#What Recent Purchases Did Strategy Make?
Strategy, the firm previously known as MicroStrategy, recently added to its Bitcoin portfolio by acquiring 520 BTC for about $35 million. This recent investment elevates its total Bitcoin holdings to 847,363 BTC, which accounts for approximately 4% of the total Bitcoin that will ever exist.
The acquisition of these coins, disclosed in a Form 8-K filing dated June 22, was made at an average price of roughly $67,068 per Bitcoin. This price is significantly lower than Strategy's overall average acquisition cost of around $75,651 per coin, calculated across its entire Bitcoin portfolio.
This move follows another substantial investment just one week prior, when Strategy purchased 1,587 BTC for about $100 million, as indicated in a filing from June 15. Such sequential purchases have become a hallmark of Strategy's approach, displaying a systematic commitment to Bitcoin acquisition akin to a subscription model, with frequent 8-K disclosures.
#How Does Strategy Finance Its Bitcoin Acquisitions?
It is important to understand how Strategy funds its Bitcoin purchases. The firm does not utilize revenue from software sales to make these acquisitions. Instead, it primarily raises capital through at-the-market equity offerings. This strategy involves issuing both common stocks and preferred shares to generate necessary cash for Bitcoin purchases.
This funding mechanism has supported Strategy's overall treasury strategy since Executive Chairman Michael Saylor initiated the Bitcoin accumulation plan in 2020. The strategy is simple: sell equity, acquire Bitcoin, and trust that Bitcoin’s appreciation will outpace the dilutive impact on shareholder value.
#What Should Traders Monitor?
For traders observing Strategy's activity, a crucial metric to monitor is not only the size of its weekly Bitcoin purchases but also the price dynamics. Specifically, keep an eye on the difference between Strategy’s average acquisition cost of $75,651 and Bitcoin’s current market price. As long as Bitcoin trades above this threshold, the company’s investment thesis remains favorable. Should it fall below, the pressure on both Saylor’s strategy and Strategy's stock may increase significantly.