Bitcoin: Strategy Halts BTC Purchases to Prioritize Its Shares

Strategy bought no Bitcoin between October 19 and 25. A first pause after several weeks of accumulation. Michael Saylor’s company preferred to dedicate 204.9 million dollars to repurchasing its preferred STRC shares, according to its SEC filing on October 26. Its reserve remains unchanged at 848,517 BTC, while its available cash has dropped to 242.4 million dollars, compared to 447.3 million a week earlier.

Strategy takes a pause in its Bitcoin purchases

Strategy’s latest weekly report contrasts with previous ones. Between October 19 and 25, the company bought no Bitcoin. It did not sell any either and made no share issuances under its At-The-Market (ATM) sales program.

A week earlier, Strategy had still purchased 267 bitcoins for $22.1 million. The company had also acquired 250 BTC the previous week, then 334 BTC at the beginning of October. This streak has now ended. The total reserve remains at 848,517 BTC, acquired for approximately $64.02 billion. The average purchase price is $75,446 per Bitcoin, fees included.

This represents a little over 4% of the 21 million bitcoins that will ever exist. But the real surprise is in the spending. While Strategy invested no dollars in new BTC during the week, it used $204.9 million to repurchase 2,068,459 STRC shares.

The amount exceeds that of previous weekly operations. Strategy has not officially abandoned its Bitcoin accumulation program. Its regulatory document only describes the operations conducted during this period.

STRC buybacks far exceed BTC purchases

STRC shares now play an important role in Strategy’s financial management. These variable-rate preferred securities, also called Stretch, pay regular dividends. Strategy notably aims to support their listing around their nominal value of $100.

The group had already doubled its buyback program in September after dedicating $176 million to STRC. The movement accelerated in October.

Over the last three weeks, amounts dedicated to STRC buybacks are:

• $192.4 million from October 5 to 11.
• $193.1 million from October 12 to 18.
• $204.9 million from October 19 to 25.

Total: $590.4 million. During these three weeks, Strategy spent only $43.6 million to buy an additional 517 BTC. STRC buybacks thus represent 13.5 times the expenditures allocated to Bitcoin over this period.

The gap is significant. Strategy still retains $956.8 million of available authorization in its preferred shares buyback program, recently raised to $3 billion. Another $1 billion program exists for common MSTR shares. No shares in this category were repurchased during the last week.

Strategy loses nearly half of its available cash

Spending on STRC directly reduced the company’s liquidity. On October 18, Strategy had $447.3 million in USD cash. Seven days later, this amount had fallen to $242.4 million. The decline represents $204.9 million, or about 45.8%. This cash is notably used for Bitcoin purchases, securities buybacks, and other financial operations of the group.

However, Strategy has a second separate reserve. Its USD Reserve, intended for payment of preferred dividends and debt interest, remains unchanged at $4.83 billion. Combining these two compartments, the company holds approximately $5.07 billion in dollar assets.

The situation also occurs at a delicate time for its stock. On October 15, MSCI approved new rules likely to exclude some companies whose balance sheets resemble those of an investment vehicle rather than an operating company.

Strategy is among the companies potentially affected. An exclusion could force index funds to sell MSTR shares. However, it would not force Strategy to sell its bitcoins. The timeline is known: MSCI must announce its final decision on November 11, ahead of possible implementation after the close on November 30. No direct link has been established between this threat and the weekly suspension of Bitcoin purchases. For now, Michael Saylor retains his 848,517 BTC. The company mainly continues to mobilize its dollars to support its own financial instruments.