In a significant move, Strategy has confirmed that it acquired $200 million worth of Bitcoin last week, marking its third-largest purchase of the year. The Tysons Corner, Virginia-based firm revealed that this purchase involved approximately 3,000 Bitcoin, acquired at an average price of roughly $67,700 each. With this latest investment, Strategy now holds around 720,750 Bitcoin, valued at an estimated $49.5 billion.
Despite the substantial holdings, the company has been grappling with an unrealized loss since Bitcoin’s value fell below the $76,000 threshold in the previous month. As of Monday, the cryptocurrency was trading around $68,452, which leads to a paper loss of about $5.3 billion for the firm. However, the company’s stock price saw a nearly 6% uptick to about $137 on the same day. Yet, the stock remains down nearly 60% from its price six months prior.
Interestingly, Strategy managed to raise more funds than what it expended on Bitcoin, netting approximately $33 million last week. This was achieved through issuing its variable rate preferred stock known as STRC, further demonstrating the company’s strategy to diversify its funding sources. Co-founder and Executive Chairman Michael Saylor has referred to this product as “digital credit,” aimed at providing a low-volatility, high-yield cash alternative.
Over the weekend, Strategy announced an increase in STRC’s monthly dividend to 11.5%, marking the seventh increase since its introduction in July. This move is seen as an effort to enhance the attractiveness of the product amid fluctuating market conditions. Last week alone, the firm raised $7.1 million through STRC offerings, significantly overshadowed by the $230 million gained through common shares.
Since launching STRC, Strategy has issued approximately $3.4 billion worth, buoyed by a $2.5 billion initial public offering (IPO) in July that was significantly upsized due to demand. In the previous month, the company raised $85.5 million via STRC, in stark contrast to the $450 million gathered through common shares.
In its efforts to secure cash for dividend payments, some analysts have begun to scrutinize the long-term viability of such strategies, particularly given the volatile nature of the cryptocurrency market. Predictions have emerged regarding the likelihood of the firm selling Bitcoin this year; a trading market owned by DASTAN recently indicated a decreasing probability from 28% to just 15%.
As Strategy navigates the ups and downs of the cryptocurrency landscape, Saylor affirmed the company’s resilience following a reported fourth-quarter loss of $12.4 billion, attributing it to extreme market volatility. He insisted that their commitment to “digital credit” aligns with their long-term vision regarding Bitcoin investments.
