As an analyst, I’m watching Strategy Inc. – formerly MicroStrategy – closely. They’re currently facing some criticism because of a recent decision regarding how they’re using their cash, especially given that they hold the largest Bitcoin reserves of any company.
On May 26, 2026, the company bought back $1.5 billion worth of its convertible notes that were due in 2029, spending about $1.38 billion in cash. This reduced the total amount of these notes outstanding from $8.2 billion to $6.7 billion, but also lowered the company’s cash reserves to around $871 million.
The decision to buy back stock at this time is surprising. Strategy currently has about $15.5 billion in perpetual preferred stock, including its main STRC series, which pays an annual dividend of 11.50%. This means the company pays around $1.5 billion each year in dividends. Because its traditional software business doesn’t generate much cash, Strategy depends on raising money through financial markets to both buy Bitcoin and cover these payments.
Jeff Dorman, the CIO at ARCA and a keen follower of MicroStrategy, publicly criticized the recent hype around the company on May 28th in a post on X (formerly Twitter). He stated that the situation with MicroStrategy had become excessive.
Dorman observed that Strategy could have been a predictable, though unexciting, investment tied to Bitcoin’s performance. However, the company instead chose to issue a large amount of perpetual preferred stock, which he thinks was based on the belief that a significant Bitcoin price increase was about to happen.
When Bitcoin unexpectedly dropped in price, my investment firm, Strategy, quickly raised around $2 billion by selling more stock. The idea was to create a financial cushion – enough to keep paying dividends for almost two years. But instead of holding onto that cash as a safety net, management used a lot of it to pay off some of our cheaper debt. It felt a little counterintuitive, honestly.
I just don’t get why any company struggling with cash would prioritize paying off debt that isn’t even costing them anything right now. It seems like a really strange move, especially when they could be using that money for other things.
The Mechanics of Strategy’s Capital Stack
Strategy currently owns 843,738 Bitcoin, which it purchased for an average price of $75,699. With Bitcoin currently trading around $73,300, these holdings are now worth approximately $61.8 billion. The company measures its success by tracking “Bitcoin Yield”—how much Bitcoin ownership grows per share, even as the number of shares increases.
STRC, a type of security offered by the company, acts like a digital form of credit. It currently offers investors a high and adjustable return – 11.50% paid monthly – with the goal of maintaining a value of $100. For tax purposes, this return is frequently considered a return of the original investment rather than income.
Traditional preferred stock differs significantly from the convertible debt strategies used previously. Unlike those earlier strategies, which offered low or no immediate interest payments and risked dilution when converted into common stock, preferred stock requires continuous cash payments with no option to stop them.
When Bitcoin prices fall or move sideways, it can create friction between different groups with a stake in MicroStrategy. Regular shareholders hope to profit from price increases, while those holding preferred stock want consistent income. At the same time, the overall Bitcoin community benefits when companies like MicroStrategy continue to purchase Bitcoin.
Saylor’s Defense and the Bull Case
Michael Saylor, who leads Strategy and is a strong supporter of Bitcoin, is known for his clever financial strategies. The company recently bought back some of its debt, describing the move as a smart use of funds that will strengthen its financial position, lessen the potential for future stock dilution, and save money with an 8% discount.
The company consistently points to its successful Bitcoin Yield program and its track record of raising billions of dollars through various funding methods over several years. Importantly, their strategy has historically generated better returns than simply holding Bitcoin, especially when the market is rising.
Those who remain positive about the company highlight its strong Bitcoin holdings, the fact it doesn’t have debt requiring immediate sales, and its past success in managing its financial obligations. They anticipate that raising more capital or a rise in Bitcoin’s value will alleviate current financial challenges. The company’s stock is currently near its expected value, and they are exploring the possibility of paying dividends twice a month to help stabilize things.
Along with Saylor, Strategy CEO Phong Le has consistently stated that the company’s main goal is to buy Bitcoin and increase the amount of Bitcoin held per share. In a recent FOX interview, Le explained that while they may sell some Bitcoin eventually, they plan to overall increase their Bitcoin holdings and, crucially, the amount of Bitcoin per share.
Saylor’s Recent Comments on Potential Bitcoin Sales
During a recent podcast at Consensus 2026, Michael Saylor responded to concerns about Strategy possibly selling its Bitcoin holdings to manage its finances. He spoke with Bonnie Blockchain and David Lin about the issue.
