Strategy, the enterprise software company synonymous with Bitcoin accumulation, is taking steps to mitigate market volatility with a new $1.44 billion U.S. dollar reserve, a move that has intensified speculation about its long-term cryptocurrency strategy following a cryptic social media post by its founder.
The announcement of the substantial dollar reserve came as the company also resumed minor Bitcoin acquisitions. Strategy added 130 BTC for $11.7 million between November 17 and 30, at an average price of $89,960 per Bitcoin. These details were disclosed in a Securities and Exchange Commission filing.
Company founder and executive chairman Michael Saylor sparked widespread discussion with a post on X on Sunday. He shared a graphic typically used to track Strategy’s Bitcoin holdings with orange dots, but added the question: “What if we start adding green dots?” This broke his established routine of implying further Bitcoin purchases with orange dots.
What if we start adding green dots? pic.twitter.com/a19bD33KzD
— Michael Saylor (@saylor) December 2, 2024
The unexpected message led many in the crypto community to speculate about a potential shift in Strategy’s long-standing policy of acquiring and holding Bitcoin. Some interpretations suggested the “green dots” could signify stock repurchases or balance sheet adjustments. Others feared it might hint at the company beginning to sell off its Bitcoin holdings, a stark departure from Saylor’s public “never sell” stance.
The new $1.44 billion dollar reserve is intended to support preferred stock dividend payments and interest on debts. Funded through sales of Class A common stock, the reserve currently covers 21 months of dividend obligations.
Strategy plans to maintain a reserve sufficient for at least 12 months of dividends. The company intends to strengthen this to cover 24 months or more over time. The amount and terms of the reserve are subject to the company’s discretion, market conditions, and liquidity needs.
“Establishing a USD reserve to complement our BTC reserve marks the next step in our evolution,” Saylor stated. He added, “we believe this will better position us to navigate short-term market volatility while fulfilling our vision of being the world’s premier Digital Credit issuer.”
Strategy’s Bitcoin treasury now stands at 650,000 BTC, valued at approximately $56 billion. These holdings were acquired at an average price of $74,436 per Bitcoin, for a total cost of about $48.4 billion, including fees and expenses.
The company funded its latest Bitcoin acquisitions and the new USD reserve through proceeds from the market sales of its Class A common stock, trading under the ticker MSTR.
Concerns about Strategy’s financial health have escalated in recent weeks. The company’s multiple of net asset value (mNAV), which compares its enterprise value to its Bitcoin holdings, stood at around 1.2 on Monday. A drop below 1 could trigger increased pressure to sell Bitcoin.
CEO Phong Le previously clarified that the company faces no short-term refinancing risks. However, he stated that if the mNAV were to fall below 1, Strategy might selectively sell Bitcoin, particularly those with a higher cost basis, to cover preferred equity dividends and optimize Bitcoin per share.
Strategy’s Class A common stock has seen a significant decline, falling over 40% year-to-date. This downturn surpasses Bitcoin’s 11% loss during the same period. The stock traded below $180, down from a July high of $450, and recorded a 4.49% loss in pre-market trading on Monday.
Two weeks prior, Saylor publicly dismissed rumors that the company was offloading 47,000 BTC. He affirmed that Strategy was continuing its aggressive Bitcoin purchasing strategy.
Saylor also challenged a JPMorgan analysis suggesting that Strategy could see billions of dollars exit its shares. The analysis warned of potential removal from major MSCI stock indices.
Strategy remains a dominant force in corporate Bitcoin treasuries globally. Its 650,000 bitcoins represent approximately 3.1% of the total 21 million Bitcoin supply that will ever exist.