Author: Ding Dang
Strategy (formerly MicroStrategy) CEO Michael Saylor posted on Sunday: "Some weeks you just need to HODL." The market interpreted it as implying a pause in buying Bitcoin.
As the listed company with the largest Bitcoin holdings in the world, Michael Saylor's consistent investment philosophy is "Bitcoin supremacy", and investors are already accustomed to him writing "buy" into his DNA. Therefore, every pause of Strategy will touch the most sensitive nerve of the market, especially in the context of increasing BTC holdings for 13 consecutive weeks before.
The Weight of Bitcoin Treasury: How Strategy Influences the Market
As of July 8, Strategy's total Bitcoin holdings have reached 597,000, accounting for 2.84% of the total supply, far ahead of other listed companies. Its Bitcoin holdings are even 2.3 times the combined holdings of the top 100 listed companies (excluding Strategy).
According to the 8-K document information submitted by Strategy to the U.S. SEC, as of June 30, the digital assets of Strategy (MSTR.O) were valued at $64.36 billion, with an average cost of $70,982 per coin, of which the total fair value of Bitcoin appreciated by $14 billion in the second quarter of 2025.
In other words, Strategy is not only a Bitcoin whale, but also a lever for market price sentiment. Strategy's every move will touch market sensitive points. Judging from the several pauses in purchasing behavior since 2025, they almost all foreshadow a short-term market correction. Will this time be an exception?
Strategy suspends purchases, correlation with Bitcoin trends
Fundraising Flywheel: The Capital Game of Preferred Stock
Strategy was originally a company that started with enterprise analysis software. Since 2020, its core strategy has shifted to using Bitcoin as its main reserve asset, aiming to hedge against inflation and achieve asset appreciation. Strategy has also become famous for its large-scale investment in Bitcoin.
To continue purchasing Bitcoin, Strategy needs a large amount of capital. Therefore, it chooses to raise funds by issuing preferred stock. Since February 2025, Strategy has successively issued three types of preferred stock, namely STRF, STRK, and STRD, corresponding to different revenue mechanisms and risk priorities:
STRF: 10% cumulative dividend, highest priority. If not paid, the dividend will compound at an additional 1% per year, up to 18%.
STRK: 8% cumulative dividend, with convertible options.
STRD: 10% non-cumulative dividend, low priority, used more for widespread distribution to the general public.
The core of this structure's design is to allow Strategy to continuously leverage new capital without seriously diluting the equity of ordinary shareholders, providing ammunition for its continuous Bitcoin purchases, thereby maintaining the flywheel closed loop of "issuing shares - buying Bitcoin - rising stock price".
From the market performance, MicroStrategy (MSTR) significantly outperforms Bitcoin itself, especially under the recent wave of "crypto-US stocks". STRK and STRF, as earlier issued preferred stocks, have also performed very well, and the later issued STRD has also shown considerable potential. From the price trend, STRK and STRF have recently performed particularly well, even greatly exceeding the stock performance of MSTR.
It is worth noting that in March, this preferred stock issuance plan attracted senior internal executives to personally participate. According to documents disclosed by the U.S. Securities and Exchange Commission, several Strategy insiders bought the latest preferred stock, involving the company's CEO, CFO, and other executives, including CEO Phong Le who purchased 6,000 preferred shares at a price of $85, CFO Andrew Kang purchased 1,500 shares, and General Counsel Wei-Ming Shao purchased 500 shares. This "self-purchase" behavior is both a signal and releases 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 issue price of $85 per share, and completed delivery on June 10, raising approximately $980 million. Just today, Strategy announced again that it has signed a new sales agreement. According to the agreement, it plans to issue STRD stocks to raise $4.2 billion, and it is expected to prepare for continuous financing "on demand and in stages" under the ATM plan. This flywheel is turning faster and faster.
The Other Side of Leverage: Growth Engine, Also a Risk Fuse?
According to Strategy's first-quarter financial report for 2025 released on May 1, it has raised nearly $10 billion through preferred stock, convertible bonds, and ATM issuance of common stock, almost all of which has been invested in Bitcoin. This high-leverage operation has amplified the book gains brought by the rise of Bitcoin, but it has also pushed up the burden on cash flow, especially the 8%~10% annualized interest expense brought by preferred stock.
