Michael Saylor’s Bitcoin U-Turn: Selling BTC to Fund Dividends and Destroy Shorts

Michael Saylor’s U-Turn? Why Strategy May Finally Sell <a href="https://investment-policy.com/btc-usd/">Bitcoin</a> After $12.5B Loss

Michael Saylor famously built his company’s financial strategy around buying Bitcoin and holding onto it indefinitely. He shared this approach publicly and it became central to his company’s image, helping attract significant investment. However, that strategy effectively came to an end on Monday evening.

During a recent earnings call, the CEO of Strategy, known for previously advising people not to sell their Bitcoin, announced plans to do just that – sell his own holdings.

Michael Saylor and CEO Phong Le explained their plan to strategically sell some of the company’s Bitcoin to pay dividends on their $8.5 billion STRC preferred stock – the largest of its kind globally. At the same time, they announced they’ll eliminate all of Strategy’s usual debt and streamline their finances, focusing solely on common stock, STRC, and their Bitcoin holdings.

Strategy currently holds over 818,000 Bitcoin, valued at approximately $66 billion. Rather than reducing its Bitcoin holdings, the company is changing how it uses them. It’s moving away from simply buying and holding Bitcoin and becoming a more versatile financial operator, treating its Bitcoin reserves as an asset to be strategically invested and deployed.

Saylor’s timing is likely due to a desire to preempt any negative actions from short sellers who might be trying to challenge him.

The “Inoculation” play

Saylor spoke carefully, describing the planned Bitcoin sale not as something they *had* to do, but as a smart, preventative measure.

Saylor explained during the call that they likely plan to sell some Bitcoin to finance the dividend payment, partly to reassure the market and demonstrate they followed through on their commitment.

As a researcher following Strategy, I’ve always understood the concern from short sellers – they believed Strategy would eventually have to sell company stock to maintain its dividend payments. However, by proactively selling a small portion of its Bitcoin holdings, Strategy appears to be directly addressing and neutralizing that argument.

As an investor, what excites me is that this company can actually pay its dividends using its Bitcoin holdings. Even better, they could completely stop issuing new shares of stock if they choose. And the really cool part? They can publicly prove all of this, so it’s all transparent and verifiable.

Saylor was very direct: he welcomes anyone betting against his company by claiming it will need to sell stock to pay dividends, stating he’d happily prove them wrong.

CEO Phong Le made it clear the company’s strategy is changing. He stated they will sell Bitcoin if it benefits the company, but aren’t ruling out sales entirely. Their goal is to ultimately increase the total amount of Bitcoin they hold, and even more importantly, the amount of Bitcoin per share.

This is a key difference: strategy isn’t about stopping growth, but changing *how* you grow. Instead of a strict rule to never sell, it’s about selling when it improves your overall position, buying when it adds value, and always focusing on increasing your Bitcoin per share rather than just the total number of coins you hold.

The math behind the confidence

As a researcher tracking MicroStrategy, I’ve been looking closely at their Bitcoin strategy. What the numbers show is quite remarkable: Bitcoin only needs to increase in value by around 2.3% each year for their current holdings to cover their ongoing dividend payments to STRC shareholders. The best part is, they can do this without selling off any of their company stock.

Considering Bitcoin’s strong historical growth – it’s consistently increased by more than 20% each year – a 2.3% growth target is very easily achievable.

We shared our breakeven point of around 2.05% in April. This has increased slightly due to the continued release of STRC since then.

Saylor explained that reaching a certain annual recurring revenue (ARR) level would be a turning point: the company would start accumulating more Bitcoin than it spends on dividends, even if those dividends are paid in Bitcoin. Essentially, Strategy anticipates consistently adding to its Bitcoin holdings over time, even after accounting for any Bitcoin used to pay dividends.

STRC: The real story of Q1

Although a $12.54 billion net loss dominated the news – caused solely by paper losses as the value of Bitcoin dropped from $87,000 to $68,000 in the first quarter – the company’s core business, STRC, actually experienced significant growth during that same period.

As of May 3rd, STRC has raised $5.58 billion this year, nearly tripling the amount raised in the first few months of 2026. Trading activity is strong, with daily volume averaging $375 million, and the price has remained stable with volatility at just 3%. In just nine months, STRC’s total value has reached $8.5 billion. CFO Andrew Kang highlights that this performance has generated a Sharpe ratio of 2.53, which is exceptionally high for an investment of this type.

