MicroStrategy's Bold Bitcoin Bet: $101 Million Plunge Rekindles Market Hype!

Strategy (MSTR) recently re-engaged with the bitcoin market, completing its first acquisition since a contentious sale of 32 bitcoin. The company purchased 1,550 BTC for approximately $101 million. This acquisition brings Strategy’s total bitcoin reserve to 845,256 BTC, which was acquired for just under $64 billion at an average price of $75,680 per coin. The latest tranche was bought at an average of $65,332 per bitcoin, roughly $10,000 below the firm’s overall cost basis, resulting in an implied paper loss of around $10.5 billion on the full position at current prices.

The financing for this acquisition came from at-the-market (ATM) sales of Class A common stock. Strategy sold 1,409,600 MSTR shares last week, generating approximately $181 million. A portion of these proceeds was directed towards the bitcoin purchase, while the remaining funds were used to increase the company’s U.S. dollar cash reserves from $900 million to $1 billion, a strategic move analysts suggest was aimed at restoring institutional confidence.

Strategy’s return to buying follows a period of market turbulence, initiated by its disclosure on June 1 that it had sold 32 BTC between May 26 and May 31 for approximately $2.5 million. This marked the firm’s first bitcoin sale since late 2022, with the proceeds intended to fund a dividend payment on its STRC preferred stock. Despite the modest size, this disclosure significantly rattled markets. Bitcoin, which had been trading near $73,700 before the announcement, dropped close to 20%, hitting a low around $59,300 before recovering above $63,000. JPMorgan analysts described the sale as “symbolic and voluntary” but noted it “spooked” markets, raising concerns about the firm’s financial cushion as dollar reserves covered only about 6.3 months of preferred dividend payments after retiring $1.5 billion in convertible notes.

Regarding funding mechanisms, Strategy’s STRC preferred stock, a variable-rate, cumulative instrument with an 11.5% annualized rate, had been the primary vehicle for bitcoin accumulation in recent weeks. However, STRC has not traded near its $100 par value since mid-May, effectively sidelining it as a funding mechanism for approximately three weeks. Consequently, the recent Monday purchase relied on equity issuance. As of June 7, roughly $25.96 billion worth of MSTR shares remain available under Strategy’s current ATM equity program. Furthermore, the firm has extended its ATM programs to include up to $21 billion of additional MSTR shares and $21 billion of STRC preferred stock.

Strategy maintains a commanding position in the corporate bitcoin landscape, holding more than 4% of bitcoin’s fixed 21 million supply cap, a figure that dwarfs that of any other corporate holder. This dominant stance is further highlighted by other firms making their own moves; for instance, bitcoin treasury firm Strive announced a purchase of 32 BTC, bringing its total to 19,032 BTC valued at approximately $1.15 billion, which its chairman framed as a direct response to Strategy’s prior sale. According to Bitcoin Treasuries data, 198 public companies now operate some form of bitcoin acquisition model, with top corporate holders behind Strategy including Twenty One (43,514 BTC), Metaplanet (40,177 BTC), MARA (35,303 BTC), Bitcoin Standard Treasury Company (30,021 BTC), and Bullish (24,300 BTC).