Strategy pauses bitcoin buys to restore STRC preferred to par
Strategy is prioritizing the repair of its STRC preferred stock over further bitcoin accumulation, a pivot analysts say is necessary to secure its long-term capital engine.
Strategy paused bitcoin purchases for a fifth consecutive week and reported an $8.2 billion second-quarter loss, but executives signaled a fundamental shift in strategy. The company is now prioritizing the buildup of a dollar reserve and the restoration of its STRC preferred stock to par over its traditional 100% bitcoin allocation.
Executive Chairman Michael Saylor explicitly abandoned the company's foundational mandate. "Although in the past we've had 100% allocation to BTC, I don't think it'll be 100% in the future. I think it'll be a mix," Saylor said. "Maybe the best way to buy the most bitcoin is not to buy the most bitcoin."
The immediate focus is fixing STRC, which briefly traded down to $70 on June 26 after traditional broker-dealers slashed advance ratios during a volatility spike. Saylor dismissed other corporate priorities as a distraction, arguing that demand for STRC's short-duration, low-volatility digital credit is 50 to 100 times larger than any other instrument in the company's capital structure.
Analysts note that Strategy's push to return STRC to its $99 to $100 range is not merely defensive. Institutional holdings nearly tripled from $1.1 billion in mid-March to $3.1 billion by July 1, bringing institutional ownership to 29%. The average institutional position size doubled to roughly $3.5 million.
TD Cowen and Benchmark both reiterated buy ratings, viewing the pivot as a move to protect the credibility and scalability of Strategy's broader capital raising abilities. However, the firms diverged on valuation. Benchmark cut its price target to $435 from $570, lowering its year-end 2026 bitcoin assumption to $100,000 from $125,000. TD Cowen maintained a $260 target.
To support STRC and weather a bitcoin price decline of more than 40% from a year ago, the company is fortifying its balance sheet. CEO Phong Le noted convertible debt was reduced by 18% to $6.7 billion, while lifting the dollar reserve 12% to $2.4 billion. CFO Andrew Kang pegged the broader dollar reserve at $3.75 billion, sufficient to cover preferred dividends and interest obligations for approximately two years.
Strategy grew its total holdings to a peak of 846,000 BTC before selling, leaving it with 843,775 BTC. Executives pushed back against criticism of the sales, noting the company bought 175,000 bitcoins year-to-date while selling only 3,600. Strategy shares closed at $97.70 on Thursday before dropping more than 5% on Friday. The company has $975 million remaining on its STRC buyback authorization.
