Strategy bought no bitcoin last week, spent $205 million on its preferred, leaving $242.4 million for coins
STRC, the preferred stock meant to take over funding Strategy's bitcoin buying, has not been issued since it slipped below its $100 stated amount in May, and the cash pool behind the company's coin purchases is down to $242.4 million. The restart test is par; the other test is MSCI's November 11 index-removal list.
Vincent Jiang · 3 min read
The first blank week since mid-September
Strategy−3.05% — Strategy, down 3.05 percent today, the Nasdaq company holding 848,517 bitcoin, filed its weekly 8-K, the SEC form that carries its purchase disclosures, before Monday's open with an empty purchase column: no coins bought or sold from October 19 to 25, and no shares sold through its at-the-market program, its channel for selling new stock into the market 13.
It was the first blank week since mid-September 1. The one line that moved was $204.9 million spent buying back 2.07 million shares of STRC, its variable-rate preferred stock, paid from USD Cash, the pool that normally buys coins 13. That pool fell to $242.4 million from $447.3 million in a week 13, and MSTR slipped 2.2% in premarket trade 3.
Both ends of the machine stopped at once
For years Strategy has sold stock and bonds and bought coins with the proceeds 4. Last week neither end ran. STRC is designed to trade near its $100 stated amount, and each new share carries $100 of dividend-bearing claim; selling one below that raises less cash than the obligation it creates, so with STRC under par since late May, none have been issued 14. In Monday's premarket it sat at $99.35 3.
The market's biggest corporate bitcoin buyer is now its own best customer, with $664 million of preferred buybacks since October 1 against $72.3 million of bitcoin 3. The authorization is $3 billion, with $956.8 million left 15. Chief executive Phong Le said in July the buying would taper as STRC neared par; the latest repurchases averaged $99.60 5.
The common shareholder pays
Who pays is the common shareholder: the pool their model says buys coins is retiring preferred claims instead, while bitcoin sits near $79,200, above the $75,446 average cost but below the $82,900 of the last purchase 2.
The cash pool Strategy uses to buy bitcoin has fallen 85% since August
Data
| USD Cash | |
|---|---|
| Aug 30 | $1,610M |
| Oct 4 | $833.4M |
| Oct 18 | $447.3M |
| Oct 25 | $242.4M |
Less paper, more bitcoin per share
The buyback retires $100 of stated value for less than that, which lifts net bitcoin per common share 4. Strategy has already pre-announced a $20.91 billion third-quarter gain on its coins, an unaudited management estimate from its October 5 filing 10.
The corporate bid did not vanish
Strive, the treasury firm run by its chief executive, Matt Cole, bought 6,182 coins for $511 million in the same week Strategy sat out, and it holds 505,000 STRC shares itself 9.
One price decides the restart
The outside bid is thinning too: spot bitcoin ETFs shed $635.6 million on Thursday, the most since June 27. Shareholders vote October 28 on switching STRC dividends to daily payments, earnings land October 29 alongside Coinbase's, and $10.9 billion of options expire Friday with max pain, the price where the most options expire worthless, at $78,000 28.
Bitcoin sits between Strategy's average cost and its last purchase
Data
| Value | |
|---|---|
| Last purchase | $82,900 |
| Spot, Oct 26 | $79,200 |
| Average cost | $75,446 |
November 11 brings the second test
Then November 11, when MSCI+0.56% — MSCI, up 0.56 percent today, the index provider, names the companies removed under its new rule barring non-operating companies; removal would force funds that track its indexes to sell, and the rule knocked 9.6% off the stock in a day 56. The size is contested: Strategy counts MSCI-linked holdings near 13 million shares, about $1.8 billion and under a day of trading, against JPMorgan's $2.8 billion estimate 56. VanEck's Matthew Sigel calls STRC's return to par the test of a restart 5; the next Monday 8-K shows which way it turned.
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