A key topic of discussion was the growing ecosystem around STRC. Several protocols, including Apex, Saturn, and Hermetica, are already creating yield-generating coins using STRC technology. These DeFi platforms are also allowing users to amplify their potential returns with leverage ranging from 2x to 10x.

Companies like Prevalon, Strive, and Anchorage are collectively holding $150 million worth of STRC. Additionally, over $270 million is currently being used in various DeFi applications. According to Saylor, there are now around three dozen new projects in progress that weren’t even being considered just eight to twelve weeks ago.

The company is suggesting that shareholders vote to change STRC’s dividend payments from once a month to twice a month. This change is intended to make the investment more stable and appealing to investors looking for regular income.

Going debt-free: The clean balance sheet vision

One of the most overlooked points from the conversation was Michael Saylor’s announcement that Strategy aims to eliminate all of its debt.

The company plans to eliminate its six existing convertible bonds by either exchanging them for STRC shares, converting them into regular company stock, or paying them off with cash. Saylor envisions a very straightforward structure for any future Bitcoin-focused company: just one type of common stock, one type of variable-rate preferred stock (STRC), and a holding of Bitcoin. That’s it.

Strategy has decided to focus all its efforts on a single credit instrument, STRC, and won’t be issuing any more of its other credit instruments – STRF, STRK, STRD, and STRE – for now. While these existing instruments won’t be discontinued because they still offer valuable future opportunities, they won’t be a priority for new funding. Strategy believes concentrating on STRC is the best path forward.

Saylor explained that STRC is intentionally treated differently because its fluctuating rate prevents investors from being stuck with a bad deal. He was much more excited about selling STRC at 11.5% than STRF at 10%, emphasizing that overall volume is more important than profit margin. He put it simply: he’d prefer to sell $500 billion worth of STRC at 11% rather than $50 billion at 9%.

The volatility arbitrage

A particularly insightful part of the discussion focused on how Strategy’s system changes based on varying levels of Bitcoin price fluctuation.

When markets are unstable and prices fluctuate a lot, stocks tend to do well. MicroStrategy (MSTR) had the biggest options trade in the U.S. market on a recent day. Conversely, when Bitcoin prices are stable, investments in credit – like bonds – perform better because the risk of default is lower, and potential profits can be greater.

As a researcher tracking Bitcoin’s financial instruments, I’ve been analyzing the conditions under which they might be considered investment grade. Michael Saylor has outlined clear benchmarks: currently, with a Bitcoin volatility of around 40% and a credit rating of 3, these instruments start to look like solid investments. If volatility drops to 30%, they’d achieve investment grade status even with a lower rating of 1.5. And if Bitcoin becomes even more stable – below 30% volatility – we could potentially see significant amplification, possibly allowing leverage ratios to jump from 3:1 to 8:1. Looking ahead, the expectation is that as Bitcoin’s market cap grows and trading becomes easier, its volatility will decrease from the current 40% to around 20%, and its annual returns will follow suit, moving from 40% to 20%.

If things go as planned, Strategy’s current offerings in the credit market are expected to all become investment grade. This could significantly increase demand for its products, potentially expanding the market by tenfold.

The market does not agree, yet

Even with all of this happening, Saylor admitted the market hasn’t fully adjusted its valuation of Strategy’s assets to match his perspective. When asked if the market shared his view of the risks involved, Saylor was direct: “No, it doesn’t. If it did, STRF would be worth $200.”

He compared the current situation to companies like Amazon, Netflix, Apple, Google, and Nvidia, which all took years – sometimes over a decade – for the market to fully grasp their potential. He believes a significant positive shift in valuation will happen unexpectedly, much like when Warren Buffett’s investment in Apple caused its valuation multiples to jump from 10x to 25-30x almost immediately.

Regulatory outlook and the Basel Card

Regarding regulations, Strategy is in a strong position. The company can move forward with its current plans without needing any new rules or approvals. Its holdings of BTC, MSTR stock, and STRC are all protected by well-established securities laws—going back over a century—and are listed on NASDAQ, meaning there’s no legal uncertainty surrounding them, as Saylor explained.

According to Saylor, the most significant change that could happen is an update to Basel rules. This update would treat Bitcoin as acceptable collateral, just like gold. If that happened, insurance companies and regulated banks could start using Bitcoin without needing special permission from regulators.

