News Block: Saylor Unveils a $3.8 Billion Plan After STRC Crashes, Billionaire Says Bitcoin Is Dead, Ledn Launches Gold-Backed Loans

**Natalie Brunell** (0:01)
Welcome to the Coin Stories News Block, powered exclusively by Ledn. I'm Natalie Brunell, and in about 10 minutes or less, I'll provide you with insightful updates on Bitcoin, financial markets and the global economy. Everything you need to know in one block. Let's go.
Last week was the worst week in the short history of digital credit. The new class of Bitcoin-backed preferred stocks issued by companies like Strategy and Strive. Strategy's stretch fell as low as $71.25.
Strive's SATA dropped to around 79 And for instruments designed to trade at $100, that was a sharp and sudden crack. So the critics piled on. Social media was full of people declaring stretch dead, Strategy broken, and the entire Bitcoin treasury model, a house of cards. All eyes were on Michael Saylor and the Strategy team this week. And on Monday, Strategy announced a new digital credit capital framework, essentially telling the market, we hear you, and here's how we're going to address everything. The headline number. Strategy has set aside $3.8 billion in liquidity to cover its dividend and interest obligations, enough to pay every preferred shareholder for more than two years, even if the company never issues another share. That $3.8 billion comes from two sources. First, a $2.55 billion cash reserve earmarked exclusively for dividends and interest, nothing else. The board established a hard floor. Management will maintain at least 12 months of coverage at all times and going below that will require board approval.
Second, a new program that gives the company the ability to sell up to $1.25 billion in Bitcoin if needed to top up that reserve. Now, it's worth noting that much of that cash reserve was built by selling MSTR common stock. So, the reassurance for preferred shareholders came at a cost to common shareholders in the form of dilution. That's a trade-off the company clearly decided was necessary to stabilize the capital structure. And the Bitcoin sale option is the part getting a lot of attention and the most pushback. Critics immediately said, Saylor is gonna sell over a billion in Bitcoin. He said he'd never sell. But look, here's the context. The 1.25 billion represents less than 2.5% of Strategy's total Bitcoin holdings of nearly 850,000 Bitcoin. The goal is not to become a seller of Bitcoin. The goal is to have enough flexibility to avoid issuing common stock at bad prices, especially when the stock is trading near the value of the Bitcoin it holds. As CFO Andrew Kang put it, Bitcoin is capital. This program gives Strategy the flexibility to use a portion of its Bitcoin reserves to strengthen digital credit.
On top of that, Strategy raise stretches dividend from 11.5 percent to 12 percent to make it more attractive to income investors and they authorized up to two billion in buybacks, one billion for their preferred securities, and one billion for MSTR common stock. Now, that last part is a big deal and it's a notable shift. Saylor has historically been critical of stock buybacks, so the fact that he's now authorizing them tells you how seriously he's taking the need to defend the capital structure. CEO, Fong Li, framed it this way, strategy is evolving from one-way capital issuance to active capital management. We intend to move between issuing securities when capital is attractive and repurchasing securities when our instruments trade at levels that make buybacks accretive. So that is a very meaningful evolution. Until now, the model has been pretty one-directional. Issue shares, raise cash, buy Bitcoin. But now, they're saying, we'll also buy back our own shares when the market misprices them. And if needed, we'll sell a small amount of Bitcoin to fund those buybacks rather than dilute common shareholders. The market responded. Stretch and MSTR both rallied about 12% on Monday. Stretch climbed back into the mid-80s. So last week, the critics had their moment, but this week, strategy answered. You can decide what you think about it.
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All right. Now, let's zoom out because every bear market comes with the same soundtrack. The price is down, the skeptics get louder, and one by one, high-profile investors announce they've sold or lost faith. Last month, Mark Cuban sold most of his Bitcoin. This week, billionaire Jeremy Grantham went on CNBC and called Bitcoin useless, speculative, and predicted it would dwindle away with a whimper.