Why Michael Saylor’s company is really selling bitcoin

Michael Saylor became famous for saying you should "sell a kidney if you must, but keep the bitcoin." So when his company started selling thousands of BTC, many assumed it was a change of heart or a loss of conviction.

The reality is very different. The sales have far less to do with belief in bitcoin and far more to do with how MicroStrategy (referred to here as "Strategy" for simplicity) funded its massive BTC stack in the first place. Understanding that structure is key to understanding why it’s now a forced seller – and what that means for every company trying to use its balance sheet as a bitcoin vehicle.

MicroStrategy’s bitcoin stack and the problem behind it

Strategy holds a little over 840,000 BTC, making it one of the largest corporate holders of bitcoin in the world. On the surface, that sounds simple: company buys bitcoin, holds bitcoin, number go up.

But sitting above that pile of BTC is something much less simple – a set of fixed, dollar-denominated obligations that arrive every month, regardless of what the bitcoin price is doing. These obligations don’t care about four-year cycles, halving narratives, or HODL memes. They just need to be paid, in cash, on time.

That structural mismatch – volatile asset versus fixed cash promises – is the real reason Strategy is selling bitcoin.

Perpetual preferreds: the engine that must be fed

To fund its bitcoin buying spree, Strategy didn’t just issue common stock and convertible notes. It also created a stack of preferred securities that sit above the common shares. These include several series with names like Strike, Strife, Stride, Stretch, and a euro-denominated one called Stream.

Most of these are perpetual preferreds. In plain English, that means:

• They pay investors a fixed dividend in cash, potentially forever.
• They don’t have a maturity date – there’s no point where the obligation just ends.
• They usually don’t convert into common equity – they just keep paying.

Each series carries a high dividend rate. Strike pays around 8%, Strife and Stride around 10%, and Stretch (STRC) launched at 9% with a $100 par value. These are expensive promises to keep, especially when they stack on top of each other.

Stretch and the ratchet that keeps tightening

Stretch is the most important piece of this puzzle because of the way it was designed. When it launched in July 2025, it came with a built-in "ratchet" feature:

• If Stretch trades below $95, the dividend rate steps up in 0.5% increments.
• Each 0.5% step adds an estimated $53 million per year to the dividend bill.
• The idea was to make the yield more attractive whenever the price sagged, pulling in new buyers and pushing the price back toward $100.

By July of the following year, that initial 9% coupon had already climbed to around 12%, and payments shifted from monthly to semi-monthly. In theory, the ratchet was supposed to be one-way: rates could go up automatically when the price fell, but would only come down after a sustained period of healthy trading near par.

Recent reporting suggests the board later made further increases discretionary rather than automatic, but the damage was already done. The security was still trading around $89 – well below the $100 level it was meant to hug – and the dividend bill had exploded.

When dividends dwarf the actual business

The real problem shows up when you compare these obligations to Strategy’s operating business.

In a recent quarter:

• Preferred dividends alone were about $400 million.
• The software business – the actual operating company with real customers – generated about $122 million in revenue (not profit).

In other words, the dividend bill was more than three times the company’s entire top line. Annualized, total preferred and interest obligations sit somewhere around $1.2–$1.7 billion, depending on what you include.

A year earlier, quarterly preferred dividends were just $49 million. That line item grew roughly eightfold in 12 months. All of this is denominated in dollars and must be paid in dollars, no matter what bitcoin is doing.

The “infinite money glitch” that stopped working

So how did Strategy afford this for so long? The answer is that for years, the market rewarded the company with a huge premium over the value of the bitcoin it held.

Investors weren’t just buying BTC exposure; they were paying extra for the "Strategy wrapper" – the story, the leverage, and the belief that the company could accumulate more coins per share over time. This showed up in a metric often called market value to net asset value, or MNAV: the ratio of Strategy’s market cap to the value of its underlying bitcoin.

• At the 2021 peak, that ratio hit around 6x.
• During the late 2024 mania, it was over 3x.

As long as the stock traded well above the value of its BTC, Strategy could issue new shares at a big premium, use the proceeds to buy more bitcoin, and actually increase the amount of BTC per share for existing holders. Dilution made everyone richer – as long as the premium held.

