- Strategy skipped its usual Bitcoin purchases last week in favor of reinforcing its cash reserves.
- The Bitcoin development company raised $748 million via common stock offerings, bringing its total USD reserve to $2.19 billion.
Strategy (formerly MicroStrategy) has diverged from the trend, skipping its Bitcoin (BTC) purchase last week. This came despite its executive chairman, Michael Saylor, hinting at another acquisition announcement earlier.
Strategy Builds $2.19 Billion Cash Reserve
“Green Dots ₿eget Orange Dots,” said Saylor on Sunday. Many took it as part of his routine hype-posting ahead of a major Bitcoin acquisition disclosure on Monday.
However, the publicly traded company’s subsequent Form 8-K filing with the US Securities and Exchange Commission (SEC) revealed that it didn’t add to its BTC haul between December 15 and 21, contrary to the crypto community’s expectations. Bitcoin notably traded between $84K and $90K over the timeframe.
Instead, the business raised $747.8 million during the period by selling 4.535 million shares of its MSTR Class A common stock. Strategy allocated all the net proceeds to building up its cash reserves, increasing them to $2.19 billion.
With that, the firm’s digital asset portfolio remains at 671,268 BTC to date, accounting for 3.36% of Bitcoin’s circulating supply. Meanwhile, it reflected an aggregate purchase price of $50.33 billion for the asset, translating to a dollar-cost average of $74,972 per BTC.
Purpose of the Cash Reserve
The occasion marks Strategy’s first top-up in its cash reserves following its official establishment on December 1. The company initially set aside $1.44 billion in the reserve to guarantee 12 months of dividend payments to holders, providing an additional layer of protection during market volatility.
The institution aims to build enough US dollar reserves to cover at least 24 months of dividends under favorable market conditions. The move not only gave MSTR investors assurance. It also arrived as relief to members of the crypto community who feared that the company’s sudden unloading of its BTC haul could negatively impact market sentiment and stability, given its prominent standing in the broader Bitcoin and crypto market.
Amid Strategy’s measured risk-mitigating efforts, critics like SchiffGold founder Peter Schiff again took the opportunity to lambast the Saylor-linked company’s decision. The veteran gold investor pointed out that the business is clearly preparing for an upcoming market downturn. He remarked that, given the US Federal Reserve’s quantitative easing and rising inflation, it would be better off building gold reserves rather than dollar reserves, as Tether has been doing as of late.
Commenters to Schiff’s response countered his unsolicited advice, though, arguing that Strategy’s goal is maintaining actual liquidity. Others said it would be a bad idea for the company to acquire gold right when it’s trading at a new all-time high.
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