Executive Summary

Strategy (formerly MicroStrategy) has transitioned from a strict "HODL" philosophy to an active treasury management model that permits selling Bitcoin (BTC) to fund its STRC Preferred Stock dividends. While the company remains a massive net accumulator of Bitcoin, it has begun small, strategic sales to meet contractual obligations and signal market liquidity.

Executive Summary

As of July 2026, Strategy holds 847,363 BTC with an average cost basis of approximately $75,540 [Source: https://bitbo.io/mstr/]. With BTC trading at approximately $62,684, the company's position is currently underwater by over $10 billion. Despite this, the company has authorized a $1.25 billion BTC Monetization Program to fund annual dividend obligations of ~$1.76 billion, particularly when its preferred stock (STRC) trades below par value, restricting traditional equity-based funding [Source: https://www.strategy.com/treasury-policy-june-2026].

1. Bitcoin Holdings and Cost Basis

Strategy's current treasury position is significantly underwater relative to its acquisition prices.

2. Why Sell Below Cost Basis?

The decision to sell BTC while underwater is driven by structural financial requirements rather than a change in long-term conviction:

• Mandatory Dividend Obligations: The STRC preferred stock carries a high annual yield, recently reported at 12.00% (effective July 1, 2026) [Source: https://www.strategy.com/investors/strc-details]. This requires roughly $1.5 billion to $1.76 billion in annual cash payments [Source: https://www.strategy.com/treasury-policy-june-2026].
• STRC Trading Below Par: Strategy typically funds these dividends by issuing new preferred shares. However, when STRC trades below its $100 par value, this mechanism is restricted, forcing the company to use its BTC reserves or its $2.55 billion USD Reserve [Source: https://www.strategy.com/treasury-policy-june-2026].
• Market "Inoculation": Michael Saylor has stated that the company would sell small amounts of BTC to "inoculate the market," demonstrating that selling is a viable operational tool and not a sign of distress [Source: https://www.coindesk.com/business/2026/05/05/michael-saylor-s-strategy-signals-potential-bitcoin-sale-to-fund-dividends-obligations].

3. Recent Transaction Activity

Despite the narrative of selling, Strategy's recent actions show a "sell high, buy low" pattern that has actually increased its total BTC count.

• May 2026 Sale: The company sold 32 BTC for ~$2.5 million at an average price of $77,135 to fund dividends [Source: https://www.jpmorgan.com/insights/crypto/mstr-analysis-june-2026]. This sale occurred above the current average cost basis.
• June 2026 Re-accumulation: Shortly after, the company purchased 1,550 BTC for $101.3 million at an average price of $65,332 [Source: https://www.jpmorgan.com/insights/crypto/mstr-analysis-june-2026].

4. Risks and Dividend Coverage

Strategy maintains a "USD Reserve" policy to provide a buffer during market downturns. As of late June 2026, the company held $2.55 billion in cash, providing approximately 17.4 months of dividend and interest coverage [Source: https://www.strategy.com/treasury-policy-june-2026].

However, a prolonged period where BTC remains below the $75,540 cost basis poses a risk: the "BTC Yield" (the accretion of BTC per share) could turn negative if the company is forced to sell increasing amounts of BTC to cover fixed costs while the asset's value is depressed.

Conclusion: Strategy is not "dumping" BTC; it is using a small fraction of its holdings (0.0038% in the most recent instance) as a backstop for preferred dividends when equity markets are unfavorable. The company remains a net buyer of Bitcoin by a significant margin.