Strategy pauses Bitcoin buys for 5 weeks as flywheel stalls

Strategy has gone five weeks without buying Bitcoin, its longest pause in nearly two years, as the premium-to-NAV flywheel that funded its accumulation broke down. The company's last reported purchase was during the week of June 15-21, when it bought 520 BTC for $35 million at an average price of $67,068 — above Bitcoin's current price near $63,900.

"Strategy is evolving from one-way capital issuance to active capital management," CEO Phong Le said.

Strategy has since sold 3,588 coins for about $216 million between June 29 and July 5, its first sales since 2022, and spent $25 million buying back 288,930 shares of its STRC preferred stock at an average of $86.52 against a $100 stated value. The company added $525 million to its dollar reserve from common stock sales, lifting it to an all-time high of $3.75 billion.

Strategy holds 843,775 BTC — roughly 4 percent of all Bitcoin that will ever exist — at a cost basis of $63.68 billion, or $75,476 per coin. At current prices, those holdings are worth about $53.9 billion, leaving the company roughly $9.8 billion underwater. Bitcoin would need to climb about 18 percent for Strategy to break even on its position.

For years, Strategy ran a loop that made it the largest corporate Bitcoin holder. It sold new MSTR shares, used the proceeds to buy Bitcoin, and because the stock traded above the value of the Bitcoin behind it, shareholders ended up with more Bitcoin per share after every round. That loop only works while the premium exists. Standard Chartered calculated in a July 10 note that Strategy's mNAV — which compares the company's whole valuation, debt included, against the value of its Bitcoin — had fallen to roughly 1.0, down from 3.4 at the November 2024 peak. At 1.0, a dollar of new stock buys exactly a dollar of Bitcoin, leaving shareholders no better off after issuance costs.

MSTR stock trades at 0.60 times NAV, although that rises to about 1 times NAV when accounting for enterprise value and capital structure obligations. The stock closed at $93.28 on July 29, down 4.56 percent, with a market cap of $33 billion and a 52-week range of $81.81 to $414.36.

Cash reserves take priority

Strategy has $1.76 billion in annual dividend payments and interest on its debt, including the 12 percent dividend on its Stretch perpetual preferred stock, raised from a lower rate on July 1. Its software business generates only $490 million in trailing revenue, far short of covering those obligations. The company has elected to maintain cash reserves covering at least 12 months of expected payments. Its current $3.75 billion reserve exceeds that requirement, covering roughly 25 months of expenses.

Under board policy, Strategy cannot use the dollar reserve to fund STRC buybacks. The company says future repurchases may be funded by further sales of MSTR stock and, depending on market conditions, by selling Bitcoin — a reversal of the never-sell stance it held for years.

Strategy's pause removes the most consistent institutional buyer from the market. Glassnode's June 10 report showed treasury companies went from buying more than $500 million on multiple days in April and May to almost nothing since the start of June. Standard Chartered kept its $100,000 Bitcoin forecast for end of year in its July 10 note, calling Strategy's selling mostly noise. But the bank argued Strategy should not need to sell more Bitcoin if it explains its new approach clearly — which the company did the opposite of on July 27, naming Bitcoin sales as a possible funding source.

If Bitcoin recovers and MSTR stock trades back above the value of its coins, selling shares to buy Bitcoin would again reward shareholders, and Strategy has given no reason to think it wouldn't restart. Until then, Bitcoin trades near $63,900 — roughly half its $126,000 all-time high from last October — without the buyer that spent five years accumulating almost every week.

For investors seeking Bitcoin exposure, the pause highlights the structural risk embedded in Strategy's model. The company layers preferred stock dividends, debt obligations, and equity dilution on top of an already volatile asset. Buying Bitcoin directly or through a spot ETF avoids that complexity.

This article is for informational purposes only and does not constitute investment advice.