Strategy’s 5-week pause on Bitcoin buys: Smart strategy or lost chance?

[purple_sparkles]

The company remains one of the top 10 largest corporate bitcoin holders on our list. This pause in buying shouldn’t be interpreted as loss of faith for bitcoin in general as a good way to preserve the value. For me, this is nothing but financial prudence. Some may even want to boost their cash balance to eventually buy some bitcoin at even lower prices.

At some point, we have to accept the fact that micro strategy is not immune to some drop in following up with his initial investment decision. showing restraint in his investment might mean that he is just managing his funds and in the process strategizing on how to come back even better. just like strategy is currently doing, most of us have had times when we became cold in our investment and where not as active as we wanted maybe because we were settling other things. it is part of what comes with staying invested over a long time. you get to experience a lot of downs at some point but at the end, you still have to keep the momentum going.

I think this could also be an attempt to influence bitcoin's price. Many investors closely watch their actions, and if people see that Strategy isn't buying bitcoin for some reason, they may also switch into a wait-and-see mode. That could reduce buying pressure and affect bitcoin's price. If the price drops further, Strategy could then make much larger purchases at lower levels.

[Gragebox]

You know what I don't like? A post -hypothesis instead of pre- hypothesis, I don't think you would have had these lessons if they didn't stopped buying but we all know at some point, they are going to take a break. The debt ceiling was obvious, there was no way they are going continue with that heavy weekly purchases when the stock were crashing down plus the speculations were not good, the articles were sentimental and strategy himself run his mouth for media too much, he is cool but I don't like when he runs his mouth. Said he used AI to design STRC, that's the very least thing a billion dollar company should say.

A problem that really makes it irritating are, whenever they form post-hypotheses instead of pre-hypotheses. The arrest in MicroStrategy’s week heavy buy up can have been anticipated according to the current financial constraints, market correction and rising negative sentiment. Any other way, everyone already knew that an arrest would happen in soon.

Other factors are Saylor is just doing more bad to media than good appearances.

Calling he used AI on STRC-design is really in-professional on behalf of a 1 bill-worth company.

He can do what he wants, companies do what's best for their interest and don't care what the public said or feel, but it changes nothing about Bitcoin. If we see other companies buy more Bitcoin instead of only him, I will be more than happy, one company with such a big reserve when we don't know how much accumulation they are going to do in the future is not healthy for Bitcoin. For now, it may be sounding bullish for people that want make uptrend until they give excuse to offload some on the market.

However, no company can ever depart from its self-serving pursuits no matter how the public sentiments are and what happens to the fundamental health of bitcoin price. It can be extremely volatile to see concentration ofBTC holdings by a single entity because this is equivalent to placing additional dependency and an extra center of control over the entire ecosystem. Despite that, investors regard concentration of this manner as progress for the upward trend cycle of BTC, but may bring about significant risks in future when this party might want to liquidate their assets.

I had a good understanding of MicroStrategy at one time, but when I saw that they move depending on buying and selling, then I understood that none of their activities have any impact on the bitcoin market. Since none of their activities can do anything to the bitcoin market, there is no point in thinking about them.

That’s true! It’s very easy to drown in the corporate news but the underlying on Bitcoin is infinitely larger than one company’s balance sheets.

Big take! It is easy for everyone to over-focus on what MicroStrategy is doing but truth is Bitcoin is actually so much bigger than any corporate treasury, the price direction and path is dictated by global market’s liquidity and the macro economic environment, not one company buying a bunch of bitcoin and creating noise in the system! They are nothing else than a market player!

He needs it, the market is down for a while now, and who knows how long it will take to recover. He already bought so much dips in the current market as-well.. so there’s literally no big deal in the pause.

Much better than selling those BTC.. the last time he did, the internet went crazy over a tiny sale from their  stash and it also affected the market a bit.

He’s going to sell some large portions at some point anyway, not now (maybe ) but someday.

Buying when a long decline is expected, is just being a smart money manager. Everyone forgets that the minuscule piece MicroStrategy sold at end of year 2022 was just TLH, nothing else, and everyone was hysterical over it. However, hoping they will eventually “sell off” a “big chunk” makes a mistake because they are no longer a betting against the cycles type firm but a Bitcoin developer raising capital through convertible bonds and collecting BTC, perpetually. Because they would have enormous tax bills if they started selling offBTC and not only that it would erase the stock premiums they hold.

I think it is smart, or at least it's the "least dumb thing" they can do now. If they buy BTC and lower their cash reserves they would risk to run into problems if the Bitcoin price later this year falls much lower, and this could conduce into a vicious cycle, because the investors then will be again fearing a bankruptcy or massive Bitcoin sales.

A comfortable amount of cash, in times like these, makes good sense. While this may seem like a time to increase Bitcoin holdings to the masses, there would be value in increased liquidity should the uncertainty still prevail considerably. A company, in the event of any further market declines, that is caught in cash shortages will face problems in honouring debts; this obviously causes panic among investors.

This can potentially cause forced, un-necessary, sell offs of crypto assets.

