Grayscale says that the leveraged Bitcoin model of Strategy could restrict its ability to continue buying BTC, and force it to sell more, if they so choose.
“The shift in approach from one of the world’s largest BTC holders has weighed on market sentiment,” said Zach Pandl is Grayscale’s Head of Research.
Michael Saylor’s Strategy sold 32 BTC On Monday, the company held 843 706 BTC worth a fraction of that total, enough to shake market sentiment. has tanked By 16% Since the Sale
The stock price of Strategy has fallen by 12.8% to $126, a low for two months.
BTC’s losses accelerated when Strategy was sold, and STRC dropped. Source: Google Finance
Pandl said that this would have an even greater impact on Stretch, the preferred equity option of the firm with a variable rate.
Stretch was designed to be traded at an average share price of $100, and it pays a dividend rate of 11.5%. However, the current trading is below this at $95, which means investors need a higher return.
In the event that Strategy increases its dividend in order to reward investors, this will increase cash obligations. This could lead to more BTC being sold and further pressure on prices.
“Strategy’s levered business model is under pressure, and this has increased the volatility for the BTC market as a whole,” Pandl said
Grayscale, according to Grayscale, believes that Strategy will be successful. “limited ability to accumulate more tokens at current share prices for both STRC and MSTR.”
Related: Saylor downplays Bitcoin slide as Strategy faces $11B paper loss
Goldbug Peter Schiff said Thursday you can see something like this on X. If Strategy must increase its dividend to get STRC up to $100 then it will hurt the company. “will run out of cash much sooner, pulling forward Bitcoin sales to fund payments.”
Pandl finished by saying that corporates holding less Bitcoin would benefit the larger market.
“For the health of the Bitcoin ecosystem over the long run, less BTC on levered DAT [digital asset treasury] balance sheets and more on diversified corporate balance sheets will be a positive, in our view.”
Saylor’s Strategy is not all bad news
Augustine Fan of crypto software company SignalPlus told Cointelegraph Friday that the markets blamed recent Strategy sales, and STRC’s discounted price to par, for the latest drop. “but the reality is that even the most ardent supporters are running out of reason to be structurally bullish.”
“All focus will be on the MSTR situation to see how Saylor manages to handle his liquidity strains by balancing dividend payments against STRC and the DAT holdings.”
Jeff Ko of CoinEx’s chief analyst told Cointelegraph Strategy was the first Bitcoin seller to sell bitcoins. “important psychological trigger” For this week’s selling off.
But he added that this move is more beneficial than implied by the reactions of the markets, because it allows the company to be more flexible.
“Greater flexibility around selling Bitcoin can help Strategy manage balance sheet risk more prudently, rather than forcing itself into a one-way accumulation strategy under all market conditions.”
Magazine: Korea’s first memecoin rug-pull case, China’s crypto rules review: Asia Express
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Source: cointelegraph.com
