Original author: Oluwapelumi Adejumo
Chopper, Foresight News
As the Bitcoin treasury company Strategy continues to repurchase preferred shares, STRC's price is steadily rebounding toward its $100 target.
STRC.live data shows that on Monday, STRC traded near $95, continuing its rebound from a low of $74 at the end of June. Strategy is narrowing STRC’s discount by directly repurchasing shares on the secondary market and introducing a 12% annualized dividend.
Over the past three weeks, Strategy has accumulated approximately 2.3 million shares of STRC, with a total value of about $214.8 million. The latest round, the largest to date, saw the company spend $108.6 million to purchase 1.1 million shares in the week ending August 9. Previous rounds involved investments of $25 million and $81.2 million, respectively.
Based on the $1 billion digital credit securities repurchase program approved in June, Strategy currently has $785.2 million in available capacity remaining.
The preferred stock price of Strategy Inc.'s STRC has rebounded after the company repurchased approximately $214.8 million in shares over the past three weeks.
Sell Bitcoin to fund STRC buybacks
Over the past several weeks, Strategy has increasingly tapped into its Bitcoin reserves to fund the repurchase of STRC. For the week ending August 9, Strategy sold 1,690 Bitcoin at an average price of $64,262, generating $108.6 million in proceeds.
A week ago, the company executed the same action, selling 1,638 bitcoins for proceeds of $104.7 million. Of this, $52.3 million was used for an $81.2 million STRC buyback, with the remaining funds coming from the issuance of additional MSTR common shares.
Within two weeks, Strategy sold a total of 3,328 bitcoins, generating approximately $213.3 million in proceeds, and simultaneously invested $189.8 million to repurchase STRC.
After this round of sales, Strategy's Bitcoin holdings decreased from 842,138 BTC a week ago to 840,447 BTC. The company's total cost basis for its current Bitcoin holdings is $63.36 billion, with an average cost basis of $75,385.
After four consecutive weeks of selling, Strategy has sold a total of 6,948 bitcoins this year, with its holdings steadily declining from the June high of 847,363. However, relative to its massive bitcoin inventory, the scale of these sales is limited, and Strategy remains the company with the largest bitcoin holdings globally.
The strategy's Bitcoin holdings have declined for four consecutive weeks.
A series of transactions indicate that, under the Strategy Digital Credit Capital framework, Bitcoin is being赋予 broader functions. The company may time the sale of portions of its holdings to support its preferred shares and other debt within its capital structure.
Dollar cash reserves have reached a historic high of $4.65 billion.
In the same week, Strategy accelerated its cash reserve buildup by raising an additional $653.1 million through the issuance of common stock.
The company sold 6.5 million shares of MSTR common stock through an at-the-market (ATM) offering, with $650 million deposited into the U.S. dollar reserve account and the remaining $3.1 million allocated to the general cash account.
This move pushed the company’s U.S. dollar reserves from $4 billion a week ago to a record high of $4.65 billion. These reserves provide a liquidity buffer for STRC preferred dividend payments and debt interest obligations, effectively strengthening the safety margin amid ongoing capital structure expansion and rising fixed expenses.
Strategy CEO Phong Le stated that since the implementation of the new capital management framework at the end of June, the size of the U.S. dollar reserves has grown rapidly. He wrote: “Our U.S. dollar reserves and duration have both reached all-time highs. In just two and a half months, we added nearly $3.8 billion to our reserves, with both metrics increasing more than fivefold—this is the direct result of implementing the digital credit capital framework.”
Strategy's cash reserve
Executive Chairman Michael Saylor stated that this capital injection extended the dollar reserve duration by another 143 days, bringing the total duration to approximately 2.7 years. The currently held U.S. dollar reserves are sufficient to cover preferred dividends and debt interest payments for the next three years, significantly alleviating short-term debt obligations.
The Strategy's ongoing on-market offering of MSTR has approximately $2.2 billion in remaining availability; an additional $1 billion common stock repurchase authorization remains unused.
Adequate cash reserves give Strategy greater flexibility, eliminating the need for external financing when paying dividends or meeting debt maturities.
The final $5 spread for STRC will determine its future direction.
STRC is currently only about $5 away from its $100 par value; the key test ahead is whether the stock can close this gap on its own without support from Strategy. The company has previously indicated that returning STRC to par value will take some time.
During the Q2 earnings call, the company mentioned that after STRC's listing in 2025, it took approximately 70 trading days to stabilize at $100. Based on a similar pace, this rally is expected to return to par value around September 8.
However, the current market environment is different; Strategy is actively supporting the market through a dual approach of adjusting dividend policy and direct repurchases in the secondary market.
Once the price returns to its $100 par value, the company will no longer need to conduct large-scale repurchases, and STRC will be better positioned to serve as an effective financing tool. Issuing new shares at a price close to par, compared to a prolonged period of trading at a discount, can significantly improve financing efficiency.
If STRC lacks upward momentum and continues to trade below its $100 face value, Strategy still holds $785.2 million in buyback authority and can immediately continue supporting the market.
The strategy will decisively intervene if STRC falls significantly below its target price. However, the market’s biggest question now is how much capital the company will need to inject to support STRC through its final few dollars of upward movement, and whether it will continue selling Bitcoin.