Strategy’s Bitcoin holdings fell deep into paper loss territory as BTC traded below the company’s average purchase price, resuming analysis of Michael Saylor’s Bitcoin treasury model.
Strategy holds 843,706 Bitcoins (BTC) were acquired at an average price of $75,699 per coin, for a total cost of $63.8 billion. However, the recent Bitcoin downturn reduced the value of Bitcoin Strategy’s reserves to $52.6 billion, pushing the unrealized loss to $11.2 billion, according to the company’s report panel.
It also holds floating rate preferred stock, STRC rejected below its intended value of $100 and is currently trading at $94.60 at the time of writing. Strategy (MSTR) stock price fell 1.5% in pre-market trading on Thursday to $124.7, Yahoo Finance data can be seen.
The paper loss deepens the analysis of Strategy’s Bitcoin treasury model as BTC is trading below the company’s average purchase price, while a drop in STRC’s price could complicate future preferred stock issuance to finance Bitcoin acquisitions. This came days after Strategy announced the sale of 32 BTC, which was its first sale since 2022.
Strategy dashboard with key metrics for Bitcoin Reserve. Source: Strategy.com
Saylor addressed Thursday’s bearish readings, saying rising ETF outflows are “putting pressure on BTC” and that capital markets have invested $400 billion in artificial intelligence infrastructure over the past six months.
“This is capital rotation, not Bitcoin loss of value. Volatility creates opportunity,” Saylor said in X post.
Source: Michael Saylor
Bitcoin price has fallen by approximately 4.7% in the last 24 hours and 13.8% in the last week. At the time of writing, the cryptocurrency is trading at $63,157, down more than 20% over the past month. According to to TradingView. As Cointelegraph reported, $4.4 billion has flowed out of Spot Bitcoin ETFs over the last 13 trading days.
BTC/USD, 1-month chart. Source: Cointelegraph/TradingView
Some market watchers said STRC’s move is not unusual.
“The STRC face value of $100 is not a reserve price. It is a stated value used for liquidation preferences and certain redemption provisions.” he wrote Popular investor and podcast host Scott Melker adds:
“A 5% discount to par is not evidence that something is wrong. It is evidence that investors are demanding a higher rate of return, price risk or responsiveness to market conditions – exactly what preferred stocks do.”
Others were less hopeful. The golden mistake and long-time Bitcoin critic, Peter Schiff he said that the lower STRC’s price falls, the higher MSTR will be forced to enhance its dividend payout to “drive the share price back to $100,” meaning that “MSTR will run out of cash much sooner, which will push forward selling Bitcoin to fund the payments.”
Related: Capital B is seeking a $122 billion financial mandate to buy more Bitcoin
Standard Chartered says Bitcoin’s bottom is near, depending on Strategy’s next move
Despite the sell-off, Standard Chartered predicted that the bottom in the Bitcoin market could be near, depending on Strategy’s next purchase.
“I would see this as a preliminary sign that the low has been printed and given that logic, suspicions of weekend selling will be muted,” said Geoffrey Kendrick, global head of digital assets research at Standard Chartered.
Kendrick said that buying 320 BTC or 3,200 BTC, which is 10 or 100 times the last sale, could signal a bottom in the market.
After Strategy 704 BTC had previously been sold in 2022 at a tax loss, the company purchased 810 BTC just two days later.
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