Last week, Bitcoin rose 13%, reclaiming the $70,000 level over five trading days for the first time since June. By Monday, the price had surpassed $78,000.
The world's largest corporate Bitcoin buyer, Strategy, bought zero bitcoins this week.
It did something else: it sold 18.26 million shares of its common stock, raising approximately $2 billion, which it then converted into U.S. dollars. As of August 23, the company had a total of $6.69 billion in U.S. dollar liquidity on its balance sheet.
Where did the $2 billion go?
$300 million has been added to the "USD Reserve"—a dedicated pool established by the company in June, exclusively for paying preferred dividends and interest on debt; any other use requires board approval. The pool now contains $5.1 billion.
$136.4 million was used to repurchase 1.43 million shares of STRC preferred stock.
The remaining funds went into a newly established pool, simply named "USD Cash," currently at $1.59 billion. Unlike the previous one, this pool has fully open purposes—it can be used to buy Bitcoin, repurchase common or preferred shares, repay convertible bonds, replenish the USD Reserve, or for other corporate purposes.
The company stated that the added flexibility allows management to respond more quickly to market changes, "including price discrepancies involving Bitcoin or the company’s own securities."
The same filing also shows that, for the week ending August 23, Strategy neither bought nor sold any Bitcoin, with its holdings remaining unchanged at 840,447 for the second consecutive week. In fact, it has not purchased a single Bitcoin since the week of June 22.
Why is a company that buys Bitcoin hoarding cash?
To understand how unusual this is, you need to know how many times Michael Saylor has repeated that analogy over the past few years: holding cash is like holding a block of ice that’s melting. The entire Strategy narrative is built on this idea—converting every dollar on the balance sheet into Bitcoin as quickly as possible.
It now has two labeled USD pools, totaling $6.69 billion.
The reason lies on the cost line.
The strategy spent $63.36 billion on 840,447 bitcoins, averaging $75,385 per bitcoin (including fees and related costs). This line is critical to the entire story: on August 14, bitcoin dropped to $62,600, causing the company’s unrealized loss on bitcoin to peak at $8.2 billion.
It only recently rose back above its cost line last week, when the price rebounded to $78,000, achieving an unrealized profit of $1.4 billion.
The issue is that unrealized paper losses don't need to be repaid, but dividends and interest must be paid on time.
Strategy's issued STRC preferred shares promise an annual dividend of 12%, with a par value of $100. Think of it as a high-interest IOU from the company—the market’s confidence in this IOU is reflected directly in its price.
Throughout the summer, STRC traded below its face value; in early August, CEO Phong Le publicly stated that the company would maintain its 12% dividend and aims to keep STRC trading consistently in the $99 to $100 range.
To support this price, you need to buy back. But where does the money come from when Bitcoin experiences a deep correction and stock prices aren’t rising?
The answer lies in the new capital management framework established in June—it for the first time allows Strategy to sell Bitcoin to repurchase preferred shares trading below par value.
On August 3, the company sold 1,638 bitcoins, raising $104.73 million; by August 5, the cumulative sale of 5,226 bitcoins had raised $321 million, which was used to repurchase $106 million worth of STRC. On August 17, it raised an additional $334 million through a share offering, also used to repurchase preferred shares.
This $2 billion equity offering is an amplified version of the same strategy. To date, approximately $483.4 million of the $1 billion preferred share repurchase program has been utilized, leaving $516.6 million remaining; the $1 billion authorization for common share repurchases has not been touched at all.
What's wrong with the flywheel?
Over the past few years, this strategy has been called the "flywheel" by the market: issue new shares to raise funds → buy Bitcoin → Bitcoin price rises → stock price rises even faster than Bitcoin → the higher the premium, the more funds can be raised by issuing the same number of shares → buy more Bitcoin.
Fuel is the premium, the amount the market is willing to pay above each dollar of Bitcoin.
The premium is now gone. MSTR has dropped about 66% over the past year, and Bloomberg states that this financing flywheel "remains damaged, with the valuation premium far below levels seen in previous cycles." Once the premium disappears, equity issuance shifts from "using other people’s money to add leverage for free" to simple dilution.
Nansen senior research analyst Nicolai Sondergaard laid out the math clearly: “For MSTR shareholders, this trade-off is dilution for flexibility. This recent equity offering strengthened the balance sheet but did not immediately increase bitcoin exposure per share.”
His evaluation of the new pool was equally measured: “The new USD Cash pool gives Strategy more time and flexibility, but it doesn’t eliminate the underlying obligations.”
Dividends still need to be paid, interest still needs to be paid, and convertible bonds must be repaid upon maturity. Cash buys time, not escape.
So, how should we interpret this week’s moves?
In mid-August, index provider MSCI launched a consultation proposing to exclude "non-operating companies" from its global investable market indices. The determination would use a two-step screening process based on the proportion of operating assets and five financial metrics. Under this proposal, Strategy, Japan’s Metaplanet, and uranium holder Yellow Cake could all be affected.
For a company with significant passive fund holdings, being removed from an index means a wave of price-insensitive sell orders. On the day the news broke, MSTR dropped 4.3%.
The rebuttal from the strategy team is heated: the responsibility of index providers is to measure the market, not to decide what assets a company can hold.
This rally in Bitcoin has a clear catalyst: Trump urged Congress to pass legislation regulating digital assets, while the U.S. Treasury doubled the size of its long-term Treasury buybacks, lowering yields—lower yields make risk assets more attractive.
The price has returned, turning unrealized losses into unrealized gains; MSTR rose as much as 3% to $122.79 in early Monday trading, while STRC stood at $96.49, still over three dollars away from the range mentioned by Phong Le.
What the company did this week was convert $2 billion into U.S. dollars and place them into two pools.
That piece of ice, once thought to be melting, is now the most flexible thing in his hands.
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