Analysis: If the Strategy must sell BTC to pay dividends, it may face a downward spiral risk
BlockBeats News, June 18th, CryptoQuant analyst Maartunn posted, stating that at the current price, Strategy's BTC reserve can cover its dividends for about 32 years. However, if Strategy needs to sell BTC to pay these dividends, selling pressure may occur, potentially driving down the BTC price. A decrease in the BTC price would then reduce the value of its BTC reserve and shorten the dividend coverage period it is emphasizing. In other words, if this situation persists, there may be a risk of evolving into a downward spiral.
Previously reported, Strategy's preferred stock STRC severely deviated from its peg to a recent low, with a closing price of $88.9. The significant deviation of STRC indicates a market demand for a higher yield and a decrease in investor confidence in its credit/dividend stability. Strategy previously relied heavily on issuing STRC to finance the purchase of Bitcoin; if the STRC price is below face value, issuing new STRC is no longer cost-effective for the company, equivalent to borrowing at a higher cost. Therefore, its "ability to continue buying coins" will be weakened. In response to this, Strategy stated on social media: "The company's Bitcoin reserve is sufficient to cover dividends for 32 years," attempting to stabilize the market.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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