Strategy Invests $267 Million in Bitcoin, Launches STRC for the Third Consecutive Week

Strategy Increases Bitcoin Holdings Amid Price Drop

Despite Bitcoin reaching its lowest value in over a month, Strategy continued to purchase the cryptocurrency, though the pace of its acquisitions has slowed compared to previous weeks.

The Virginia-based company, headquartered in Tysons Corner, invested $267 million last week to acquire approximately 2,900 additional Bitcoins, according to a press release. This is a significant reduction from the $1.2 billion and $2.1 billion spent in the two preceding weeks.

Currently, Strategy holds the largest corporate stash of Bitcoin, totaling 712,600 BTC—an amount valued at $62.7 billion, with Bitcoin recently trading near $87,600, based on data from CoinGecko. The price of Bitcoin dipped below $90,000 on Friday, as financial instability in Japan and concerns about a potential U.S. government shutdown added to market uncertainty.

Shares of Strategy were recently trading around $161. Although the stock has dropped over 60% in the past half year, it has shown relative stability, gaining 1.5% in the last month.

The company financed its latest Bitcoin purchase mainly by issuing common stock, which made up 97% of the $264 million raised. Additionally, Strategy issued more of its variable rate preferred shares, known as STRC, which pay monthly dividends.

STRC currently offers an annualized cash yield of 11%. Michael Saylor, Strategy’s co-founder and Executive Chairman, has promoted STRC as a high-yield alternative to traditional savings accounts for investors. This month alone, the company has raised $421 million through STRC offerings.

Strategy has indicated it will issue more preferred shares if STRC trades above $100, aiming to keep the price within that range and use the proceeds to buy more Bitcoin. On Monday, STRC was priced at $99.50, after exceeding $100 in prior weeks.

Funding and Investor Concerns

Last year, Strategy began using preferred shares as an additional funding source, which led to the creation of its USD Reserve. This move has raised concerns among investors that the company might eventually need to sell some of its Bitcoin holdings to meet its financial commitments.

According to the company’s website, Strategy’s cash reserves are sufficient to cover 30 months of dividend payments. The establishment of this reserve coincided with a decrease in the company’s mNAV—a key metric for evaluating the effectiveness of issuing new common shares to achieve its objectives.

Strategy measures its performance by tracking the increase in Bitcoin owned per share, known as BTC Yield. When the mNAV (multiple-to-net asset value) is above 1, issuing new common stock to purchase Bitcoin is considered beneficial.

Recent Performance and Market Outlook

As of Monday, Strategy’s mNAV stood at 1.08. Following its recent $2.1 billion Bitcoin acquisition, the company demonstrated its ability to continue accumulating significant amounts of Bitcoin, even while trading at a minimal premium to its assets, according to TD Cowen analyst Lance Vitanza.

Vitanza noted that although most of the recent purchases were funded by equity issued near asset value, the activity generated a notable BTC yield. He anticipates that Strategy will keep increasing its Bitcoin acquisitions as prices remain subdued.

“We expect this trend to continue,” he added. “As long as Bitcoin’s price stays low, Strategy is likely to be more assertive in issuing both common and preferred shares, especially compared to last summer when Bitcoin was reaching new highs.”

Market Predictions and Investor Sentiment

On Myriad, a prediction market operated by Decrypt’s parent company Dastan, traders assigned an 86% probability on Monday that Strategy’s mNAV, as tracked by Bitcoin Treasuries, will fall to 0.85 before reaching 1.5—a slight decrease from 88% earlier in the month.