Over the last eight quarters, the company increased its share count by roughly 74%, raising more than $17 billion in 2025 alone by selling new stock. Many investors treated this like an "infinite money glitch" that could run forever.

But there’s a hard rule here: above net asset value, issuing stock is accretive; below it, issuing stock destroys value. There is no middle ground.

The premium disappears – and the math flips

Today, that premium has largely vanished. On a simple basis (market cap divided by the value of the coins), Strategy’s MNAV has fallen to around 0.68 – from about 2x just a couple of years ago. That means the market is valuing the whole company at less than the value of its bitcoin.

The company’s own reported MNAV is slightly above 1, but that’s because it counts preferred and other structured securities at face value, not at their market value. In July, Strategy even redefined the metric in its glossary and said any MNAV calculated before July 23 isn’t comparable to the new one. In practice, the chart that once justified the premium has been effectively retired.

Back in August 2025, Strategy publicly promised it would not issue common stock below 2.5x MNAV, except to pay interest and dividends. Since then, it has sold around $14.3 billion of stock, all below that threshold. Management has since acknowledged that issuance only becomes accretive again above roughly 1.22x.

Once the premium disappears, the "free money" channel closes. The company can no longer rely on issuing overvalued stock to fund its coupons and buy more BTC. At that point, there’s only one major asset left to tap: the bitcoin treasury itself.

Why Strategy is now selling bitcoin

With the stock trading near or below the value of its coins and the preferred dividend bill ballooning, Strategy has been forced to rotate its funding sources. That’s why we’re now seeing bitcoin sales.

Recent disclosures show a clear pattern:

• Strategy sold 1,638 BTC at an average price just under $64,000, raising about $105 million.
• Roughly $52 million of that went to pay preferred dividends.
• Another $52 million went to buying back Stretch shares to support their price and avoid further ratchet triggers.

In the same week, the company sold more than 3 million common shares for about $290 million, with around $250 million going into its dollar reserve. So, in a single reporting period, Strategy:

• Sold bitcoin to fund coupons and defend the preferreds.
• Issued equity to rebuild its cash buffer.

This wasn’t a one-off. Earlier in the year, the company sold:

• 32 BTC in May – its first standalone reduction in holdings since 2022.
• 3,588 BTC in early July for around $216 million.

Year to date, that’s roughly 5,258 BTC sold, leaving holdings at just over 842,000 BTC with a cost basis around $75,400 per coin.

The key takeaway: bitcoin is being sold to pay the coupon and to buy back the very securities that were originally issued to buy bitcoin. It’s a feedback loop created by the capital structure, not a sudden loss of faith in BTC.

How to spot when a treasury is under stress

There’s a useful tell here for anyone watching bitcoin treasury companies: pay attention when a company is selling BTC and issuing equity in the same reporting week.

• If a company is a healthy net buyer with strong funding, you’d expect it to either issue equity to buy more BTC or use operating cash flows – not to sell BTC while also selling shares.
• When both happen together, it’s a sign the treasury is being used as a working capital account to plug structural gaps.

Keeping up with all the filings is time-consuming, but this simple pattern – BTC out, equity out, at the same time – is a strong signal that the structure is under pressure.

This isn’t just about one company

Strategy isn’t alone. A whole class of "bitcoin treasury" stocks has emerged over the last few years, and many are now facing similar issues.

Bloomberg tracked a basket of digital asset treasury stocks and found a median decline of about 43% this year, while bitcoin itself fell around 27% over the same period. In other words, many of these wrappers have underperformed the asset they’re supposed to track or leverage.

A growing number of the biggest treasury companies now trade at or below the value of the coins they hold. Some examples:

• Metaplanet in Tokyo trades at around 0.72x its basic MNAV and has adopted a policy of not issuing common stock below 1x NAV.
• Semler Scientific effectively disappeared as a standalone entity after a merger. Its diagnostics business now generates only a small amount of revenue next to the bitcoin treasury it built.
• Satsuma in London put it to a shareholder vote and liquidated all 668 of its BTC.
• Bitdeer sold its last 948 BTC in February to pivot toward AI.

Different management teams, different jurisdictions, same core problem: fixed cash obligations and equity structures built on top of a highly volatile asset eventually force selling into weakness. That’s usually the worst possible time to be selling bitcoin.