One must attain a financial state of comfort before aiming to increase your portfolio size.

But in my opinion Strategy slowly needs to define what they want to do with all their Bitcoins. Just holding 800,000+ Bitcoins is completely unproductive in the long term. If they want to be a Bitcoin bank in some way, they need to slowly present details how that could work. Or alternatively, they could build financial products based on a kind of Bitcoin backing -- not on some complicated share/cash backing.

There is definitely merit in what you've said above. Hoarding more than 800,000 BTC's and not making money off of them is really a resource being wasted in the long run, though. When talking about MicroStrategy as the "Bitcoin Bank" it involves very large technical and regulatory risks, for now anyway. At the moment it is much more safe from system failure to not issue BTC backed finance instruments at all and simply use it as a commodity they store.

What I would like for example if they build a sort of "long term Bitcoin" product, very much like an investment fund who buys the dips and sells the tops to get a product with a flatter, but more consistently bullish price evolution.

A disciplined Bitcoin fund which can buy the pull backs or scale out around the peak price, might smooth the fluctuations. By managing risk Disciplined Bitcoin could give consistent, steadier long-term gain. Instead of buy and holder or buying every single surge of theBitcoin.

[Satofan44]

What is your opinion on this issue?

The question the way it is being presented and asked is dumb, what "chance" is lost if the price stays the same or similar in a sideways market? There is no amount of BTC that Strategy must buy in any given timeline, their only obligation arises after issuing shares for capital which is meant to finance Bitcoin purchases. When they do that, they have absolutely no obligations to do anything at all. Furthermore, for someone who has been a "buy the top" entity in Bitcoin whether they buy at $60k or $70k makes no significant difference at all. The conclusion is clear, the strategy and focus on dividend sustainability is the correct approach.

A problem that really makes it irritating are, whenever they form post-hypotheses instead of pre-hypotheses. The arrest in MicroStrategy’s week heavy buy up can have been anticipated according to the current financial constraints, market correction and rising negative sentiment. Any other way, everyone already knew that an arrest would happen in soon.

No, it was not predicted -- don't make shit up, it won't earn you merit. Aside from a general and useless statement of "yeah it would run out of money eventually in a bear market", nobody knew that these moves were going to be played this way. They have changed and adapted their strategy for better or worse several times now.

Calling he used AI on STRC-design is really in-professional on behalf of a 1 bill-worth company.

What about it? Are MicroSlop and GoogleSlop not doing the same with trillion dollar companies? 

[Dr.Bitcoin_Strange]

It's a smart strategy. It's good that they realized that not having a cash reserve can cause problems for the company sooner or later.

I was reading a comment where someone said Strategy is a unique company because Bitcoin is the main strategic asset on its balance sheet. However, what the person didn't realize is the risk attached to a company that only holds a large amount of a volatile asset like Bitcoin without also having cash reserves and other liquid assets that can be used to cover debts and company expenses when Bitcoin price is on a long bear market.

Take Tesla, for example. It is a company that has Bitcoin, but has traditional businesses, cash and lots of assets. They have cash reserves, and that is good for the company because a prolonged Bitcoin bear market cannot be the reason why they go bankrupt since they are not completely dependent on Bitcoin's price performance.

However, a company like Strategy, which is heavily focused on Bitcoin, could experience bankruptcy problems if it doesn't improve its strategy and apply proper risk management measures like it is doing now.

You can see how they were criticized when they talked about selling some of their Bitcoin during this bear market. Some people argued that they bought Bitcoin at higher prices and should have sold earlier if they knew they would eventually need to sell. If they had also been keeping some cash reserves after they started accumulating Bitcoin, it would have made more sense because they wouldn't need to sell Bitcoin at a low and unfavorable price to settle debts and some obligations.

[Satofan44]

It's a smart strategy. It's good that they realized that not having a cash reserve can cause problems for the company sooner or later.

I was reading a comment where someone said Strategy is a unique company because Bitcoin is the main strategic asset on its balance sheet. However, what the person didn't realize is the risk attached to a company that only holds a large amount of a volatile asset like Bitcoin without also having cash reserves and other liquid assets that can be used to cover debts and company expenses when Bitcoin price is on a long bear market.

Take Tesla, for example. It is a company that has Bitcoin, but has traditional businesses, cash and lots of assets. They have cash reserves, and that is good for the company because a prolonged Bitcoin bear market cannot be the reason why they go bankrupt since they are not completely dependent on Bitcoin's price performance.

However, a company like Strategy, which is heavily focused on Bitcoin, could experience bankruptcy problems if it doesn't improve its strategy and apply proper risk management measures like it is doing now.

You can see how they were criticized when they talked about selling some of their Bitcoin during this bear market. Some people argued that they bought Bitcoin at higher prices and should have sold earlier if they knew they would eventually need to sell. If they had also been keeping some cash reserves after they started accumulating Bitcoin, it would have made more sense because they wouldn't need to sell Bitcoin at a low and unfavorable price to settle debts and some obligations.

