Strategy Resumes Bitcoin Buying After a 10-Week Pause

In an encouraging development for crypto enthusiasts, Strategy returned to its signature Bitcoin accumulation strategy after a 10-week hiatus. Saylor's X post on Sunday was accompanied by a chart tracking the company's Bitcoin purchases. Early Monday, Saylor posted "paint the bears orange," which was widely interpreted as a signal that fresh purchases were about to be disclosed. Later that day, Strategy said in a filing that it bought $369.7 million worth of Bitcoin last week, marking its first purchase since late June. MSTR shares gained more than 4% on the news.

Strategy purchased 4,603 BTC at an average price of $80,318 during the week ended Aug. 30, according to the filing. It also raised $602.8 million through common-stock sales to help fund the purchases and repurchased $151.8 million of preferred shares. The company now holds 845,050 Bitcoin acquired at an average price of about $75,412 apiece.

Strategy's latest Bitcoin purchase follows a difficult stretch for the company. Bitcoin's price tumbled in June, undermining confidence in Strategy's financing model and weighing heavily on both its common and preferred shares. That prompted the company to unveil a turnaround plan in late June that included selling Bitcoin to reshape its balance sheet. I discussed that plan in more detail in my early July article.

Meanwhile, Strategy has drawn criticism for selling nearly 7,000 Bitcoin at prices ranging from $60,000 to $65,000 as part of its turnaround plan, only to return to the market at roughly $80,000. Critics argued that the moves ran counter to Wall Street's "buy low, sell high" maxim. Strategy CEO Phong Le defended the transactions in a Bloomberg TV interview on Tuesday, saying they were based on capital costs rather than Bitcoin's market price.

Bitcoin's Rally Reignites Strategy's Leveraged Upside

As Bitcoin staged a dramatic rebound in the second half of August, the outlook brightened for Strategy. The world's largest cryptocurrency surged 25% in August, marking its best month since November 2024. The rally began after Treasury Secretary Scott Bessent announced plans to at least double the size of long-term debt buybacks. The move encouraged traders to shift away from the U.S. dollar and into assets including Bitcoin, fueling what is known as the dollar-debasement trade. President Donald Trump's push for Congress to pass the long-awaited CLARITY Act also helped bring investors' attention back to crypto.

Shares of Strategy rallied 42.5% in August as the cryptocurrency's surge pushed the value of the company's holdings back above their acquisition cost. MSTR tends to amplify Bitcoin's moves because its common stock represents a leveraged residual claim on Strategy's massive Bitcoin treasury, allowing gains in the cryptocurrency to translate into disproportionately larger changes in equity value. The same dynamic works in reverse, which is why MSTR fell much more sharply than Bitcoin during the cryptocurrency's latest downturn.

It is also important to note that when Bitcoin rallies, Strategy's capital-raising machine strengthens. That's because a higher MSTR share price allows the company to issue common stock more efficiently and use the proceeds to fund additional Bitcoin purchases and other capital needs. Proceeds from the latest share issuance, for example, were also used to repurchase its Variable Rate Series A Perpetual Stretch Preferred Stock (STRC) — commonly called "Stretch" — fund STRC dividends, and add to the company's newly created "USD Cash" pool.

Bitcoin's Next Move Matters, but Strategy Has Built a Bigger Safety Net

As always, the key factor for MSTR stock is where Bitcoin heads next. The cryptocurrency made several attempts to break and hold above the key $80,000 level in late August but ultimately failed. And developments over the past couple of days have made that threshold even harder to reclaim.

A flare-up in tensions between the U.S. and Iran at the start of this week has driven oil prices and global bond yields sharply higher. The move came after bond yields had already jumped following hawkish remarks from Fed Chairman Kevin Warsh at the Jackson Hole symposium, which raised the prospect of a Fed rate hike this month. Higher borrowing costs tend to dampen risk appetite, putting pressure on cryptocurrencies. Against that backdrop, developments in the Middle East and upcoming U.S. non-farm payrolls and inflation data will be key to Bitcoin's near-term direction and, by extension, MSTR stock.

Strategy appears better equipped to withstand a pullback in Bitcoin than it was at the start of the summer, thanks to its balance-sheet overhaul. Its USD Reserve, designed to fund preferred-stock dividends and interest payments on outstanding debt, currently stands at $5.10 billion. That cushion reduces the risk that Strategy would need to issue common stock on unfavorable terms to meet those obligations during a sharp Bitcoin downturn — a concern that weighed heavily on both its common and preferred shares over the summer. The company also has a recently created USD Cash balance of $1.61 billion that can be deployed to buy Bitcoin, giving it the ability to capitalize on lower prices and potentially acquire the cryptocurrency below its average purchase cost. Taken together, those changes leave Strategy considerably better positioned to navigate Bitcoin volatility than it was a few months ago.

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com