For a deeper dive into how this dynamic has played out around major drawdowns, including Strategy’s earlier pain, it’s worth revisiting our breakdown of MicroStrategy’s multi-billion dollar bitcoin drawdown.

Lessons from Grayscale and the discount problem

If this sounds familiar, it should. Grayscale’s Bitcoin Trust (GBTC) traded at a huge discount to its underlying BTC for years. On June 17, 2022, that discount hit around 34%.

The reason was simple: there was no way to redeem shares for the underlying bitcoin at par. Without a redemption mechanism, the market could push the price far below NAV, and it stayed there until GBTC converted into an ETF in 2024.

Many bitcoin treasury companies are running into a similar issue. When the market decides a company looks more like a closed-end fund or a leveraged wrapper than an operating business, its stock can trade at a steep discount to its coins. Without a clean way to unwind or redeem, that discount can persist and worsen.

Some analysts, like VanEck’s Matthew Sigel, have even suggested that treasury companies should include a "living will" in their prospectus – a clause forcing management to unwind and return cash to shareholders if the stock trades below NAV for long enough.

Is Strategy in real danger?

Despite the structural stress, this doesn’t mean Strategy is on the brink of collapse. Its balance sheet still has meaningful buffers.

As of the latest figures discussed:

• The dollar reserve stands at around $4 billion – enough to cover roughly two years of dividends and interest.
• Total debt is about $6.7 billion and has fallen roughly 18% this year, including a $1.5 billion repurchase of convertible notes at an 8% discount.
• The company reported an $8.2 billion quarterly loss, but that’s almost entirely a non-cash fair value markdown on its bitcoin holdings, not actual cash leaving the business.

Equity analysts have cut their price targets but are not calling for bankruptcy. Citi trimmed its target from $260 to $136, Benchmark from $520 to $435, and Barclays from $130 to $125. All of those are still above where the stock has recently traded.

So what we’re seeing is stress on the structure, not necessarily the end of the company.

Index risk: the hidden threat for MSTR holders

There is another risk MSTR investors should be aware of: index exclusion.

MSCI has already consulted on whether to kick out companies whose digital assets exceed half their total assets. It decided not to do so in January, but at the same time opened a broader review into "non-operating" companies – firms that increasingly look more like investment funds than operating businesses.

Prediction markets on Polymarket currently price around a 37% chance that MSTR will be removed from the MSCI index by year-end. If that happens, index-tracking funds would be forced to sell, regardless of price or fundamentals. Strategy would have no way to stop that wave of selling.

For investors treating MSTR as a simple bitcoin proxy, this is an important additional layer of risk that doesn’t exist when you hold BTC directly.

Owning MSTR vs owning bitcoin

All of this leads to a crucial distinction: if you own MSTR, you are not simply owning bitcoin. You’re owning a piece of a capital allocator whose primary focus is bitcoin, but whose returns are heavily shaped by its funding structure, preferred stack, and index status.

Bitcoin itself has none of this:

• No coupons.
• No preferred holders.
• No ratchets.
• No fixed payment due on the first of the month.

The "bitcoin treasury company" era was built on the idea that a listed company could be a better way to own BTC than simply holding BTC directly – thanks to leverage, premium, and financial engineering. What’s unwinding now is that specific claim, not bitcoin itself.

We’ve already seen how this dynamic contributed to sharp downside moves in the past. For more context on how corporate structures and forced selling interact with price, you may want to read our explainer on why bitcoin dropped 40% and what could happen next.

So, is this just a squeeze or something bigger?

Whether this is a temporary squeeze that eases if bitcoin rallies, or a sign of a deeper structural problem, depends on how you look at it:

• If BTC rips higher and MSTR’s premium returns, Strategy could once again issue accretive equity, refinance, and reduce pressure on the preferred stack.
• If the premium stays gone and index risk materializes, the company may be stuck selling more BTC into weakness to feed its fixed obligations.

What’s clear is that the market is re-pricing the value of the "wrapper" relative to the underlying asset. For investors, the key questions are:

• Do you want exposure to bitcoin itself, or to a leveraged, structurally complex vehicle built around it?
• Are you comfortable with the added risks of fixed dollar obligations, potential index exclusion, and forced selling?

The answer will be different for everyone. But the core lesson is simple: the reason Strategy is selling bitcoin isn’t about belief – it’s about math.