Strategy Inc.'s shares have fallen 15% this month, erasing much of the premium relative to its Bitcoin holdings. The company's preferred-stock offering intended to fund future Bitcoin purchases drew tepid demand, raising only $47 million. To cover the shortfall, the firm resumed common-share issuance despite prior pledges to limit dilution, unsettling investors. The corporate-treasury approach pioneered by Michael Saylor involved raising debt and equity to buy Bitcoin and inspired many imitators collectively holding over $108 billion of Bitcoin. Weakening premiums and financing reversals now raise questions about the strategy's sustainability.
Michael Saylor's once-celebrated Bitcoin experiment is mired in a market backlash, raising questions about the sustainability of the corporate-treasury model he pioneered. Shares of Strategy Inc., formerly MicroStrategy, have fallen 15% this month, erasing much of the premium the firm long enjoyed over its Bitcoin holdings. The company, long a bellwether for crypto sentiment, is now drawing fresh skepticism. At the center of the concern is the firm's financing tactics.
Strategy's new preferred stock-billed as its main vehicle for future Bitcoin purchases-has drawn tepid demand. A recent sale raised just $47 million, well short of Saylor's ambition for blockbuster capital raising. To make up the shortfall, the company has returned to common-share issuance, despite earlier pledges to limit dilution. That reversal has rattled investors. The stakes extend far beyond one company.
Saylor's playbook-raise debt and equity, buy Bitcoin, watch the market assign a premium, repeat-inspired a wave of treasury firms that collectively hold more than $108 billion, or 4.7% of Bitcoin's supply, according to BitcoinTreasuries.net. "The decreasing premium is a natural reaction to competition and alternative ways for traders to gain exposure to digital assets," said Jake Ostrovskis, principal analyst on Wintermute's OTC Desk.
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