Strategy's Unconventional Bitcoin Trade Pays Off, Sort Of

Strategy's Phong Le has explained why his company sold Bitcoin at $60K and bought it back at $80K. At first glance, this trade seems disastrous, as Strategy sold about 7,000 BTC in the $60,000 to $65,000 range, only to buy the same coins back at a higher price of around $80,318.

However, according to Le, selling Bitcoin was the right decision for his company. He stated that they were selling equity when their stock traded at a premium to its coins and buying Bitcoin when equity became more expensive. This strategy allowed them to cover preferred dividends without diluting shareholders or issuing cheap shares.

The 10-week buying freeze during this period may have seemed like idle time, but Strategy actually used it to build a strong balance sheet. The company's net debt went from around $7 billion to zero over that stretch, while they accumulated about $7 billion in cash. Le has called their current financial position a 'bullet-proof balance sheet', with the company now running at 0% net leverage.

Strategy's math seems to support this claim. When selling 7,000 BTC at a midpoint of $62,500, they raised around $437 million. Buying back the same coins at $80,318 would have cost about $562 million, resulting in a loss of roughly $125 million or 1,500 bitcoins' worth of purchasing power.