Strategy’s Bitcoin reserve became a subject of discussion again when the BTC price fell below the company’s average purchase cost. According to the company’s data, Strategy purchased a total of 843,706 Bitcoins at an average price of $75,699 per coin. While the total cost of these purchases was 63.8 billion dollars, with the last decrease, the market value of the reserve decreased to 52.6 billion dollars. Thus, unrealized losses reached 11.2 billion dollars.
Bitcoin decline increased balance sheet pressure
At the time of writing, Bitcoin was trading at $63,157. This level indicated a decrease of approximately 4.7% in the last 24 hours and 13.8% in the last week. On a monthly basis, the loss exceeded 20%. In the same period, a total outflow of $4.4 billion was recorded from spot Bitcoin ETFs in the last 13 trading days.
Michael Saylor argued that the movement was not due to a permanent deterioration in Bitcoin, but to the movement of capital into different areas, and stated that volatility created an opportunity.
Strategy, headed by Michael Saylor, is a US-based company formerly known as MicroStrategy, which stands out for holding a large amount of Bitcoin on its balance sheet. The latest price movement has brought criticism of the company’s Bitcoin-focused treasury model back to the agenda.
The company’s variable interest perpetual preferred stock, STRC, also fell below the targeted $100 level and was traded at $94.6. Strategy stock also fell 1.5% to $124.7 in pre-market trading on Thursday, according to Yahoo Finance data.
STRC and new financing steps are being followed
The decline in STRC price is considered a development that may complicate Strategy’s plans to issue similar preferred shares to finance future Bitcoin purchases. This chart emerged after the company recently announced that it sold 32 BTC. The transaction in question was the first Bitcoin sale recorded since 2022.
Mini dictionary: Privileged share is a type of share that gives certain priorities in the partnership structure. It may include priority of payment in the event of liquidation or certain repurchase conditions, but the nominal value stated in such shares does not constitute a mandatory basis for the market price.
Scott Melker emphasized that the $100 nominal value specified for STRC does not constitute a floor in terms of market price, but rather this level is used as a basis for liquidation priority and some buyback provisions.
On the other hand, Peter Schiff, known for his criticism of Bitcoin, made a more cautious assessment. According to Schiff, as the price of STRC declines, there could be pressure for higher dividends to push the stock back closer to $100. It was claimed that this situation could consume the company’s cash resources faster and push Bitcoin sales forward due to payment obligations.
Standard Chartered focuses on buy signal
Despite this, Standard Chartered stated that the bottom level in Bitcoin may be near despite the sales wave in the market. Geoffrey Kendrick, the bank’s global head of digital asset research, attributed this assessment largely to Strategy’s next step.
Kendrick said that Strategy’s new purchase of 320 BTC or 3,200 BTC could indicate a bottom formation for the market. These amounts correspond to 10 and 100 times the company’s recent sales of 32 BTC, respectively.
In 2022, Strategy bought another 810 BTC just two days after selling 704 BTC for tax loss purposes. For this reason, some analysts in the market think that the company’s next move may signal a short-term direction on Bitcoin pricing.
