Strategy Inc.’s (NASDAQ:MSTR) transactions are part of disciplined capital management rather than a change in its long-term Bitcoin (CRYPTO: BTC) strategy, according to CEO Phong Le.

Why Strategy Started Selling BTC

In its Q2 earnings call, Le said Strategy intends to monetize portions of its Bitcoin holdings for three primary reasons:

  • To build its U.S. dollar reserve to as much as $5 billion.
  • To fund preferred dividend obligations.
  • To support up to $2 billion in authorized security repurchases.

The company currently holds approximately 843,000 BTC and is targeting an additional $1.25 billion in cash reserves.

This is enough to cover nearly three years of its current annual dividend and interest obligations of $1.76 billion.

Le also disclosed details of Strategy’s first two Bitcoin sales.

The company initially sold 32 BTC during the week ending May 31 and it was designed to test operational processes and generated a roughly $1 million realized loss.

It led to a creation of a potential $400,000 tax asset.

A month later, Strategy sold 3,588 BTC, or about 0.4% of its holdings, raising around $216 million to fund preferred stock dividends due June-end.

The transaction generated a realized loss that could translate into an estimated $59 million tax benefit.

Why Strategy Needs Bitcoin

Le said Strategy currently has roughly $18.5 billion in unrealized Bitcoin losses, representing a potential $5.4 billion future tax benefit that could offset capital gains through strategic sales.

He also rejected the notion that Strategy’s buying or selling materially influences Bitcoin prices.

According to Le, Bitcoin averages roughly $26 billion in daily trading volume.

Even during Strategy’s largest week of Bitcoin accumulation, its purchases accounted for just 1.42% of market liquidity.

Over the past 12 months, the company’s average daily purchases represented only 0.22% of Bitcoin trading volume.

On the selling side, Strategy’s largest disposal amounted to about 0.08% of Bitcoin’s daily liquidity.

Le estimated that ongoing Bitcoin sales to fund annual preferred dividends would average roughly $5 million per day, or just 0.02% of average daily trading volume.

“Strategy needs Bitcoin,” Le said. “Bitcoin is extremely liquid.”

While acknowledging that large sales could temporarily affect market sentiment, Le argued that ‘we’re a heavy participant in Bitcoin market when we buy, but very small when we sell back’

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