Zero bitcoin, a lot of own stock

Strategy, the world's largest corporate holder of bitcoin, has for three consecutive weeks prioritized buying back its own STRC preferred shares over expanding its bitcoin holdings. A weekly SEC filing dated October 26 shows the company repurchased 2,068,459 STRC shares for $204.9 million in the week of October 19–25, while bitcoin purchases in the same period were zero, according to ForexLive (investinglive.com).

The pattern is not new. In the preceding weeks, Strategy spent $193.1 million and $192.4 million respectively on STRC buybacks, versus just $22.1 million and $21.5 million on bitcoin in the two weeks where the company actually bought cryptocurrency. In total, Strategy has spent around $590 million buying back its own preferred shares over the past three weeks, compared to roughly $44 million on bitcoin.

$204.9 million
spent on STRC buybacks (Oct 19–25)
0 BTC
purchased same week
848,517 BTC
total holdings

What is STRC, and why does $100 matter?

STRC, nicknamed "Stretch," is a perpetual preferred share with a variable dividend that Strategy pays out. The dividend is continuously adjusted to keep the price near the par value of $100, and the rate was raised to 12 percent this summer following a weak stretch for the stock.

The $100 level is critical because Strategy has said the company will not sell new STRC shares below par. Above this threshold, STRC once again becomes a financing tool: Strategy can sell shares into the market and use the cash to buy bitcoin. The company still has about $17.5 billion in STRC available under its ongoing at-the-market (ATM) sales program, a figure that hasn't moved in the weekly filings since at least June.

Management has been clear about the connection. CEO Phong Le told Bloomberg TV on July 14 that Strategy will issue more STRC shares and buy bitcoin as soon as the price is back at par. The claim circulating on social media that Saylor is poised for "powerful" bitcoin purchases is thus grounded in a real, stated plan – but it isn't new.

Near par is not the same as par that holds

The company is propping up its own price

Here lies the catch in the headlines about "powerful purchases": much of STRC's rise is due to Strategy itself buying back the shares. The latest buyback was done at an average price of around $99.06 – almost exactly where the five-month high currently sits.

This support comes at a cost. After last week's buyback, Strategy was left with a cash balance ("USD Cash") of $242.4 million, separate from a reserve of $4.83 billion earmarked for preferred share dividends and interest on debt. The board raised the preferred share buyback authorization from $2 billion to $3 billion on October 19, and about $957 million of this capacity remains.

The real test comes at $100. To fund new bitcoin purchases, Strategy must sell STRC shares to outside investors, not just buy back its own. If demand for the current dividend proves weaker than hoped, new issuance could push the price back below par and send the company back to propping up its own paper. Saylor's informal goal of reaching par by September 8 has already passed without happening, suggesting that the last few dollars are the hardest to raise.

Strategy has spent around $18 on its own preferred shares for every dollar spent on bitcoin in recent weeks.

What this means for the bitcoin market

Strategy has been the market's most reliable corporate buyer of bitcoin, and a week without purchases removes a known source of demand. Bitcoin fell below $80,000 on October 27, and analysts at TradingKey have pointed to both outflows from spot ETFs and Strategy's pause as possible explanations – though a single week doesn't prove causation, ForexLive emphasizes.

The company still holds 848,517 bitcoin at an average cost of around $75,446 per coin, so this is about a change in purchasing flow, not a retreat from the position.

What to watch

The quarterly report will be presented on Thursday, October 29, after US market close, with a webinar at 5:00 PM Eastern Time. Several concrete points will determine whether "powerful purchases" amount to more than a headline:

  • Whether management provides a clear timeline for new STRC issuance, rather than repeating "once we reach par"
  • Whether STRC holds at or above $100 in weeks when Strategy is not buying back its own shares – that is the real evidence of external demand
  • Monday's weekly filing, where the line for STRC shares sold under the ATM program is key; as long as it shows zero, the main financing channel remains closed
  • The size of any bitcoin purchases – purchases funded solely by ordinary share sales have in recent weeks amounted to tens of millions of dollars, well short of what Strategy has historically called a "powerful" purchase

Until confirmed STRC issuance at par is followed by significant bitcoin purchases in the same filing, the $100 level should be treated as a door that is nearly open – not one Strategy has already walked through, according to ForexLive's review of the company's filings.