Strategy Skips Bitcoin Purchase 4 Weeks In A Row

• Strategy opted to increase its cash reserves to $3.2 billion rather than replenish its Bitcoin stash over the past week.
• The company still controls 843,775 BTC, with an average purchase price of $75,476 per BTC.
• The public, especially MSTR shareholders, criticized the business for continuously diluting its common shares to maintain its BTC holdings.

Strategy (formerly MicroStrategy) once again skipped its Bitcoin (BTC) purchase over the past week. For the fourth consecutive week, the company hadn’t replenished its digital asset portfolio in favor of reinforcing its cash reserves.

Strategy Increases Cash Reserves

According to Strategy’s Form 8-K filing with the Securities and Exchange Commission (SEC) on Monday, it secured $263.5 million from the sale of MSTR Class A Common Stock between July 13 and 19. It allocated most of the proceeds of the share offering to increase its US dollar reserve to $3.2 billion.

The move aligns with the company’s board-approved Digital Credit Capital Framework in June, which aimed to strengthen its cash reserves. The same framework authorized it to increase its Variable Series A Perpetual Stretch (STRC) Preferred Stock dividend, enable debt and MSTR buybacks, and raise funds through discretionary BTC sales.

ADVERTISEMENTStrategy’s current US dollar reserves offer flexibility in dividend payments to investors, especially during turbulent market conditions. To date, its cash stash allows it to cover up to 22 months of uninterrupted dividend payments at the rate of $1.763 billion annually.

Strategy’s Bitcoin Portfolio

The amount stacks with Strategy’s 843,775 BTC holdings, which it acquired for a total of $63.69 billion or $75,476 per BTC. Assuming that Bitcoin’s price remains constant at $64.5K per coin, the supply could sustain nearly four decades of the business’s dividend coverage.

Strategy’s market cap sits at $35.963 billion. However, its mNAV (Market Cap to Net Asset Value) dangerously hangs in the balance at 1.01x, indicating that the stock is trading almost at par with the value of its underlying assets and offering only a little premium over its Bitcoin holdings.

ADVERTISEMENTThe trend is a stark contrast to the company’s nearly 4x mNAV in the November 2024 bull run and a far cry from its more than 8x mNAV in September 2020.

Criticisms Over MSTR’s Continuous Dilution

Strategy’s new approach has generated mainly negative responses from the public, with several people flinging their ire at Michael Saylor, the company’s Executive Chairman. Individuals who also claimed to be shareholders cried foul at the non-stop dilution of MSTR.

Several people, including Peter Schiff, Chairman of SchiffGold and a strong critic of Saylor, pointed out that Strategy has once again needlessly sacrificed common shareholders to protect preferred shareholders without selling Bitcoin. He accused Saylor of likely being scared to sell BTC because there’s no demand to absorb the sales.

Meanwhile, others viewed Strategy’s continued reluctance to buy Bitcoin as a possible sign that the company may be expecting further corrections in the premier crypto asset’s price.

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