If Strategy indeed sold 491 bitcoins, what would be the market impact?

Renowned trader Lightcrypto went silent for a year, and when he finally spoke, it was explosive. He said that the largest holder of Bitcoin, company Strategy, has started selling coins.

According to the address he provided, 491 bitcoins were sold. Based on a coin price around $60,000, this amount is less than $29 million. With Strategy holding around 847,000 BTC, this amount is negligible.

Of course, some people say that the behavior of this address does not align with the logic of Strategy's publicly known addresses, so it is highly likely not Strategy. However, Lightcrypto is well-known for identifying addresses, and a significant number of people do believe him.

Selling the coins is indeed a possibility, as Strategy has just announced their new coin selling channel. On June 29, Strategy announced the "Digital Asset Capital Framework," where the board authorized the company to sell up to $1.25 billion in BTC to supplement cash reserves, pay preferred stock dividends and debt interest, repurchase preferred stock, and repurchase MSTR common stock.

What we need to consider next is, if the 491 coins have truly been sold, what does this mean for the Bitcoin market and Strategy's stock mechanism?

Is 491 BTC a Significant Amount?

Let's look at the proportion.

From the perspective of the spot market, 491 BTC is quite small. It accounts for approximately 0.058% of Strategy's total holdings. If Strategy's holdings are likened to a 100-liter water tank, then 491 coins would be like scooping out 58 milliliters.

Therefore, if the market is only concerned with "selling pressure," 491 coins are not the focus.

The real comparison lies with two other figures. At the end of May, Strategy sold 32 BTC for around $2.5 million. That instance seemed more like a temporary operation to meet demands related to paying preferred stock allocations. A month later, the company formalized coin selling by including it in the framework, authorizing up to $1.25 billion, roughly covering about 20,000 BTC at $60,000 per coin.

In other words, if the 491 coins sale is confirmed, it is not "Strategy dumping the market." It is more like the beginning of a leak in this pipeline.

Why are They Selling?

The answer lies within STRC.

STRC is a perpetual preferred stock of Strategy with a target face value of $100. Its buyers are not typical crypto players but rather income-focused funds seeking stable cash flow. The original story of this product was straightforward: Investors buy STRC, Strategy takes the money to buy BTC, BTC backs the company's assets, and STRC continues to trade close to its face value.

The issue is that STRC has not always traded close to its face value.

On June 30, Yahoo Finance displayed STRC's closing price as $84.86. At the same time, Strategy increased STRC's annualized dividend yield from July to 12%. This created an unsightly dislocation. The lower the price, the less the market believes, and the more the company has to pay in dividends.

This 12% is not just the investors' return but also Strategy's cost.

According to Strategy's announcement on June 29, the company's current annual preferred stock dividend and debt interest expenses are approximately $1.76 billion. In plain language, that means the company needs to set aside about $4.8 million every day to sustain this capital structure.

This is not to say that Strategy cannot afford it. The company's disclosed USD reserves are around $25.5 billion, which could cover 17.4 months. But this explains why the BTC selling framework emerged. Selling BTC is not to dump coins on the market but to provide liquidity to this entire equity and preferred stock structure.

Is 491 Coins to MSTR Positive or Negative?

This must be viewed in two layers.

Short-term, the market may perceive it as positive. After the framework announcement on June 29, MSTR's pre-market price surged nearly 7%. This reaction is not contradictory. The market dislikes disorderly selling but appreciates when a company clearly outlines its liquidity arrangements.

This chart explains why MSTR was able to rise at that time. Solely based on USD reserves, Strategy had a coverage period of about 17.4 months. With the $1.25 billion BTC liquidation authorization, the coverage period extended to approximately 25.9 months.

The market is not buying 'selling coins'.

The market is buying 'at least not trouble tomorrow'.

However, from a medium-term perspective, this is a devaluation of MSTR's narrative. MSTR's strongest story in the past was one-way accumulation: fundraising, buying BTC, increasing per-share BTC holdings. Now, there is an additional reverse action: selling BTC, shoring up reserves, paying dividends, and repurchasing discounted securities.

This may not be wrong, and may even be what a mature publicly traded company should do. But it will transform MSTR from the "eternal marginal buyer" to "someone who also has to manage debt at times."

The key to the stock mechanism is mNAV, which is the multiple of MSTR's market value to its net asset value. When mNAV is above 1, the Strategy issues stocks to buy BTC, and the market interprets this as increasing the BTC value per share. However, once mNAV falls below 1, issuing more stocks is akin to selling its Bitcoin at a discount.

At that point, selling BTC could actually become a cleaner form of financing.

For common stockholders, this may not be immediately negative. If the company uses the proceeds from selling Bitcoin to buy back discounted STRC, it can reduce future dividend pressure, benefiting common stockholders. However, the market will pose a new question: since even the strongest buyer is selling Bitcoin, how much of a BTC premium should MSTR still enjoy?

What Does This Mean for the BTC Market?

491 coins will not alter the spot supply and demand.

But it will alter traders' psychological charts. In the past, when the market dropped, Strategy was often seen as the ultimate buyer. ETF outflows, miner sell-offs, retail holders not buying, and whales.

If 491 coins are indeed real, this perception will experience a crack. Strategy may still be a long-term holder, and may continue to buy. However, it is no longer just an account with a buy key.

More troublesome is the coin-selling framework being tied to STRC. As long as STRC remains below face value for an extended period, Strategy must choose between several options: increase dividends, buy back discounted preferred stocks, replenish USD reserves, or utilize BTC. Each option is not a disaster, but each will pull back the "Bitcoin faith" towards cash flow.

If 491 coins materialize, it will only be the first small note.

What truly matters is whether the market will continue to consider each small note as an exception in the future.

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia