Grayscale backs Strategy after $216M Bitcoin sale

• Grayscale said Strategy's US$216 million Bitcoin sale strengthened its balance sheet by increasing cash reserves.
• The research firm argued the larger cash buffer reduces financing risk despite concerns over the sale.
• Bitcoin recovered above US$63,000 as BlackRock's spot ETF returned to net inflows and trading activity increased.

Strategy strengthened its financial position by selling US$216 million worth of Bitcoin (CRYPTO:BTC), according to a new report from Grayscale, which said the transaction reduced financing risk rather than signalling financial weakness.

The report followed criticism after Bitcoin briefly fell to around US$61,000 following the sale before recovering above US$63,000, while Grayscale said Strategy's financing structure remains supported despite carrying almost US$7 billion in debt against holdings of 843,775 Bitcoin worth about US$53 billion.

“Rather than viewing the sale as bearish, the transaction could help Bitcoin establish a more durable price bottom by easing concerns surrounding Strategy’s balance sheet and funding needs,” wrote Grayscale Head of Research Zach Pandl.

Grayscale said the sale increased Strategy's US dollar cash reserves to about US$2.55 billion, enough to cover nearly 17 months of preferred dividend payments, while the company also introduced a treasury policy allowing it to issue shares or sell Bitcoin to maintain adequate cash reserves.

Following the report, Strategy's STRC shares closed 0.81% higher at US$88.58 before rising about 0.51% in premarket trading to around US$89, while MSTR gained 0.45% to US$101.22 and Cantor Fitzgerald maintained its Buy rating with a 12-month price target of US$212.

Bitcoin also recovered to trade near US$64,000 after falling as low as US$61,275, while daily trading volume increased 77% and BlackRock's spot Bitcoin exchange-traded fund returned to net inflows after several weeks of outflows.

Grayscale said stronger cash reserves and greater financial flexibility could improve investor confidence in Strategy's capital structure, while continued ETF inflows and seasonal market strength have also supported Bitcoin's recent recovery.

At the time of reporting, Bitcoin price was $62,664.82.