As an analyst, I’m watching the development of security token offerings very closely. Andrew Fong, President of Strategy, highlighted that progress on tokenizing securities – whether through legislation like the Clarity Act or direct SEC rules – will significantly boost the layer-2 STRC ecosystem. We’re already seeing substantial activity internationally, with $270 million in tokenized STRC traded on platforms like Apex and Kraken outside the U.S. If we get clear regulations here at home, I expect to see the U.S. market experience similar growth.

The ownership shift nobody is talking about

During a recent discussion, Bloomberg’s Eric Balchunas highlighted some interesting data. According to River, over the last year and four months, companies, ETFs, and governments have bought around 1 million Bitcoin, while individual investors have sold about 730,000. This indicates a large-scale, but relatively unnoticed, increase in Bitcoin purchases by institutions.

Saylor described this situation as a massive shift of wealth, potentially worth $1.4 trillion, benefiting those who invested in Bitcoin early on. Even though companies and exchange-traded funds have spent between $150 and $200 billion on Bitcoin, they collectively own less than 10-15% of all Bitcoin in existence.

The vast majority of Bitcoin, around 85-90%, is held by individual investors, not institutions. Michael Saylor believes this actually makes the network *more* decentralized. BlackRock’s ETF, for example, gives access to Bitcoin for 50 to 100 million people, and Strategy adds another 100 million. This means institutional investors spread ownership across a much wider base than the few large holders (‘whales’) ever did.

Quantum security and the next announcement

Fong announced that Strategy is creating a Bitcoin Security Program involving companies that hold and manage large amounts of Bitcoin, like custodians, exchanges, and treasuries. This program aims to create a common understanding of the potential risks posed by quantum computing, the tools being developed to address those risks, and how to reach agreement on the best course of action.

We anticipate an announcement in about a month. According to Fong, the industry currently has many differing opinions, and this group aims to bring everyone together and create a unified direction.

By the numbers: Q1 2026 at a glance

Strategy announced first-quarter revenue of $124.3 million, an 11.9% increase compared to the same time last year. They also reported a gross profit of $83.4 million, representing a healthy 67.1% margin. While these results aren’t the main focus for investors, they do show that the company’s older software business remains profitable.

The company reported an operating loss of $14.47 billion, but this was solely due to the decreasing value of its digital assets, specifically Bitcoin. Accounting standards (ASU 2023-08) require these losses to be reflected even if the assets haven’t been sold. Bitcoin’s price fell from approximately $87,000 to $68,000 during the first quarter. The company finished the quarter with $2.21 billion in cash and cash equivalents.

As of May 3rd, our Bitcoin strategy has generated a 9.4% return this year, resulting in a profit of 63,410 BTC, which is equivalent to roughly $4.97 billion. So far this year, we’ve raised $11.68 billion and consistently delivered on our commitments to investors, having paid $692.5 million in dividends on preferred stock over 23 consecutive payments without interruption.

Bitcoin’s price, measured in sats, was 213,371, which is about 18% higher than a year ago. The company aims to increase this value to double its current level over the next seven years.

MicroStrategy stock finished Tuesday at $186.90, a 1.7% increase for the day. Over the last month, the stock has risen by 46%, though it remains 26.7% lower than it was six months ago.

What this actually means

Strategy hasn’t turned negative on Bitcoin; it’s simply refined its approach. Their previous “never sell” policy was effective for attracting attention when things were simpler. Now, they’re developing a complex financial system where Bitcoin, stocks, and lending work together. They can adjust these elements based on how the market is performing, its level of risk, and changes in interest rates.

When Bitcoin is eventually sold, it will be a limited sale meant to demonstrate the ability to move assets easily, not a sign that our overall belief in Bitcoin has changed.

In just nine months, STRC has become an $8.5 billion asset, and a huge wave of new financial products – blending both decentralized and traditional finance – are being developed around it. Strategy aims to become the leading global provider of digital credit, ultimately planning to replace all traditional debt and establish what Michael Saylor believes is the most efficient way to hold Bitcoin.

Even Saylor acknowledges the market hasn’t fully recognized Bitcoin’s potential yet. Whether this represents a promising opportunity or a risky overestimation will likely be determined by Bitcoin’s historical trend of increasing in value over the long term.

2026-05-06 08:23