Strategy’s Bitcoin Buying Pause Was Deliberate as Dollar Reserves Reach $3 Billion

Strategy’s decision to forgo additional Bitcoin purchases last week and build its cash position instead was part of its recently announced capital-management strategy, analysts said.

The Block reported on July 13 that Benchmark and TD Cowen said in recent notes that Strategy’s sale of about $467 million of MSTR common stock last week, without any additional Bitcoin purchases, showed the company putting its Digital Credit Capital Framework into action.

Instead of increasing its Bitcoin holdings, Strategy kept its stash at 843,775 BTC and expanded its dollar reserves to $3 billion.

TD Cowen maintained its Buy rating on Strategy and reiterated its $260 price target. Lance Vitanza, an analyst at TD Cowen, wrote that the latest disclosure was an early sign management had begun executing the capital-allocation strategy it laid out about two weeks ago. The firm said the company was focused on strengthening its balance sheet rather than adding to its Bitcoin holdings.

TD Cowen added that investors should not view the lack of fresh Bitcoin purchases negatively. Instead, it said investors should focus on Strategy’s long-term plan to increase Bitcoin holdings per share while maintaining a capital structure centered on preferred stock.

Benchmark took a similar view, maintaining its Buy rating and $570 price target. Mark Palmer, an analyst at Benchmark, said the common-stock sale was intended to expand a dividend war chest to support preferred-share payouts.

Strategy’s dollar reserves rose about 18% in a week to $3 billion, Palmer said. He added that the cash position was sufficient to cover preferred-share dividends for more than 20 months, which should ease investor concerns about the company’s ability to meet obligations tied to preferred stock and convertible notes without raising additional funds.