Strategy has resumed buying bitcoin as the cryptocurrency moved back above $85,000. The company said in its latest financial disclosure that it purchased 950 bitcoin over the past week for nearly $76 million, bringing its holdings to 846,000 bitcoin. Bitcoin rose more than 6% over a 24-hour period to approach $86,000, while Strategy shares gained nearly 9% to about $167.
The purchase was Strategy's first bitcoin acquisition in roughly three weeks. As the world's largest publicly traded corporate holder of bitcoin, the company remains closely tied to the cryptocurrency's price through both its balance sheet and share price. Its holdings represent about 4% of bitcoin's total supply.
Strategy also buys back $174 million of preferred stock
Alongside the bitcoin purchase, Strategy spent $174 million repurchasing STRC preferred shares. The dividend-paying security was issued to raise funds for additional bitcoin purchases, with holders receiving regular dividends. The buyback reduces the amount of dividends the company will have to pay investors in the future.
Strategy is led by billionaire Michael Saylor, who has long advocated a policy of never selling bitcoin. The company has nevertheless sold bitcoin four times over the past four months. The decline in bitcoin prices increased pressure on Strategy's financing and cash-management arrangements, while the launch of STRC last year was also linked to its efforts to raise capital for further bitcoin purchases.
After bitcoin rebounded over the past month, Strategy has resumed accumulation and has now completed two recent purchases. Chris Beauchamp, chief market analyst at IG Group, said the renewed buying suggested that management saw some support for bitcoin's recovery and was willing to build its position again.
The latest purchase was smaller than some of Strategy's earlier transactions. Beauchamp said the reduced size did not necessarily signal particular concern about the market and could instead reflect a staged buying approach as bitcoin prices rose.
Bitcoin rebounds from a low near $58,000
Bitcoin's recent advance came during a month that has historically tended to be weak for the cryptocurrency. Bitcoin had fallen to about $58,000 in June, roughly 53% below the $125,000 low recorded in October last year. The latest rally extends a recovery from bitcoin's one-year downtrend.
In mid-August, the US Treasury announced plans to increase purchases of longer-dated government bonds. The announcement renewed market attention on bond yields, inflation and demand for government debt. In the preceding months, investors had focused more heavily on fast-moving themes such as artificial intelligence, while bitcoin's role as an alternative asset returned to market discussions.
Beauchamp said markets often need a new narrative to drive a move. As the Treasury turned its attention back to the government bond market, investors began reassessing bitcoin's links with macroeconomic liquidity, inflation and bond-market conditions.
Bitcoin's post-rate-hike pullback was brief
The Federal Reserve's latest rate hike also briefly interrupted bitcoin's advance. After the central bank raised rates by 25 basis points on September 16, bitcoin fell to about $75,600, giving back gains made earlier in the month.
Higher interest rates typically raise financing costs and can reduce flows into volatile assets, leaving cryptocurrency markets vulnerable to pressure. This pullback, however, was short-lived, and bitcoin later moved higher again. Beauchamp said that once the widely anticipated rate increase was delivered, one important source of uncertainty had temporarily been removed, prompting investors to reassess the next phase of the market.
For Strategy, each significant move in bitcoin feeds through to the company's valuation and share-price performance because of its large holdings. The latest disclosure shows that the company is continuing to buy bitcoin while repurchasing part of its STRC preferred stock, but the 950-bitcoin purchase remains smaller than some earlier acquisitions. Further changes in its holdings will depend on bitcoin prices, financing conditions and the company's capital arrangements.