Strategy Expands Bitcoin Holdings, Boosts Cash Reserves Amid Market Volatility

In brief

Strategy expanded its USD Reserve to $1.1 billion and increased its total Bitcoin holdings to 846,842 BTC.

Executive Chairman Michael Saylor introduced a new risk metric dubbed CEPE BPS to track its Bitcoin holdings.

Despite Bitcoin's rise on Monday, Strategy's overall stockpile remains roughly $7.8 billion underwater.

Strategy padded its cash cushion for a second straight week while expanding its Bitcoin holdings, setting aside more resources for paying dividends and managing debt.

The Bitcoin-buying firm’s so-called USD Reserve now stands at $1.1 billion, Strategy announced on Monday. The balance had fallen as low as $871 million last month after the company moved to repurchase a portion of its convertible debt at a discount.

Amid fears that Strategy could sell more Bitcoin to maintain confidence in its flagship preferred stock, JPMorgan analysts argued last week that “a rebuilding of the company’s dollar reserves might be needed to restore confidence and reduce investor concerns.”

Strategy shares rose 7.2% to $132.66, according to Yahoo Finance. The firm’s stock jumped as high as $136 after the opening bell, before settling 24% lower over the past month. The uptick came as Bitcoin rose above $66,500, a 4% increase over the past day, according to CoinGecko.

The company’s efforts to accumulate cash follow its decision to sell 32 Bitcoin for $2.5 million several weeks ago. Although the liquidation represented just a sliver of its stockpile, Strategy’s move caused some investors to question whether they could still depend on the world’s largest corporate holder of Bitcoin as a steady source of demand for the digital asset.

“Still adding dots,” Strategy Executive Chairman and co-founder Michael Saylor posted to X on Sunday, alongside a chart chronicling the company’s Bitcoin purchases in bits of orange.

After purchasing 1,587 Bitcoin for $100 million last week, the Tysons Corner, Virginia-based firm signaled that it now owns 846,842 Bitcoin worth $56.3 billion. With Bitcoin trailing Strategy’s average purchase price, the firm’s stockpile was roughly $7.8 billion underwater.

The company established cash reserves in December, as Bitcoin plunged, to assure investors that it could continue to make payments on Stretch (STRC). The preferred stock, which offers an 11.5% annual dividend, is currently worth around $10 billion.

On Sunday, Saylor appeared to introduce a “conservative risk metric” for Strategy, dubbed CEBE BPS, which tracks how much Bitcoin the firm owns per share after senior claims. Historically, the company has measured the ratio before applying senior claims.

Increasing Bitcoin owned per share has long served as Strategy’s north star, but Saylor’s comments indicate that the company is refining its scope to account for liabilities.

Saylor’s remarks came days after he clarified on X that the company gauges “accretion” in multiple ways. Historically, Strategy has referenced accretion in relation to whether its latest purchase increased the amount of Bitcoin that the company owns per share.

“Accretion depends on the metric,” he added, noting that the company can measure it in terms of its Bitcoin-owned-per-share metric or the net value of assets, including cash reserves.

The purchase that Strategy disclosed on Monday reduced the firm’s Bitcoin holdings per share, under its typical framework, for a second straight week. The year-to-date percentage change in Bitcoin owned per share has fallen to 12.5% from 13% over that period.