As a Bitcoin investor, I found it reassuring to hear the company explain potential reasons they might sell some of their BTC. It sounds like it would only be for practical things – like having enough cash to run the business, paying dividends to shareholders (especially those holding STRC preferred shares), or taking advantage of quick profits in the market. The key takeaway was that any selling would be small and strategic. They’ve always bought far more Bitcoin than they’ve sold, and they’re committed to continuing that trend – basically, they’re still big believers in accumulating Bitcoin long-term.
Saylor explained the popular idea of “never selling Bitcoin,” clarifying that it’s a guiding principle for long-term strategy, not a strict rule that disregards sound financial practices.
He explained that Bitcoin functions as both a digital asset and a way for Strategy to manage its cash flow. This allows the company to utilize its Bitcoin holdings in innovative ways while still actively buying more assets, funded through stock and preferred stock offerings.
This explanation is particularly important right now, as concerns grow about whether the company’s commitment to pay high dividends on its preferred stock might lead to more frequent or larger asset sales when Bitcoin prices fall or there’s a shortage of available funds.
The recent shift in how the company communicates – admitting that selling some assets could be an option while still prioritizing Bitcoin purchases – complicates the current discussion. This move comforts some investors by showing the company can adapt without losing its focus on Bitcoin, but it also highlights the financial challenges the CEO has been warning about, especially after the debt buyback and with reduced cash on hand.
Risks and the Bear Case
Dorman believes MicroStrategy has taken on too much debt, putting it in a risky position. He warns that if Bitcoin’s price doesn’t increase soon, the company could quickly run into financial difficulties.
There aren’t many good solutions right now, and someone is likely to suffer. According to Dorman, the main options are either selling Bitcoin to keep preferred shareholders happy – which would hurt the value of both MicroStrategy stock (MSTR) and Bitcoin (BTC) but help STRC holders – or cutting or reducing those dividend payments. That would be good for MSTR and BTC, but it would damage STRC’s reputation and the trust of its investors.
Selling more stock through an ATM program could give the company some breathing room, but it would also put more financial strain on existing shareholders and potentially create conflict between common stockholders, preferred stockholders, and the wider Bitcoin community.
Dorman predicts a significant setback for someone within the next four months, as the situation forces a choice between supporting one group of people over another.
This episode explores the bigger picture of how companies are using Bitcoin in their financial strategies. While perpetual preferreds offer a new way to earn yield with digital credit, they also bring the usual risks of fixed-income investments to the often unpredictable world of Bitcoin. If Bitcoin’s price stays down for a long time, the cycle of issuing these instruments, buying Bitcoin, and seeing its value increase could stop, creating tough decisions for companies.
Bitcoin Transfer Sparks Fresh Selling Rumors
As an analyst, I’ve been following the recent activity around Strategy’s Bitcoin holdings. It appears they’ve moved roughly 411.48 BTC – around $30.3 million worth – to Coinbase Prime, which has fueled speculation about potential selling.
Although many people are speculating that this change means Coinbase is planning to sell off assets, that hasn’t been confirmed. Coinbase Prime doesn’t just facilitate trading; it also securely holds digital assets for big companies. This transfer of funds could simply be related to internal financial moves, like managing funds, arranging collateral, or reorganizing their treasury – and not necessarily a sale.
These potential changes are just rumors until Strategy officially announces them in a formal regulatory filing.
Rumors of potential Bitcoin sales by Strategy are circulating quickly, and traders on the Polymarket prediction platform are increasingly betting it will happen before the end of 2026 – currently, they give it an 84% probability. This activity suggests growing concern about Strategy’s cash flow, especially considering its dividend payments and how it’s been spending money recently.
What Comes Next
As of late May 2026, Bitcoin’s price has stabilized after recently reaching higher values. Meanwhile, Strategy continues to buy more Bitcoin using funds from ongoing investments. The next few months will reveal whether Michael Saylor’s recent debt repayment was a smart move, or if it unnecessarily restricted the company’s available funds.
The results will be important not just for those who’ve invested in MSTR and STRC, but also for how seriously people take companies that use debt to buy Bitcoin as an investment.
Strategy’s attempt to combine advanced technology with strong belief in Bitcoin is a remarkably bold move in the financial world. Its success hinges on skillful implementation, access to funding, and, most importantly, how the price of Bitcoin changes over time. Whether it will be a win or a struggle remains to be seen.
Saylor’s recent statements about sales show the company is carefully adjusting how it presents itself. They’re trying to stay true to their core beliefs while also dealing with the practical challenges of a changing market.
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2026-05-29 11:33