Bitcoin (BTC) 3% is Enough for Survival... Is the Collapse Theory for Strategy (MSTR) Wrong?

▲ Strategy (MSTR), Bitcoin (BTC)/AI Generated Image

Strategy (MSTR) has been embroiled in collapse theories after selling Bitcoin (BTC) for the first time in four years. However, a counter-argument that the company only needs an average annual 3% rise in Bitcoin to survive is directly challenging the market's extreme pessimism.

In a video uploaded on July 5 (local time), Lark Davis, host of the crypto-specialized podcast The Lark Davis Show, argued that while it's clear Strategy is facing financial pressure, interpreting this as corporate failure or a collapse of its Bitcoin position is an overstatement. MSTR's stock price fell to $82, its lowest in two years, and STRC dropped to $71, $29 lower than its stated value of $100. Dividend obligations also quadrupled from $300 million to $1.2 billion in just six months, and the capacity to pay dividends decreased from seven years to 14 months.

The fact that Strategy sold 32 BTC for the first time in four years and approved Bitcoin sales of up to $1.25 billion also fueled the crisis theories. Davis assessed that "the core narrative of infinite Bitcoin accumulation has been temporarily halted," but emphasized that considering Strategy's holding of 847,000 BTC, the approved sale volume accounts for only about 2%. He argued, "It's neither a liquidation nor is Strategy collapsing," asserting that it's a fund management decision to protect the corporate structure and preferred stock dividends.

The core of the bullish argument is Saylor's dividend calculation. Michael Saylor explained that even if Bitcoin sees 0% growth over the next 40 years, dividends can still be paid, and if it rises by just 3% annually, dividend payments can continue. Comparing this to the 30% average annual compound growth rate for Bitcoin discussed in the market, Davis stated, "The required return is only 3%. Claims of Strategy's ongoing collapse are not looking at this calculation." Strategy's approval of preferred securities and MSTR common stock repurchase programs was also interpreted as a sign that management views market valuations as low.

On the other hand, the structure where corporate Bitcoin buying demand is excessively concentrated in Strategy was pointed out as a real risk factor. The video claimed that Saylor accounts for over 90% of corporate Bitcoin purchases by 2026 and analyzed that if the largest buyer slows down, the market could be affected. However, citing the view of Bitwise's Chief Investment Officer, it reported that the era of Strategy as the largest single buyer might end as global banks, asset managers, pension funds, and sovereign wealth funds gradually share the demand for Bitcoin. Davis characterized the current situation as "Strategy is under pressure, but it has not failed."

[Article Summary]

-Strategy faced crisis theories as its dividend obligations quadrupled from $300 million to $1.2 billion in six months, and it sold 32 BTC for the first time in four years.

-Lark Davis emphasized that the approved Bitcoin sale of up to $1.25 billion represents about 2% of its holdings, and the dividend structure can be maintained with just a 3% annual increase in Bitcoin.

-The video acknowledged Strategy's financial pressure and the risk of concentrated corporate buying, but argued that expanding institutional demand could reduce reliance on a single buyer.

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