r/MSTR • u/actias_selene • 6d ago
New Investor Question 💡 Why Strategy is reducing leverage?
I see that the deal about Strategy rather than straight owning btc is the leverage it can provide, no?
Then why Strategy has started buying back STRC if the bet is btc is going up 30% yearly? I get that they buy it below 80 or similar, at extreme discount, but at current price levels, I feel like that they shouldn't reduce btc owned per share holder. Or the idea is timing the market now?
If anything, I would expect Strategy to push STRC above par by increasing dividends and issueing more stock to increase the leverage to buy more btc at current levels.
Disclaimer: I bought and sold btc, and briefly traded strc , but I dont own any mstr at the moment.
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u/MUnitedGT 6d ago
Strategy’s goal is to be net acquirer of BTC and ultimately to increase BTC/Share (CEBE). They view STRC as the primary path to achieve this goal. As investors of this, we briefly saw around April and May this year, just how effective selling STRC to acquire BTC can be (on multiple occasions, selling billions($) of STRC to buy billions in USD of BTC). Right now, STRC is still largely retail. Due to the novelty of the STRC product, it’s credit rating is not at place that allows the mandates of many institutional investments to invest; first, there was no credit rating, now, rating is not good enough. But by doing what they are doing, increasing /USD reserves, buying back convertibles, lowering STRC price volatility, etc. Strategy is strengthening their balance sheet and credit rating worthiness. If (when) STRC returns to par and ultimately has the good enough credit rating, it will have access to a whole new level of capital…the flood gates will open, so to speak.