As of now, MSTR's market value is approximately $112.9 billion, and the enterprise valuation is around $120 billion, corresponding to a net asset multiple of 1.7. Although it is still in a reasonable range, the elasticity of this line depends on two fulcrums: one is the continued strength of Bitcoin prices, and the other is the smooth and stable external financing environment.
From the revenue side, the company's own "blood-making" ability is weak. According to data provided by @0xChainMind, the company's software business revenue in 2024 was only $463 million, the lowest record since 2010.
From the Q1 financial report, the company's main business revenue in the first quarter of 2025 was $111.1 million, a decrease of 3.6% year-on-year ($115.2 million in Q1 2024). However, subscription service revenue was $37.1 million, an increase of 61.6% year-on-year, indicating the successful transformation of cloud services and subscription models, which is a highlight of revenue. If the old impairment model is still used for calculation, operating expenses and losses are about $190 million (there is a dispute here, and Strategy is also facing a class action lawsuit because of this), and the cash reserve is $60.3 million. If this data is used to speculate, operating expenses can only be barely covered. If the company wants to maintain operation and pay 8%-10% annualized interest on preferred stock (annual expenditure of up to $300-500 million), it must rely on "continuous financing" to maintain the flywheel operation.
"Thunder" Behind the Report: $5.9 Billion Floating Loss, Class Action Lawsuit on the Way
Strategy is facing a class action lawsuit because it adopted the new FASB accounting standard (ASU 2023-08) for the first time in the first quarter of 2025. According to the new rules, companies must measure crypto assets at fair value, instead of only recognizing impairment when they depreciate. This means that any fluctuation in the price of Bitcoin will be reflected in the income statement in real time and directly.
As a result, in Q1 alone, Strategy disclosed unrealized floating losses of $5.9 billion, directly triggering an 8% plunge in MSTR's stock price in that quarter.
Worse, the company is accused of failing to disclose these floating loss risks in a timely and comprehensive manner. The well-known New York law firm Pomerantz LLP immediately filed a class action lawsuit against Strategy in the Eastern District Court of Virginia, accusing it of "false and misleading statements" between April 2024 and April 2025, suspected of violating federal securities laws. The case is currently progressing, and investors can apply to join the class action lawsuit before July 15. Strategy said it will actively respond, but did not make any predictions about the outcome of the case.
This means that the price of Bitcoin not only determines the asset value of Strategy, but also determines 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 term, collateral coverage, BTC price, volatility, and annualized yield expectations to generate statistics 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 not just buying Bitcoin; it is more like building a closed-loop system around the capitalization and financialization of BTC.
A report by venture capital firm Breed points out that, due to its size, holdings, and counter-cyclical capabilities, Strategy is likely to be a long-term survivor of the crypto-fiscal model, with a 91% probability of being included in the S&P 500 index in the second quarter of 2025.
But not everyone is so optimistic. Some analysts pointed out that this flywheel runs smoothly in a bull market, but once it enters a bear market, its debt structure, preferred stock interest, and cash flow stability will be severely tested.
On July 1, TD Cowen reiterated its "buy" rating for Strategy in a research report and maintained its target price of $590 per share. It stated that despite the risks, the premium of Strategy's stock price relative to the net asset value (NAV) of its Bitcoin (BTC) holdings is reasonable. The agency said that Strategy's "equity-to-BTC loop" model allows it to use its stock issuance revenue to buy more Bitcoin, thereby driving higher stock prices and further Bitcoin purchases, forming a virtuous cycle.
From the current data, Strategy's short-term cash flow can still be "barely maintained", and its Bitcoin holdings are the absolute protagonist on the company's balance sheet. But this is also its biggest risk: its prosperity is almost entirely built on the assumption that the price of BTC is stable or rising. In a sense, Strategy is no longer a traditional technology company; it is more like a "Bitcoin high-leverage asset management platform" packaged in a software shell.
