Banner created using ChatGPT
BTC Price appreciation over $78,000 attracted Strategy to accumulate BTC again
BTC has managed to retain all the gains it procured from the short-squeeze events that played out at Aug 19-21st.
Bitcoin has found support at $76,319, and moved upwards to $81,000.
BTC Price action Chart>>
BTC chart shows large green candles, indicating that investments have been flowing into Bitcoin after the short-squeeze events played out, so the price did not decline back to $63,000, but stayed above $76,319$.
What makes for notable news is that Bitcoin’s most orange colored whale – Strategy has began purchasing Bitcoin after fasting like a bear in hibernation for 10 weeks.
Strategy, previously flashed in news for the opposite reason they usually appear for.
Yes, this superstar corporate whale that usually purchases BTC, had initiated a selling phase with Strategy having sold 1,638 BTC between July 27–August 2 and another 1,690 BTC between August 3–9..
This was a shocker for the Market – because we know Strategy’s BTC acquisition strategist, Michael Saylor is widely known to recommend investors to HODL on to Bitcoin.
So, has BTC price technicals convinced Michael Saylor that it is a smart move to accumulate BTC now, as its bear correction period is over?
MicroStrategy upgrades to Strategy (empowered by Business Intelligence and BTC)
We all know under the influence of Michael Saylor, Strategy underwent a brand transition to be linked with the fortunes of Bitcoin.
If you read about Strategy on Tradingview, you would not know that the company’s core business deals with sales of Business Intelligence products to companies.
Traditionally before the transition the company was called MicroStrategy known for their native cloud AI analytics enterprise software solutions.
Tradingview mentions this about Strategy -:
“Strategy, Inc. engages in the development of fixed-income instruments that provide investors varying degrees of economic exposure to bitcoin. It executes bitcoin acquisition, capital management, and capital markets strategies.”
Description of Strategy’s Business in Tradingview
You log in to Strategy’s website, you would be greeted with details about its various capital market instruments with Strategy offering various perpetual preferred stocks that pay annual dividends.
Strategy website showcases its financial investment products that are part of the Capital Markets
Strategy is now marketed to be a Bitcoin Treasury company that devises strategy for maximum capital gains using Bitcoin
MSTR and various preferred stocks are part of Strategy’s Capital markets strategy to deal with low-performance phases of BTC and MSTR.
Strategy can manage to retain investors during such periods with its preferred stock products such as STRC, STRD, STRK, STRF paying dividends to holders. Dividend percentage is variable, altered according to market conditions.
MSTR price direction determined by BTC’s price direction
It is understood that BTC’s price performance has impact on price of MSTR, with MSTR’s price corelated to BTC’s price direction.
This is because currently Strategy holds 4.02% of Bitcoin 21 Million Total supply amounting to 845,050 BTC.
This co-relation is visible in recent price action.
As BTC recently rose by 29% from 62,808$ touching $80,000, MSTR rose parallelly by more than 50% from 92$ to 144$ during the same time-frame.
Strategy, was also one of the whales whose purchase activity of 4,603 BTC after Aug 24 supported BTC to be above the support floor of 76,319$.
Strategy’s devised mechanics for retaining financial resilience during Bear Phases
During Bull Phases Strategy’s BTC acquisition strategy can be straightforward – sell MSTR shares and buy BTC.
Strategy can afford to do this as its MSTR shares trades at a premium to its BTC holdings. What this implies is MSTR Market capitalisation is more than the Market Capitalisation of BTCs held by Strategy.
This equation changes in Bearish Phases as MSTR’s price can eventually begin to trade at a discount. This situation arises when Market Capitalisation of MSTR declines below the Market Capitalisation of BTC stash held by Strategy.
Strategy faced this situation when BTC’s price began to fall below the average costStrategy purchased its BTC; 75,412 $.
As BTC kept declining further to $63,000, Strategy halted making further Bitcoin purchases as it would dilute the value of MSTR shares, once the market cap of MSTR declines below the market cap of its total BTC holdings.
This erosion of value makes MSTR stocks unattractive to investors.
This was why Strategy devised a Bitcoin monetisation plan for the company to stay resilient with finances during bear phases.
This permitted Strategy to sell a portion of their BTC stash worth 5$ Billion to –
-
Improve its Balance sheet
-
Provide USD liquidity that gets accumulated into Strategy’s USD Account and USD Reserves
Through this, Strategy acquires financial prowess to retain shareholders by paying
dividends to preferred stockholders, and raising the value of preferred stock securities through buy backs.
The company also retains finances to pay interest on its debt.
Strategy’s flexible Capital Allocation Playbook balancing BTC and Capital Market investments
Michael Saylor has developed a playbook to equip Strategy survive Bear periods while retaining as much BTCs as possible until the tides change.
Saylor had to take on bears in his journey steering Strategy as a BTC Treasury company which is the largest Corporate Whale holder today.
However, he had to sacrifice some BTC by selling them this year to survive the damaging impacts of the Bears!
Watch his video fighting the bears here to stay in the BTC zone(:
https://x.com/saylor/status/2092277359034458361
However, when the coast is clear from bears Michael will keep driving Strategy to accumulate BTC.
Michael saw such an opportunity after BTC’s price appreciated over $78,000 on Aug 21st.
BTC Price action Chart>>
This lead to a ripple effect as value of Strategy’s BTC reserves rose, and MSTR stock prices increased to 123$.
MSTR Price Action Chart >>
Now, Strategy could afford to accumulate BTC selling MSTR shares.
Therefore, Strategy sold 4,531,421 MSTR shares for $602.8 million and used its proceeds to
-
Grow BTC reserves purchasing 4,603 BTC for $369.7 million paying $80,318 per Bitcoin.
-
Grow USD reserves depositing 30$ million into USD Cash account
-
Buy Back of 1,557,177 shares of STRC preferred stock with $151.8 million
-
Allocate $50.7 million to pay dividents to STRC shareholders
This demonstrates that Michael Saylor is following a methodology to execute Strategy’s BTC acquisition strategy, that balances Strategy’s Capital Market strategy by pursuing considered capital allocation to different markets Strategy builds and grows to survive bearish Market tides.
Has Strategy been activated into BTC purchase mode with favourable mNAV value
Rising BTC prices & healthy mNAV valuations sets encouraging conditions for Strategy to procure BTC
As Bitcoin and MSTR prices have risen, favorable conditions have developed for Strategy to accumulate BTC.
As of writing Strategy’s mNAV is 1.13x, this means that valuation of Strategy; the Market Cap of MSTR is greater than the valuation of BTC assets the company holds.
As long as mNAV is > 1, valuation of Strategy is above the value of BTC reserves it holds.
So, what do you think? Has BTC completed reaching its low and looks poised to keep appreciating from here?
If that is the case, one can expect Michael Saylor to make more purchases of this Orange asset for Strategy.
We will know as Strategy’s Bitcoin buys and sell offs create headlines!
News Sources Referred to for Writing This Article
Strategy (MSTR) Stock Gains After Resuming Bitcoin Purchases After 10 Weeks
Strategy Sells 1,638 Bitcoin, Boosts Cash Reserves to $4.0 Billion
Posted Using INLEO
