Summary
- Strategy has boosted its USD Reserve to $1.1 billion and raised its Bitcoin holdings to 846,842 BTC.
- Executive Chairman Michael Saylor has introduced a new risk metric called CEPE BPS to monitor Bitcoin holdings.
- Despite a recent rise in Bitcoin's price, Strategy's overall Bitcoin investment is approximately $7.8 billion in the red.
For the second consecutive week, Strategy has fortified its cash reserves while also increasing its Bitcoin assets, aiming to secure funds for dividends and debt obligations.
The company’s USD Reserve has now reached $1.1 billion, as announced by Strategy on Monday. This reserve had dipped to $871 million last month after the firm engaged in repurchasing some of its convertible debt at a reduced rate.
In light of concerns that Strategy might need to sell additional Bitcoin to maintain trust in its preferred stock, analysts from JPMorgan recently suggested that “rebuilding the company’s dollar reserves might be necessary to restore confidence and alleviate investor worries.”
According to Yahoo Finance, shares of Strategy climbed by 7.2% to $132.66. The stock peaked at $136 shortly after the market opened but has since dropped about 24% over the past month. This price increase coincided with Bitcoin's rise above $66,500, marking a 4% daily gain, as reported by CoinGecko.
Strategy's recent cash accumulation follows its earlier decision to sell 32 Bitcoin for $2.5 million. While this sale represented only a small fraction of its total holdings, it raised questions among investors about the reliability of the world's largest corporate Bitcoin holder as a consistent buyer of the digital currency.
“Still adding dots,” posted Michael Saylor, Strategy’s Executive Chairman and co-founder, on X, sharing a visual representation of the company's Bitcoin acquisitions.
After acquiring 1,587 Bitcoin for $100 million last week, the Virginia-based firm now holds 846,842 Bitcoin valued at $56.3 billion. Given that Bitcoin's current price is below Strategy’s average purchasing cost, the firm’s overall Bitcoin position is roughly $7.8 billion underwater.
The company initiated cash reserves in December as Bitcoin prices fell, reassuring investors of its ability to make payments on its preferred stock, Stretch (STRC), which yields an annual dividend of 11.5% and is valued around $10 billion.
On Sunday, Saylor introduced a “conservative risk metric” known as CEBE BPS, which measures the amount of Bitcoin owned per share after accounting for senior claims. Traditionally, the firm has evaluated this ratio prior to considering senior claims.
While increasing Bitcoin owned per share has been a longstanding goal for Strategy, Saylor's recent comments suggest a shift in focus to include liabilities in their evaluations.
This update follows Saylor's earlier clarification on X, where he stated that the company assesses “accretion” in various ways. Historically, this term has been used in relation to whether recent purchases have increased the Bitcoin amount owned per share.
“Accretion depends on the metric,” he noted, indicating that the firm can evaluate it based on either the Bitcoin-owned-per-share ratio or the net asset value, which includes cash reserves. The latest acquisition disclosed on Monday has actually reduced the Bitcoin holdings per share for the second week running, with the year-to-date percentage change in Bitcoin owned per share decreasing from 13% to 12.5% over that timeframe.