Michael Saylor suggests Strategy may divest Bitcoin 'to reassure the market'
In a notable departure from his historically unwavering stance against selling Bitcoin, Michael Saylor's company has suggested for the first time it might consider divesting some of its holdings.
In a departure from Strategy's traditional approach, executive chairman Michael Saylor indicated that his company might divest some Bitcoin holdings to "inoculate" the market from sudden fear or to bolster investor trust in the organization, marking a shift from the firm's longstanding policy of never liquidating its Bitcoin position.
"We'll probably sell some Bitcoin to fund a dividend, just to inoculate the market, just to send the message that we did it," Saylor stated during Strategy's first-quarter earnings call on Tuesday.
Market observers will come to understand that "the company's fine, the Bitcoin's fine, the industry's fine, the world didn't come to an end," Saylor remarked following Strategy's disclosure of a $12.5 billion net loss, primarily attributed to unrealized losses on its Bitcoin (BTC) portfolio as Bitcoin declined 23.8% during the first quarter.
Since August 2020, when the company initiated its approach of maintaining Bitcoin as a core treasury reserve asset, Strategy has remained a persistent buyer of Bitcoin in the market.
During a February appearance, Saylor rebuffed worries that the company might be compelled to liquidate its Bitcoin position during a cryptocurrency market decline, stating on CNBC's Squawk Box, "I expect we'll buy Bitcoin every quarter forever."
Saylor additionally indicated that Strategy possessed the capability to endure a severe Bitcoin price decline to levels as low as $8,000 while still meeting its debt commitments without requiring any sales.
Saylor wants Stretch to be world's biggest credit instrument
In recent months, Strategy has increasingly relied on perpetual preferred stock offerings that pay dividends, such as Stretch (STRC), to finance its ongoing Bitcoin acquisitions.
The Stretch instrument has enabled Strategy to finance a significant percentage of the 145,834 Bitcoin purchased this year, pushing its cumulative holdings to 818,334 Bitcoin, valued at $66.7 billion.
According to Saylor, Strategy's objective is to develop Stretch into the "biggest credit instrument in the world," explaining that expanding assets under management will enhance liquidity, facilitating wider acceptance and generating a "network effect."
Saylor hopeful neobanks will build Bitcoin credit products
Saylor revealed that multiple Bitcoin-centered decentralized finance protocols, such as Pendle and Saturn, have begun tokenizing STRC's 11% monthly dividends, facilitating their trading and enhancing liquidity within the Bitcoin-backed credit ecosystem.
Additionally, Saylor expressed optimism that a neobank would soon begin providing Bitcoin-backed "digital yield accounts" to customers.
"We had none of these conversations going on eight weeks ago or 12 weeks ago, and now I see like three dozen initiatives," Saylor stated.
According to Saylor, Bitcoin-backed digital yield accounts have the potential to deliver returns of up to 8% for investors, which he contends significantly exceeds the yields available from many stablecoins.
"Check back in 12 more weeks, I think we'll have some exciting news," Saylor commented regarding the expanding Bitcoin credit marketplace.
In the meantime, MSTR shares declined 4.33% during after-hours trading on Tuesday, closing at $178.80 following the company's first-quarter earnings announcement.
Looking ahead, Strategy appears positioned to deliver improved second-quarter results, with Bitcoin having risen nearly 20% to $81,250 since April 1.