Strategy Expands Cash Reserves to $1.1B, Buys 1,587 Bitcoin
In brief
- Strategy's USD Reserve expanded to $1.1 billion, up from $871 million in December.
- The firm purchased 1,587 Bitcoin for $100 million in latest buying activity.
- Strategy now owns 846,842 Bitcoin valued at $56.3 billion overall.
Cash Cushion Restored
The USD Reserve expansion to $1.1 billion represents a significant recovery from the lows Strategy hit last month. The company established these cash reserves in December as Bitcoin plunged, aiming to assure investors it could continue payments on its preferred stock, which carries an 11.5% annual dividend and is worth approximately $10 billion.
Strategy's decision to rebuild its dollar reserves follows criticism from Wall Street. JPMorgan analysts argued that a rebuilding of the company's dollar reserves might be needed to restore confidence and reduce investor concerns. The cash cushion matters because it signals financial stability even as the firm's core strategy remains buying and holding Bitcoin.
Bitcoin Holdings Grow Despite Underwater Position
The 1,587 Bitcoin purchased for $100 million brings Strategy's total holdings to 846,842 Bitcoin worth $56.3 billion. That's a substantial stockpile, though the firm faces an uncomfortable reality: its Bitcoin is roughly $7.8 billion underwater relative to its average purchase price.
Strategy's stock rose 7.2% to $132.66 on the announcement, though the shares have settled 24% lower over the past month. The year-to-date percentage change in Bitcoin owned per share has fallen to 12.5% from 13%, reflecting the underwater position and the dilutive effect of preferred stock issuances.
The latest purchases come weeks after Strategy sold 32 Bitcoin for $2.5 million, a modest liquidation that funded the earlier cash reserve buildup. Bitcoin itself rose above $66,500 on the day of the announcement, a 4% increase over the past day, providing tailwinds for the firm's holdings even if the average cost remains higher.
