Strategy Clarifies Bitcoin Liquidation Policy as Financial Pressure Mounts

NAV Violation and Capital Crisis

Liquidation of BTC holdings would only occur if MSTR shares were trading below NAV—putting the shares at a discount to the underlying Bitcoin price per share—and simultaneous cutoff from debt or equity markets left the company short of new capital.

This “ mNAV < 1” threshold turns panic selling into value preservation leverage, protecting BTC yield per share amid volatility.

This framework mirrors MicroStrategy’s strategy before its rebrand under Michael Saylor, where $4.6 billion in convertible bonds funded 252,220 BTC repurchase transactions since 2020—now totaling 252,220 BTC , worth $23.9 billion at $94,800/BTC.

The move comes as Strategy is dealing with $800 million in annual preferred dividends — a fixed obligation from 2024 issuances — that are putting pressure on cash flow from its $500 million software business. However, the company’s BTC treasury generates a 4% staking yield ($956 million annually at current holdings ), creating a buffer that Le’s dashboard quantifies for decades of sustainability.

The Logic Behind the BTC Selling Policy

Selling Bitcoin has long been considered a hypothetical red line for Strategy, whose corporate identity and investor base are closely tied to its role as a BTC- focused fund manager . However, the firm’s clear stance has reframed the BTC liquidation not as a betrayal of principles, but as a matter of fiduciary responsibility in a context of financial stress.

mNAV (market capitalization divided by net asset value) reflects investor confidence in the company's ability to generate returns above the value of its underlying BTC holdings.

• When mNAV > 1 , issuing shares or debt to buy more BTC will create value for shareholders.

• When mNAV < 1 , buying more BTC will dilute the value and selling BTC can increase the Bitcoin yield per share.

But in stressed markets, these liquidity channels can simultaneously narrow. A prolonged freeze in available capital— especially if accompanied by a falling stock price —would tighten Strategy’s investment fund’s flexibility and test its ability to maintain BTC accumulation while meeting fixed obligations.

Our review

To address liquidity stress concerns, Strategy has released a new “ BTC Credit ” dashboard, which aims to quantify how long dividend payments will last under different Bitcoin price scenarios.

According to the company model:

• Strategy can sustain payouts for decades even at BTC at $74,000 ,

• And still maintain solvency at a pay level even in extremely adverse circumstances when Bitcoin drops to $25,000 .

The tool is designed to both educate investors and reinforce the notion that Bitcoin ’s long-term scarcity and asymmetric return profile remain consistent with Strategy’s mission — even while acknowledging the need for disciplined actions on the part of the treasury in rare cases.

Disclaimer: The information presented in this article is the author's personal opinion in the cryptocurrency field. It is not intended to be financial or investment advice. Any investment decision should be based on careful consideration of your personal portfolio and risk tolerance. The views expressed in this article do not represent the official position of the platform. We recommend that readers conduct their own research and consult with a professional before making any investment decisions.