Strategy · Wall Street · Bitcoin · The Block
Strategy supporters rebut ‘death spiral’ fears as bitcoin price wobbles
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Speculation that Strategy (MSTR) could be headed for a “death spiral” of forced bitcoin liquidations has made the rounds in recent days as the cryptocurrency tumbled towards $60,000.
Key facts
- Since sinking in price to about $60,000, BTC has rebounded in the past 24 hours, trading above $66,000 as of 11:03 a.m
- Strategy sold 32 BTC for approximately $2.5 million between May 26 and May 31, the first time the firm sold any of its holdings since it began acquiring bitcoin in December 2022
- STRC is a perpetual preferred share designed to trade near $100 while offering a variable monthly dividend, currently around 11.5% annualized
- Speculation that Strategy (MSTR) could be headed for a “death spiral” of forced bitcoin liquidations has made the rounds in recent days as the cryptocurrency tumbled towards $60,000
Summary
On Monday, Wall Street analysts from Benchmark and TD Cowen pushed back against that narrative, defending the durability of the company’s bitcoin treasury strategy. "The death-spiral story assumes that Strategy is one bad week from selling bitcoins, and it skips several steps to get there. Strategy sold 32 BTC for approximately $2.5 million between May 26 and May 31, the first time the firm sold any of its holdings since it began acquiring bitcoin in December 2022. That said, according to Palmer, because Strategy’s perpetual preferred stocks do not have "a hard maturity" that could trigger accelerated selling, there likely won't be an uptick in sales.