Strategy Formalizes Bitcoin Sell-off…Should Investors Sell?

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Market attention is focused on Strategy, the largest corporate holder of Bitcoin (BTC), as it has formalized a plan to sell up to $1.25 billion worth of Bitcoin. However, the media outlet evaluated that this decision is not a negative factor that would undermine the logic of Bitcoin investment; rather, it reduced uncertainty by clarifying the criteria for selling.

According to the investment specialized media The Motley Fool on July 4 (local time), Strategy announced a new Digital Credit Capital Framework on June 29, establishing the authority to sell up to $1.25 billion worth of Bitcoin. The proceeds from the sale are planned to be used for dividend payments on Stretch preferred shares, interest expenses, and share buybacks. Bitcoin's price dropped by 2.2% in the 24 hours immediately following the announcement.

Strategy is currently the largest corporate holder, possessing approximately 4% of the total Bitcoin to be issued. However, the approved sale amount is only a fraction of its current Bitcoin holdings, which are valued at approximately $50.6 billion. The media outlet assessed that even if the approved amount were to be sold all at once, it would not be large enough to drastically increase market supply and collapse the price. The explanation is that this plan is closer to a liquidity mechanism used when fundraising is needed, rather than new Bitcoin purchases.

The biggest change in this framework is that Strategy's likelihood of selling Bitcoin has increased compared to before. Instead, the market can now somewhat predict future selling times and amounts by checking cash holdings through quarterly earnings reports and press releases. This analysis suggests that it has the effect of reducing investor uncertainty rather than unpredictable sales.

The media outlet pointed out that Strategy holding an excessively large amount of Bitcoin itself is a long-term risk factor. It stated that if the company's fundraising structure deteriorates in the future, prolonged sales could put pressure on Bitcoin's price. However, it evaluated that the core fundamentals of Bitcoin, such as its supply limit, mining difficulty, halving structure, scarcity, and neutrality, have not changed at all, and the investment logic has not been undermined by this announcement alone. It also added that Strategy's stock price has fallen by over 70% in the past 12 months, and Bitcoin has also dropped by about 42% during the same period, indicating that many negative factors have already been reflected in market prices.

The media outlet warned that if Strategy were to change its current framework or bypass it to sell more Bitcoin in the future, it could significantly burden the price. However, it concluded that while it is true that Bitcoin has become a somewhat riskier asset than before at this point, this selling plan alone is not a reason for investors to sell Bitcoin.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*