Grayscale Says Strategy’s Leveraged Bitcoin Approach Faces First Major Stress Test

“Less Bitcoin on levered DAT balance sheets and more on diversified corporate balance sheets will be a positive,” said Grayscale’s head of research, Zach Pandl.

According to Grayscale Investments, pressure is being placed on Strategy’s leveraged Bitcoin acquisition model, which may restrict the company’s capacity to continue accumulating BTC and could eventually result in additional asset sales.

“The shift in approach from one of the world’s largest BTC holders has weighed on market sentiment,” said Zach Pandl, Grayscale’s head of research, on Thursday.

On Monday, 32 BTC were sold by Strategy, led by Michael Saylor. While the amount represented only a small portion of the company’s 843,706 BTC holdings, market sentiment was shaken as Bitcoin has declined by 16% since the transaction took place.

An additional $128 million in shares was sold by Strategy, while the company’s stock price has fallen 12.8% since that transaction, reaching a two-month low of $126 on Thursday.

Pandl cautioned that a more significant effect could be felt by Stretch (STRC), the company’s variable-rate preferred equity instrument.

Stretch was structured to trade near a share price of $100 while offering an 11.5% dividend yield, but it is currently changing hands at roughly $95, indicating that a higher rate of return is being demanded by investors.

If Strategy increases its dividend to attract or retain investors, its cash commitments rise, which could trigger additional BTC sales and place further downward pressure on the asset’s price, creating a potentially self-reinforcing negative cycle.

“Strategy’s levered business model is under pressure, and this has increased the volatility for the BTC market as a whole,” said Pandl.

He also noted that, according to Grayscale Investments, Strategy is expected to face limited capacity to acquire additional tokens at the current market valuations of both STRC and MSTR.

Peter Schiff expressed a similar view on X on Thursday, arguing that if Strategy is compelled to raise the STRC dividend to restore its price to $100, the company’s cash reserves would be depleted more quickly, accelerating Bitcoin sales needed to meet those payout obligations.

Pandl concluded by arguing that a smaller concentration of Bitcoin within leveraged corporate balance sheets would be more beneficial for the wider market and the overall digital asset ecosystem.

“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.”

Not All Signals Are Bearish for Michael Saylor’s Strategy#

Augustine Fan told on Friday that the recent market decline is being attributed by traders to Strategy’s latest sales and the discount of STRC below its par value, but he argued that the broader issue is that even the strongest supporters are finding fewer reasons to maintain a long-term bullish stance.

“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 told that Strategy’s initial Bitcoin sale acted as a significant psychological catalyst for the market downturn witnessed this week.

However, he noted that the decision was more positive than the market’s response suggested, as it provides the company with greater operational flexibility.

“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.”