What to know:
- Strategy paused BTC buying before Q1 earnings as analysts expect a per-share loss.
- Saylor’s “No buys this week” post ended an April run of more than $4B in BTC buys.
- STRC trading below par and no ATM share sales tightened Strategy’s funding routes.
Strategy has paused its Bitcoin buying ahead of Tuesday’s Q1 earnings report this week, as Wall Street analysts expect a loss. Michael Saylor signaled the move on Sunday with a short post on X that said, “No buys this week.”
The message ended a steady run of April purchases. Strategy had spent more than $4 billion on BTC during the month. Saylor’s posts on X have often served as signals for planned buying. This time, the signal pointed to a halt.
Also Read: Bitcoin Shock As Satoshi-Era Whale Moves 11,300 BTC While Another Buys Big
Strategy Funding Pressure Limits New BTC Purchases
The pause comes as Strategy faces pressure on two funding routes. Its STRC preferred stock has a yield of 11.5%. But it has been trading at less than its $100 par value for over two weeks. That capital raising is inefficient in terms of pricing.
The company also did not sell common shares under its At-The-Market (ATM) program. The decision was made after a late April acquisition of 3,273 BTC. It served to hold the stock steady prior to the May 5 earnings call. It also limited new purchase funding.
Strategy now holds 818,334 BTC. The coins were bought at an average price of $77,906 each. The cost basis of the company has risen to $75,537. As of writing, Bitcoin is trading at $79,822, per CoinGecko data.
Wall Street predicts a loss of $18.98 per share of Q1. The anticipated loss is largely correlated to the mark-to-market accounting of Bitcoin. Strategy reported a loss of $16.49 per share in the same period a year earlier, according to Yahoo Finance data.
Saylor Defends Strategy Model
Saylor will address the Consensus industry conference in Miami Beach, Florida, on Wednesday. Investors can observe remarks regarding future Bitcoin acquisitions. They can also seek information on financing strategies following the break.
The STRC security has received criticism due to its high dividend yield. Peter Schiff, the chief economist at Euro Pacific Asset Management, raised an alarm again on Sunday. He claimed that the structure is still a Ponzi scheme, should it be reliant on Bitcoin increasing by more than 11.5% a year.
Saylor has defended the model. He has said Bitcoin holdings are visible on-chain. According to him, investors are aware of the leveraged BTC exposure. He explains that a 1.25% annual increase in Bitcoin has the potential to cover dividends and appreciating value in the long term.
The market value of Strategy is almost $58 billion. Its Bitcoin assets are estimated to be worth approximately $63 billion. The stock is trading at a discount to net asset value. Such a lapse created more scrutiny around the stock.
Also Read: BlackRock Urges OCC to Remove 20% Tokenized Reserve Cap
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