Strategies may sell up to $1.25 billion of bitcoin

[TastyChillySauce00]

Strategy seems to have invisible risk that people don't put enough attention into. If they are selling $1.25 billion of bitcoin, their other bitcoin will go down in value making their reserves worth less than it was before the selling happened.
The bitcoin that was supposedly to be valued at $1.25 billion is probably going to have 75% of that value after this announcement. Fortunately the market don't overreact and the price stayed stable.

[Dogedegen]

It is usual practice regularly to sell huge balance sheet of a company in calculated way to keep health of the company. While selling stocks or converting assets into cash might cause immediate reaction from retail traders, it is good way to keep strong cash flow and pay fixed duties, particularly for payouts and to settle long outstanding debts, requirement that is necessary for survival in the cycle game.

This is not true when the whole point of your company is to have a huge balance sheet and the asset that you are now trying to sell. To compare that to Apple would be like if Apple sold away the rights to iOS, Mac and all its hardware. That is not regular practice but would only happen in liquidation events or restructuring where the company is in trouble, because nobody would sell their core business away. To put it back in the perspective of Strategy, this is only happening because errors were made in how the most recent Bitcoin has been acquired. You are correct to say that it generates cash inflow, but this is not really a good sign in a business that may even be realizing a loss on their investments just to keep the obligations payable.

​I think that is important sign the spot price is not that much off, so this is easy for institutions in form of these orderly sales. Front running speculation typically is not sign of basic value changes of hidden asset but shorter term stock price ups and downs. Having good cash in corporation lowers risks in forced selling in future or selling quickly.

This part is not true because they are doing this because they are forced to, so the part about lowering risk is not appropriate for the situation that we have at hand. If they did not have to do this then they would not, and they seem to be going in the direction of having to do this because of the errors that they have made.

Strategy seems to have invisible risk that people don't put enough attention into. If they are selling $1.25 billion of bitcoin, their other bitcoin will go down in value making their reserves worth less than it was before the selling happened.
The bitcoin that was supposedly to be valued at $1.25 billion is probably going to have 75% of that value after this announcement. Fortunately the market don't overreact and the price stayed stable.

The market is not going to crash 25% from a single $1.25 billion sale in the OTC markets, I am sorry but you do not know what you are talking about.

[X-ray]

I do not have the exact number now, maybe someone could find out but they had a lot of Bitcoin before they started with the massive dividends and only very little debt. Even at that point people criticized the debt but they were mistaken, this is why I say we have to be careful and accurate because we can't get to the truth of the things. The debt was at the best rates possible, it had very little obligations and could be refinanced in the future if needed so they were in a prefect position! I think it was more greed, but maybe they took a gamble on better price performance of Bitcoin and it has not worked out. If the price went up a lot they could buy back the obligations and have much more Bitcoin than when they started, but instead of that the market took the opposite turn. It is really bad where they are now, if they do not make moves to completely reduce the risk and really become a Bitcoin company then I will be against them as well. They could have avoided all of these problems..

The convertible debt was fudded by people not because it's risky but because people tend to not like even if it was a really smart move which I also think doesn't deserve the negative sentiment.

Their previous business model have some risk, but still within the normal range and quite resilient even in the bearish market, but things changed.

MicroStrategy is currently trying to have repurchase program for their common stock and digital security which includes the bitcoin collateralized stock.

[collardelay]

Strategy seems to have invisible risk that people don't put enough attention into. If they are selling $1.25 billion of bitcoin, their other bitcoin will go down in value making their reserves worth less than it was before the selling happened.
The bitcoin that was supposedly to be valued at $1.25 billion is probably going to have 75% of that value after this announcement. Fortunately the market don't overreact and the price stayed stable.

Just gleaned the following conversation from the Roundtable Bitcoin podcast:

