- The Bitcoin development company, Strategy, announced its latest 850 BTC purchase this Monday, raising its treasury to 639,835 BTC.
- A digital assets expert warned about the increasing likelihood of the company selling some of its BTC holdings to cover its commitment to investors.
Strategy (MSTR) Executive Chair Michael Saylor hinted on Sunday about an incoming Bitcoin (BTC) purchase announcement. Without missing a beat, the Bitcoin development company revealed its 850 BTC acquisition for $99.7 million on Monday.
Strategy’s Bitcoin Portfolio
According to Strategy’s Form 8-K filing at the US Securities and Exchange Commission (SEC), its latest batch of Bitcoin transactions occurred between September 15 and 21. It scored the purchases at an average of $117,344 per BTC while the asset traded from a $114K low to a $117K high.
The move increases Strategy’s Bitcoin haul to 639,835 BTC, controlling around 3.05% of the premier cryptocurrency asset’s 21 million capped supply. So far, the business intelligence platform has already invested $47.33 billion for its Bitcoin acquisition scheme at a dollar cost average (DCA) of $73,971 per BTC—impressively close to its $73,913 per BTC DCA last week.
BTC Yield Increases From 25.9% to 26% in a Week
The developments improved Strategy’s BTC yield to 26% from the previous week’s 25.9%. BTC yield is a key performance indicator (KPI) measuring the percentage change in its Bitcoin holdings relative to its assumed diluted shares outstanding.
The consistent rise of this metric illustrates that the company is effectively utilizing its capital to raise the amount of Bitcoin backing its shares, which suggests that its treasury operations are beneficial for long-term shareholders.
Strategy’s Looming Sale
Since it started its accumulation in August 2020, Strategy has never sold any of its Bitcoin assets. However, Freedx Chief Business Officer Anton Golub believes the company may eventually be forced to sell some of it to pay dividends.
Golub recently laid out several scenarios on how Strategy could cover the 8% to 10% dividends on its preferred shares.
- One is through selling some of its BTC supply, but it would contradict Saylor’s core thesis of not selling any of the company’s Bitcoin holdings.
- The second option would be to sell call options through a “covered call” strategy to technically avoid directly selling its BTC supply. Still, it contradicts Saylor’s Bitcoin conviction as the process is clearly a Wall Street tactic.
- The third is taking out collateralized loans, as it did in 2021, but this attempt nearly backfired in the aftermath of FTX’s collapse in 2022. Strategy almost got liquidated along the way.
The key takeaway in Golub’s forecast is the potential conflict between the business’s ideological commitment to never selling its Bitcoin and its financial obligations to its investors. While the company has shown a preference for raising capital through debt and equity to buy more Bitcoin, analysis raises a valid question about whether those avenues are sustainable indefinitely, or if a BTC sale may ultimately be the only viable option.
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