CryptoQuant: Strategy Needs Clear Bitcoin Buying and Selling Rules
CryptoQuant has praised Strategy’s new capital management plan for fixing immediate liquidity issues, but says the company still lacks a disciplined framework for buying and selling Bitcoin.
Positive Steps Taken by Strategy
Strategy recently introduced its five-part Digital Credit Capital Framework. According to CryptoQuant, this move is a “genuine course correction.”
The framework builds strong cash reserves, pauses Bitcoin purchases, and creates a U.S. dollar reserve for dividends and interest with a 12-month minimum coverage target. Strategy also raised the dividend on STRC preferred shares to 12% and authorized up to $1 billion each for preferred and common stock repurchases.
A separate Bitcoin monetization program allows sales of up to $1.25 billion in Bitcoin to support reserves, dividends, and buybacks.
Actions That Improved Liquidity
Following CryptoQuant’s earlier recommendations, Strategy acted quickly:
- Sold 3,588 Bitcoin for about $216 million between June 29 and July 5.
- Raised $466.7 million by selling MSTR shares from July 6 to July 12.
- Increased its U.S. dollar reserve from $1.44 billion to $3 billion.
- Nearly doubled dividend coverage from 14 months to 29 months.
Strategy’s Bitcoin holdings remain steady at 843,775 BTC. No share repurchases have been executed yet. STRC stock recovered from a low of $75 to around $88 after the announcement.
What Strategy Still Needs to Improve
Julio Moreno, Head of Research at CryptoQuant, highlighted two key gaps:
- Systematic Bitcoin Buying Framework The current plan does not include a clear, model-driven rule for when to resume Bitcoin purchases. Without this, Strategy risks buying at local tops again once liquidity improves.
- Disciplined Selling Plan The existing monetization program is defensive and limited to funding dividends and buybacks. It lacks a strategy for partial Bitcoin sales or hedging near market cycle highs to lock in gains and prepare for future opportunities.
