still within a reasonable range, the elasticity of this line depends on two pivot points: one is the continued strength of Bitcoin prices, and the other is a smooth and stable external financing environment.
From a revenue perspective, the company's own 'blood generation' ability is weak. According to data provided by @0x ChainMind, the company's software business revenue in 2024 was only $463 million, a record low since 2010.
From the Q1 financial report, the company's main business had total revenue of $111.1 million in the first quarter of 2025, a year-on-year decrease of 3.6% (compared to $115.2 million in Q1 2024). However, subscription service revenue was $37.1 million, a year-on-year increase of 61.6%, showing that the transformation to cloud services and subscription models has been successful, which is a bright spot in revenue. If the old impairment model is still used for calculations, operating expenses and losses are approximately $190 million (there is controversy here, and Strategy is also facing a class-action lawsuit), with cash reserves of $60.3 million. Based on this data, operating expenses can only be barely covered. If the company wants to maintain operations and pay preferred stock annualized interest of 8%-10% (with annual expenses as high as $300-500 million), it must rely on 'continuous financing' to keep the flywheel operating.
The 'explosion' behind the financial report: $5.9 billion in unrealized losses, class action on the way
The reason for Strategy facing a class action lawsuit is that it adopted the FASB's new accounting standards (ASU 2023-08) for the first time in the first quarter of 2025. According to the new regulations, the company must measure cryptocurrency assets at fair value, rather than only recognizing impairments when they decline in value. This means that any fluctuations in Bitcoin prices will be reflected in the income statement in real-time.
As a result, in Q1 alone, Strategy disclosed an unrealized loss of $5.9 billion, directly causing MSTR's stock price to plummet by 8% during that quarter.
Worse still, the company is accused of failing to timely and comprehensively disclose these unrealized loss risks. The well-known law firm Pomerantz LLP immediately initiated a class action against Strategy in the Eastern District Court of Virginia, accusing it of 'false and misleading statements' between April 2024 and April 2025, allegedly violating federal securities laws. The case is currently progressing, and investors can apply to join the class action before July 15. Strategy has stated it will respond actively but has not predicted the outcome of the case.
This means that the price of Bitcoin not only determines the asset value of Strategy but is also deciding its legal risks, financing capabilities, and investor confidence.
Market voices
Michael Saylor stated that Strategy has developed a BTC credit model that comprehensively considers loan terms, collateral coverage, BTC prices, volatility, and expected annualized returns to generate statistical data on Bitcoin risk and credit spreads. Strategy is promoting the digital transformation of the credit market through its STRK, STRF, and STRD, which also means that Strategy's path is no longer just about buying Bitcoin; it has built a closed-loop system around the capitalization and financialization of BTC.
A report from venture capital firm Breed indicated that due to its scale, holdings, and anti-cyclical capabilities, Strategy may become a long-term survivor of the cryptocurrency financial model, with a 91% probability of being included in the S&P 500 index in the second quarter of 2025.
However, not everyone is so optimistic. Some analysts point out that while this flywheel operates smoothly in a bull market, it will face severe tests in a bear market regarding its debt structure, preferred stock interest, and cash flow stability.
On July 1, TD Cowen reiterated its 'buy' rating on Strategy in a research report, maintaining its target price of $590 per share. It stated that despite the risks, it is reasonable for Strategy's stock price to show a premium relative to its net asset value (NAV) of held Bitcoin (BTC). The institution indicated that Strategy's 'equity-to-BTC loop' model allows it to utilize its stock issuance income to purchase more Bitcoin, thus driving higher stock prices and further Bitcoin purchases, forming a virtuous cycle.
From the current data, Strategy's short-term cash flow can still 'barely maintain' itself, and its Bitcoin holdings are the absolute main character on the company's balance sheet. But this is also its biggest risk: its prosperity is almost based on the assumption of stable or rising BTC prices. In a sense, Strategy is no longer a traditional tech company; it resembles a 'Bitcoin high-leverage asset management platform' wrapped in software.
