Bitcoin's Worst Case Scenario Has Finally Arrived

Why this Monday will be crucial for which way Bitcoin swings next

Bitcoin just suffered its worst week since 2024 — falling 16% and triggering one of its worst liquidation cascades in history.

But don’t worry, it can still get a lot worse!

As we covered last month (first in our paid Substack and then publicly on YouTube) Michael Saylor and Strategy have become the most important players in the market. They control 4% of all outstanding Bitcoin and their moves at this point are the whole ball game.

And now, the entire crypto investing world is on edge waiting to see what Strategy’s SEC filing on Monday will reveal.

If you read or watch Coinage — it’s no surprise that we’ve arrived here. After Strategy decided to use idle cash to retire billions in convertible debt, their coffers were noticeably light at the end of May. They only had six months of cash runway to continue paying out their above-market 11.5% dividend.

But when they sold Bitcoin for the first time and disclosed it in the company’s filing Monday, the market truly started to panic. Bitcoin’s total market cap has already been trimmed by more than $250 billion.

So this Monday, we will get our answer. Is this truly Bitcoin Armageddon or was the bloodbath we just experienced just Saylor and Strategy ripping the band aid off?

In other words, did Strategy sell more stock to raise the cash they need, or did they sell more Bitcoin? If they did neither, after they triggered all this with the oddly small 32 Bitcoin sale they disclosed on Monday, it would seem like a massively missed opportunity — and would certainly mean more pain is on the way.

But if they disclose that the hard part is already over, we could very well snap back with a healthy recovery.

So far, it appears the market is still leaning defensive. Strategy’s perpetual preferred stock STRC, which pays an 11.5% dividend, still has a long way to go to get back to its $100 par value. On Friday it was moving in the right direction after breaking as low as $90 — its worst de-peg so far. There are now under 10 days before the ex-dividend date of June 15, or the deadline to consider which holders are eligible for dividend payments.

Raising more money through issuing more STRC would mean more long-term dividends the company would need to pay out in perpetuity (assuming they don’t cut their dividend.) So that leaves issuing common stock, MSTR, or selling Bitcoin as the two most obvious levers they could have pulled this week. For now, on paper at least, Strategy is the most underwater it has ever been — sitting on more than $12.5 billion in paper losses on its $51.28 billion in Bitcoin.

We wish we could disclose more on the thinking that is going on inside the walls at Strategy, but our interview with Strategy’s CEO Phong Le was postponed this week. Luckily, Mr. Le has agreed to reschedule for next week.

Tune in on Wednesday for the full download from Strategy’s CEO himself — and add comments below if you have questions you want asked!