MSTR Stock Tanks 5% As Michael Saylor Sells 32 BTC For First Time

Key Insights:

• Strategy will use BTC sale proceeds to help fund dividend obligations tied to the company’s STRC preferred stock.
• MSTR stock price is down by 5% in pre-market trading, and has slipped under its 200-week moving average, raising concerns.
• Some market experts say that there’s no need to panic about the BTC sale as it was part of a balance sheet management decision.

Michael Saylor’s Strategy (MSTR) has sold a total of 32 BTC for the very first time in four years, in order to meet its preferred stock dividend obligations. In an initial reaction, the MSTR stock has dropped 5.4% in the pre-market trading hours on Monday, June 1. Although the sold BTC is a very, very small part of the company’s total BTC holdings, this shift in approach has got investors on edge.

Michael Saylor’s Strategy Sell’s 32 BTC

As per the latest filings with the U.S. Securities and Exchange Commission (SEC), Michael Saylor’s Strategy sold 32 Bitcoin for approximately $2.5 million between May 26 and May 31.

The transaction marks the company’s first operational Bitcoin sale to support corporate liquidity needs since its 704 BTC disposal in December 2022. Back then, the BTC sale was part of the tax loss trade. This time, it’s done to meet the obligations of funding the preferred stock dividends.

Following the transaction, Strategy continues to hold 843,706 BTC, valued at approximately $60.8 billion based on current market prices.

Separately, Strategy raised roughly $128 million through the sale of 801,994 Class A common shares under its at-the-market (ATM) equity program during the same period. The company reported no sales under its preferred stock ATM facilities.

Strategy also disclosed that it maintains a $900 million cash reserve. Besides, Michael Saylor’s company has reaffirmed the 11.50% annual dividend rate on its STRC preferred shares, and also announced cash dividend payouts across all its preferred stock series.

MSTR Stock Down 4.8% Instantly

Last Friday, May 29, the MSTR stock ending 7% higher moving closer to $160. However, during the pre-trading session on Monday, June 1, the stock price is already down more than 5%, back to the crucial support at $150.

Over the past month, the MSTR stock price is down over 10% already. The stock came under pressure soon after company CEO, Phong Lee, said in early May that the company could consider BTC sale.

With Strategy selling its BTC for the first time in four years, MSTR stock price moved underneath its 200-week moving average. Failure to reclaim the 200-week moving average could increase downside risks for Strategy shares, with the next major support level seen near $135.

Following the development, BTC price has also come under pressure, slipping under $70,000. If this continues, then Bitcoin could see further downside from here.

MSTR Stock And Expert Reaction to Strategy’s Bitcoin Sale

Despite selling just 0.004% of BTC from their holdings, this sale from Michael Saylor has triggered discussions within the crypto community. Jim Cramer, the host of Mad Money at CNBC, wrote:

Strategy (Micro) sells Bitcoin, $2.5 million. May have to reevaluate pro-bitcoin stance given how much Strategy has propped it up. Key trampoline for years. Some say manipulation. I think that’s too strong.

Another Bitcoin and macro investor, Brett Kessler, said that the market is overreacting, and the recent 32 BTC sale from Strategy is just part of corporate strategy management. He said that Wall Street is wrong in assuming the loss of conviction in BTC, from Michael Saylor.

Kessler argued that this is just a balance sheet management and no sign of capitulation. According to Kessler, Strategy faces substantial dividend obligations tied to its STRC preferred stock.

He noted that management has previously stated it would sell small portions of its Bitcoin holdings. This is because selling BTC is more beneficial than issuing additional equity to fund those distributions.

The analyst pointed out that Strategy sold approximately $2.5 million worth of Bitcoin to meet cash flow obligations, while having purchased roughly $43 million worth of BTC only days earlier.

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