Simply put
- According to TD Cowen, Strategy did not acquire any Bitcoin last week.
- The stock price of the Bitcoin-buying company has declined by 38% this year.
- Michael Saylor recently spoke in defense of the company’s outlook.
Usually, the week starts with Strategy highlighting newly acquired Bitcoin, but they were notably silent on Monday.
For the first time in weeks, Bitcoin-buying companies have paused their purchases as prices approach 14-month lows, as noted by TD Cowen analyst Lance Vitanza.
“We learned today that Strategy is neither issuing any securities via its ATMs nor buying more Bitcoin,” Vitanza mentioned in an email, referring to the program that allows Strategy to issue stock.
Strategy’s shares rose 5% to $179 on Friday. However, they have slipped 38% over the last month as Bitcoin prices have pulled back from their peaks, and the stock is down 67% from its high of $543 last year.
Bitcoin dropped to $82,175 last week but was trading around $89,000 as of Monday afternoon. Just last month, it reached a peak of $126,000. In prediction markets, 69% of respondents think Bitcoin could hit $100,000, while the rest predict it might drop to $69,000.
Interestingly, Strategy did not report any Bitcoin purchases in early October, which coincided with a pause typically observed at the end of the previous two fiscal quarters.
In another report, Vitanza noted that Strategy might face removal from the MSCI index in February, calling the potential decision “disappointing and possibly misguided.”
Last week, JPMorgan analysts indicated that if MSCI does remove the company from its index, it could lead to outflows of around $11.6 billion from Strategy, which shares similarities with investment funds that cannot gain inclusion.
While some similarities exist, Vitanza emphasized that the company is “clearly not an investment fund,” framing it instead as a publicly traded entity with a $500 million software business leveraging Bitcoin as production capital.
Nonetheless, being dropped from the MSCI index could prompt a significant sell-off of MSTR common stock, particularly at a time when the stock is already undervalued.
“The management of what is meant to be a passive index might just create unnecessary complications,” Vitanza concluded.
Earlier this month, Strategy’s market cap dipped below that of its Bitcoin holdings, preventing it from increasing Bitcoin per share through typical stock issuances.
This year, with profits from common stock offerings diminishing, the company raised billions to buy Bitcoin through various preferred stocks that pay dividends. As of Monday, it held approximately 650,000 Bitcoins valued at $57.8 billion.
