The cryptocurrency investment firm known as Strategy has recently opted not to purchase any additional Bitcoin for the first time in several weeks, as reported by TD Cowen analyst Lance Vitanza. This unusual silence comes after a consistent pattern of weekly announcements regarding their Bitcoin acquisitions.
As of now, Strategy”s stock price is hovering near a 14-month low, falling by 38% this year alone. The company”s shares are down a staggering 67% from their peak value of $543 last year, reaching a recent low of $179, as indicated by Yahoo Finance.
Last week, Bitcoin”s price fluctuated between $82,175 and approximately $89,000, experiencing a notable drop from its previous high of $126,000. Interestingly, a prediction market called Myriad shows that 69% of participants anticipate Bitcoin will surge to $100,000, while the remaining expect a drop to $69,000.
Historically, Strategy has made its Bitcoin purchase announcements at the start of the week, but the lack of a recent update aligns with previous pauses that occurred around the end of fiscal quarters. In a separate commentary, Vitanza noted that Strategy might face removal from MSCI indices next February, a decision he considers potentially misguided.
Concerns are mounting as JPMorgan analysts project that if Strategy is excluded from these indices, outflows could reach $11.6 billion, impacting the firm significantly. MSCI has raised flags regarding Strategy”s investment characteristics, suggesting they share similarities with investment funds, which typically are not eligible for inclusion.
While Vitanza argues that Strategy is not merely an investment fund but a public operating company with a substantial software business, its potential removal from MSCI indices could lead to significant selling pressure on common shares, further exacerbating an already challenging trading environment.
Compounding these challenges, the company recently saw its market capitalization dip below the value of its Bitcoin holdings, limiting its ability to increase Bitcoin ownership through the issuance of common stock—a strategy previously employed to bolster its holdings.
As of the latest reports, Strategy holds nearly 650,000 Bitcoin, valued at approximately $57.8 billion. The firm has shifted its funding strategies this year, utilizing preferred shares that provide dividend payments to facilitate Bitcoin acquisitions, as traditional common stock issuance has become less effective in raising capital.
