Why Strategy bought another $2 billion in Bitcoin despite a slumping crypto market
For those unfamiliar, Strategy is a type of company known as a digital asset treasury that holds cryptocurrency as its primary business model. That hasn’t worked out too well for the company of late, as Bitcoin has sunk nearly 17% in the past year and 10% in the last week. Its most recent tailspin follows macroeconomic tensions between the U.S. and Europe, which caused crypto, and the stock market, to stumble.
Strategy’s purchase, therefore, was unexpected—perhaps more so given that a key piece of crypto legislation, known as the Clarity Act, encountered an unexpected stumble last week. However, one analyst suggests that Strategy is investing so much in Bitcoin because this legislation, despite stalling, should pass sometime soon.
“Strategy is opportunistic with regard to its Bitcoin purchases,” said Mark Palmer, an analyst at Benchmark. “There’s a lot going on in the crypto space right now with the Clarity Act moving toward markup in the Senate.”
Strategy began investing in Bitcoin in 2020, which transformed it from a run-of-the-mill software company into the largest digital asset treasury. It currently holds more than 709,000 Bitcoin, which is about 3% of the total supply, and far more than any publicly traded company. The business with the next highest amount invested in Bitcoin is Mara Holdings, which owns about 53,000 Bitcoin, a fraction of what Strategy holds.
Michael Saylor’s company is not alone in purchasing cryptocurrency this week. Another digital asset treasury, Bitmine, also made a major purchase of Ethereum and now owns about 3.5% of that altcoin’s circulating supply.
Crypto’s struggles in the past year have caused most digital asset treasuries to sink. However, Strategy is able to buy more Bitcoin because it has scored major gains since hoarding the major cryptocurrency in 2020 and has the capital to withstand a tough year.
“Strategy, due to its scale and advantage position, has been able to weather the storm in terms of the falling price of Bitcoin, whereas many of the other digital asset treasury companies are trading at a discount,” Palmer said.
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