You want to make a good point, but you are mixing it up with false comparisons, false data and false conclusions. The good: It is absolutely better when an established business adopts Bitcoin into its reserve assets than companies whose sole or primary business is buying and holding Bitcoin. You are right to point out that there is no pressure for them to sell the Bitcoin during a bear market or prolonged bear market because of this. The rest of your post is in trouble.

• Aside from the most extreme and longest bear market ever, there is zero risk of Strategy going bankrupt.
• This kind of nonsense without data assumes that most Bitcoin was acquired through instruments that create financial obligations, it is false -- most of the Bitcoin was acquired in ways that has not created any kind of obligation.

The balance sheet of Strategy is massive, they are currently under no risk of bankruptcy and they are not going to be for a very long time (decades) unless Biitcoin completely collapses. If they do not have cash, they can simply sell Bitcoin to have the cash that is required to finance the obligations. Therefore, writing long posts that are based on speculations and generic statements is not the right way to approach these threads -- first check the data and then think about it, you can get some estimates with AI pretty fast.

[lionheart78]

Strategy is not new to the industry, I believe they know what they are doing.  Strategy have lots of finance-educated staff, and I believe their move is to strengthen their grip on the market.  Prioritizing building a cash reserve  and pausing Bitcoin acquisition is better than selling their Bitcoin stash.  After all the cash reserve can be pulled out to patch anything that needs financial patching.  So between the question of lost chance or smart strategy, I think it is a smart strategy.

[Lida93]

I don't care about what MicroStrategy does, whether they buy or sell, that is their business. I stopped paying attention to them when I realised that their purchase hardly move the market, it is just like those of every other person so why should I pay so much attention to what they do. Recently bitcoin climbed to over $65k and that is within the purse, suggesting that the market can move without them . I understand that their sell can add a lot of sell pressures to the market but that does not endure as the market have a way of recovering very fast.

I think it has always being the attention that we all give to this large corporate bitcoin holders that actually helps them move the market with what action that is taken, small holders snaps at it. There's this psychological effect that comes on the small holders when they learn about a huge bitcoin sell.  But what some retailers don't know is that the volume of transactions (sell) on exchanges following a big corporation selling their bitcoin is usually higher due to the global selling pressure, and that's what really causes the price pull down.

[Marykeller]

Never was it hammered(mandated) on Strategy to buy Bitcoin every week. Strategy took it upon himself to buy Bitcoin every week; he can stop at any time to buy Bitcoin, which we have seen him stop buying Bitcoin for the past 5 weeks. Many of us here didn't know about that; if that you brought it up for us to take note.

For someone(Strategy) that start buying Bitcoin for their treasure reserve from August 11 2020 till the last 5 weeks ago(when they stopped), has done well for his own company's gains, not for all of us because Bitcoin investment gains and losses are individual, not for the general public.

[Questat]

As long as it's a temporary pause, then it shouldn't be a loss of faith. But if they won't come back purchasing bitcoin and just sell their coins gradually, then maybe their focus is no longer bitcoin and have shifted already into another potential asset.

However, I still believe that having this current 5-week pause is part of their strategy to sustain their long term crypto plan. Massive purchase of bitcoin is really expensive, it requires additional funds from time to time and the only way to make this a sustainable one is to execute some purchase pause that will give time to manage cash-flow, manage debt, and stabilize their balance sheet so they can make greater purchase after that would result into higher profitability.

[SamReomo]

The company remains one of the top 10 largest corporate bitcoin holders on our list. This pause in buying shouldn’t be interpreted as loss of faith for bitcoin in general as a good way to preserve the value. For me, this is nothing but financial prudence. Some may even want to boost their cash balance to eventually buy some bitcoin at even lower prices.

They already own a good number of Bitcoin and right now that number is more than enough for them. They're now focusing on increasing their fiat reserves but I believe after sometime they'll restart accumulation of Bitcoin on weekly or monthly, or at least on quarterly basis.

It might be pre-planned to do something like this, we should not worry at all, even if they don't buy more Bitcoin now or in future, they'll still hold their current Bitcoin and that's the most important thing for us.

[Hatchy]

1. Cash reserves are essential (You can use your cash to take advantage of market corrections)
2. Do not invest emotionally( you don’t need to buy BTC following what big players do)
3. Risk management: Preservation of capital is as much important as growth of capital.


The company remains one of the top 10 largest corporate bitcoin holders on our list. This pause in buying shouldn’t be interpreted as loss of faith for bitcoin in general as a good way to preserve the value. For me, this is nothing but financial prudence. Some may even want to boost their cash balance to eventually buy some bitcoin at even lower prices.

Before they stopped buying, they sold a portion of their bitcoin but should this actually affect our decisions as investors? The truth is that most retail investors allow emotion to take the wheel. Large institutions purchasing bitcoin and they are all head over hills thinking that this means the market will start to become bullish or will continue bullish. I always tell people that institutions controls only their liquidity on the market. Fundamentals has more power to drive price but when fear kicks into play, a big portion of investors won't even recognise that they all contribute to how the market behaves. When the fear and greed index hits a significant increase, the market has to react because a side of investors are making decisions based on how they feel..