Strategy Inc., a prominent Bitcoin treasury company led by Michael Saylor, has strategically boosted its U.S. dollar reserve to $2.19 billion, according to a recent regulatory filing. This increase was achieved through the sale of 4.54 million shares of its common stock (MSTR) between December 15 and 21, generating net proceeds of $747.8 million. While the company has been aggressively accumulating Bitcoin in recent months, it paused its purchases during this period.
The decision to increase the USD reserve signals a tactical shift for Strategy Inc. The company established its USD Reserve on December 1st, initially setting it at $1.44 billion. The purpose of this reserve is to provide a cash buffer to support dividend payments on Strategy's preferred stock series (STRF, STRC, STRK, and STRD) and to cover interest payments on outstanding debt. The increased reserve offers greater financial flexibility, allowing the company to manage its obligations without being forced to sell its Bitcoin holdings during market downturns.
Strategy Inc. remains the largest corporate holder of Bitcoin, possessing 671,268 BTC with an aggregate purchase price of $50.33 billion, averaging $74,972 per coin. The company's decision to temporarily halt Bitcoin purchases does not necessarily indicate a change in its long-term strategy. Michael Saylor has stated that Strategy intends to slow its Bitcoin accumulation only when it controls 5% to 7.5% of the total cryptocurrency supply, emphasizing that scarcity, not policy, will ultimately limit their buying. Currently, Strategy holds approximately 3.2% of Bitcoin's supply.
The pause in Bitcoin acquisitions comes as Bitcoin's price has experienced some volatility, trading around $90,000 after reaching highs above $100,000. The increased USD reserve provides Strategy with the flexibility to navigate market fluctuations and manage its financial obligations. The company retains significant capacity across its common and preferred stock ATM programs, with over $41 billion available. This allows Strategy to raise capital through controlled stock sales when needed.
Some analysts have commented on Strategy's approach. Economist Peter Schiff questioned the wisdom of building dollar reserves amidst rising inflation risks, suggesting that the company should consider holding gold instead. Citigroup recently cut its price target on Strategy to $325 per share from $485, while maintaining a buy rating on the stock. Despite the recent increase in cash reserves, Strategy's stock (MSTR) has faced downward pressure, declining roughly 64% from its July highs. The company's strategy regarding the USD reserve remains at its sole discretion and can be adjusted based on market conditions and liquidity needs. S&P Global Ratings affirmed its 'B-' issuer credit rating on Strategy, with a stable outlook, noting that the USD reserve is a credit positive as it mitigates liquidity risk.
