Strategy needs to monetize BTC after buying time with digital credit framework, Galaxy Research

Alex Thorn, the head of firmwide research at Galaxy Research, shared Galaxy’s analysis on X, adding his voice to the debate regarding Strategy’s newly announced Digital Credit Capital Framework. The new rules have sparked a debate about whether or not they will solve the company’s capital-structure problems or simply delay them. How does Strategy’s new capital framework operate?

Strategy (Nasdaq: MSTR) recently disclosed a new “Digital Credit Capital Framework” in a 8-K regulatory filing. Cryptopolitan reported that the framework grants the company formal permission to sell up to $1.25 billion worth of Bitcoin.

Notably, the firm is facing a massive unrealized loss of roughly $14 billion on its holdings of 847,363 BTC. The framework creates a formal USD reserve policy that introduces revised dividend terms for its STRC preferred shares, and authorizes separate repurchase programs for both preferred stock and MSTR common shares at $1 billion each. The board has kept aside the company’s $2.

55 billion cash reserve, restricting its use to preferred dividends and debt interest. If the current spending rates of roughly $1.76 billion annually are retained, this reserve is expected to last for about 17 months.

If the full authorized sale of Bitcoin were to be executed, total liquidity would stretch to approximately $3.8 billion, an amount that would cover about 26 months of obligations. Alex Thorn of Galaxy Research pointed out that the core of the debate is whether these new rules actually solve Strategy’s capital-structure issues or simply delay them.

The company sold 32 BTC for about $2.5 million in its first-ever Bitcoin sale in late May to cover a dividend payment. JPMorgan recommends that Strategy sell its shares to raise money rather than sell Bitcoin.

Are investors buying MSTR shares? MSTR shares climbed 12.6% to $92.

68 on the Monday after the filing was disclosed, and then by Wednesday, the value had soared past $100. This figure represents a 27% increase from the p