'Dude, I'm with you 100%. Uh like I've never enjoyed bear markets. Like I've never like it's you're just watching your net worth go down. Typically this is the first one where I'm like please go lower. Like because every time it goes lower, MSTR and Stretch and all the other all the other scams of Saylor are crashing and burning and it's so fun to watch because these like, you know, I got beef with Bitcoin Core, but the the Saylor cult is way stupider somehow. Like, I'm actually really amazed that there's something stupider than the core cult is the Saylor cult. And these guys are like, you're buying fake paper Bitcoin. It's losing money constantly. It's completely against the ethos of the whole thing. It's not working. They They're not a company that produce anything that it's not Apple decided to start taking Bitcoin. It's just a guy that's like, "Hey, give me your money. I'll buy Bitcoin and I'll do a bunch of financial magic to magic more money out of the air somehow." And and it's a complete violation of all the principles. I hate everything about it. Um, I own a little bit of Microstrategy that I bought to defer taxes uh in Canada and I can't bring myself to sell it because I know if I do it will start going up again. So, I'm like holding this thing maliciously knowing that the longer I hold it, the lower it's going to go. I just want it to die. .........i couldn't care less whether Bitcoin's at $20,000. It it's not going to bother me. What's really interesting is exactly how that stuff unfolded. Like cause kind of the foundation of what Saylor was doing is like okay I mean that seems that seems fine. You're you're basically taking a very long leverage play taking low interest debt that you're that you're issuing to get something that will outpay that will you know over a long enough span get a higher percentage than the you know 1% 2% bonds that you're selling.'

For me this conversation just about sums up the entirety of Saylor's business plan. Whether it works out in the long run is just a question of time.

[Dogedegen]

I do not have the exact number now, maybe someone could find out but they had a lot of Bitcoin before they started with the massive dividends and only very little debt. Even at that point people criticized the debt but they were mistaken, this is why I say we have to be careful and accurate because we can't get to the truth of the things. The debt was at the best rates possible, it had very little obligations and could be refinanced in the future if needed so they were in a prefect position! I think it was more greed, but maybe they took a gamble on better price performance of Bitcoin and it has not worked out. If the price went up a lot they could buy back the obligations and have much more Bitcoin than when they started, but instead of that the market took the opposite turn. It is really bad where they are now, if they do not make moves to completely reduce the risk and really become a Bitcoin company then I will be against them as well. They could have avoided all of these problems..

The convertible debt was fudded by people not because it's risky but because people tend to not like even if it was a really smart move which I also think doesn't deserve the negative sentiment.

Their previous business model have some risk, but still within the normal range and quite resilient even in the bearish market, but things changed.

MicroStrategy is currently trying to have repurchase program for their common stock and digital security which includes the bitcoin collateralized stock.

You are right to point out that there was FUD, but the thing is that only the truth of the situation matters. So with people online you have this thing that if you go left some will criticize it, and if you go to the right some others will criticize it. Actually, at some times the same people will criticize both decisions even if there are only two possible options and that is just crazy! But because of this, what matters if whether something is objectively correct or in this case whether it was a bad thing or risky thing or not. The debt was great, until they started creating dividend obligations Strategy was a fantastic vehicle with almost no applicable criticism. Many people that did criticize it were done because they were envious, obsessed with ideological views and stuff like that so they can be ignored. Also surely we don't want to spend time debating the details of some approaches as they are never going to be perfect.

But these days, Strategy is something else entirely. It went from something that has almost no risk at all to something that is medium to high risk, and not even for any purposeful sake. They have managed to increase their Bitcoin even more this way, but is the cost worth it? It does not seem so, even if by luck it works out in the end. I will demonstrate with a very simple example. To understand the example, current and past prices have to be ignored completely because they are not related to the example. Which of the two is better in terms of risk and overall position? Having 50 BTC that you got for free somehow, or having 100 BTC that you took out a loan for $50 000 to get? It is always going to be the first case, it has a zero cost basis and carries no risk to you at all even if it goes to $0. The other part is very risk, you have interest, you have debt, you have to think about the value of that BTC often.

[nelson4lov]

Strategy seems to have invisible risk that people don't put enough attention into. If they are selling $1.25 billion of bitcoin, their other bitcoin will go down in value making their reserves worth less than it was before the selling happened.
The bitcoin that was supposedly to be valued at $1.25 billion is probably going to have 75% of that value after this announcement. Fortunately the market don't overreact and the price stayed stable.

Imo, that news was likely frontran. If you noticed, the price had dumped heavily days before those announcements were made which is why when the news about Strategy's Bitcoin sales came out, the price didn't move that much and that was what I expected. Most likely people smelled that blood was about to come and start selling ahead which was why price dropped heavily prior to the news.

If Bitcoin price was pumping and suddenly news broke out that strategy was selling at that exact time, it would immediately cause a drop. But not this time since it was frontran.

[ThemePen]

Strategy seems to have invisible risk that people don't put enough attention into. If they are selling $1.25 billion of bitcoin, their other bitcoin will go down in value making their reserves worth less than it was before the selling happened.
The bitcoin that was supposedly to be valued at $1.25 billion is probably going to have 75% of that value after this announcement. Fortunately the market don't overreact and the price stayed stable.

Imo, that news was likely frontran. If you noticed, the price had dumped heavily days before those announcements were made which is why when the news about Strategy's Bitcoin sales came out, the price didn't move that much and that was what I expected. Most likely people smelled that blood was about to come and start selling ahead which was why price dropped heavily prior to the news.

If Bitcoin price was pumping and suddenly news broke out that strategy was selling at that exact time, it would immediately cause a drop. But not this time since it was frontran.

The frontrunning theory makes sense as BTC had already dipped below $59K before this filing even saw light of day. Financial pressures at Strategy, as reflected by STRC discount and decay of mNAV below 1, were probably clear to some smart money.
But there is larger issue both you guys are overlooking, this is not a lock, it is just the okay to sell if you want to. He made huge purchase of BTC during the same week that he filed this one, so it does not necessarily mean that he wants to sell off huge amounts, it is just having choices for payments of the dividend.
That is not necessarily $1.25B at stake, however, if BTC remains weak and Strategy has to repeatedly sell to protect against $1.76 billion in annual dividend and interest expenses. It is not this one announcement, it is the structural issue to watch.

[Oshosondy]

Strategy has already sold 3,588 BTC

Strategy sells 3,588 Bitcoin for $216M to fund dividends, keeps $2.55B reserve intact
https://cointelegraph.com/news/strategy-sells-bitcoin-bernstein-btc-target

Michael Saylor's Strategy sold 3,588 Bitcoin (BTC) to fund preferred stock dividend payments and replenish its cash reserves.

Strategy sold the Bitcoin for $216 million, reducing its total holdings to 843,775 Bitcoin, according to a Monday 8-K filing with the US Securities and Exchange Commission.

[Dogedegen]

Imo, that news was likely frontran. If you noticed, the price had dumped heavily days before those announcements were made which is why when the news about Strategy's Bitcoin sales came out, the price didn't move that much and that was what I expected. Most likely people smelled that blood was about to come and start selling ahead which was why price dropped heavily prior to the news.

If Bitcoin price was pumping and suddenly news broke out that strategy was selling at that exact time, it would immediately cause a drop. But not this time since it was frontran.

No because that would be illegal insider trading, it was not front run and if you want to make exceptional claims you have to provide exceptional evidence. Random pattern recognition is not evidence for claims..

Strategy has already sold 3,588 BTC

Strategy sells 3,588 Bitcoin for $216M to fund dividends, keeps $2.55B reserve intact
https://cointelegraph.com/news/strategy-sells-bitcoin-bernstein-btc-target

Michael Saylor's Strategy sold 3,588 Bitcoin (BTC) to fund preferred stock dividend payments and replenish its cash reserves.

Strategy sold the Bitcoin for $216 million, reducing its total holdings to 843,775 Bitcoin, according to a Monday 8-K filing with the US Securities and Exchange Commission.

Everyone who said that if they said anything more significant after the 32 BTC event was wrong, they were predicting the end of times if Strategy sells anything considerable and here we are now. While in percentage of their total holdings this is nothing, it is still one fifth of a billion. The sale happened without almost no reaction from the market or anybody significant really, maybe there were some posts of people wanting to induce panic but it did not work. I think gregory maxwell talks about this somewhere, the issue we have in recent times is anxiety. People are addicted to anxiety because of the effects of technological devices and they won't even admit this even if it hurts them, so they will find a way to derive a very bad outcome from any situation not realizing this is their subconscious manipulating.

The market overreacted when Strategy sold 32 BTC, but we can't know if it was because of Strategy or simply a chance correlation because the market might have been bad at that day even without that sale. It is maybe impossible to calculate and then subtract the effect of Strategy's sale and announcement back then. This time around nothing really happened even if they sold 100 times more!

[hui]

From my little experience, there is no reason to see this news as negative for Bitcoin. Strategy is not selling all of their Bitcoins, but selling very small amounts of BTC to keep corporate costs, dividends, interest payments and cash reserves strong. The most important thing is that they have 843,775 BTC even after selling 3,588 BTC. That is, the company still one of the world is  largest corporate Bitcoin holders and does not seem to have major changes in their long-term Bitcoin strategy. They are always able to make appropriate decisions.