Strategy (MSTR) stock rises as Bitcoin buy eases fears of liquidation risk

Strategy (previously known as MicroStrategy) MSTR shares moved higher on Monday after the company disclosed another Bitcoin purchase.

The stock also benefited as Wall Street analysts pushed back against growing speculation that the firm's bitcoin-focused treasury strategy could eventually force large-scale asset sales.

The company acquired an additional 1,587 Bitcoin for approximately $100 million between June 8 and June 14, according to a filing with the US Securities and Exchange Commission.

Executive Chairman Michael Saylor said the purchase was made at an average price of $63,024 per bitcoin.

The latest acquisition increased Strategy's total holdings to 846,842 BTC, acquired at a total cost of approximately $64.1 billion, including fees and expenses.

The company remains the largest corporate holder of Bitcoin and now controls more than 4% of the cryptocurrency's maximum supply of 21 million coins.

Investors responded positively to the update, with MSTR shares rising more than 8% during Monday trading.

Bitcoin accumulation continues despite slower pace

While Strategy continues to add to its Bitcoin holdings, the pace of purchases has slowed significantly compared with earlier this year.

The company acquired 1,587 BTC for $100 million last week, following a purchase of 1,550 BTC for $101.3 million the previous week.

The transactions mark a sharp slowdown from the multibillion-dollar acquisitions that characterized much of the company's earlier accumulation strategy.

The latest purchase was funded entirely through sales of common stock.

Strategy raised approximately $209 million through the sale of 1.73 million Class A shares under its at-the-market equity program.

No preferred shares, including STRF, STRC, STRK or STRD, were issued during the week.

The reliance on common stock comes as the company's STRC preferred stock has traded below its $100 par value in recent weeks.

Strategy generally issues STRC only when the shares trade at or above par, limiting its ability to use the security as a funding source for additional Bitcoin purchases.

Despite the slowdown, Strategy retains substantial financial flexibility.

The company said approximately $25.7 billion remains available under its common-stock issuance program.

It also reported a US dollar reserve of $1.1 billion as of June 14, up from $1 billion a week earlier.

Analysts reject "death spiral" concerns

Recent debate among investors has centered on whether falling Bitcoin prices could eventually force Strategy to liquidate portions of its holdings to meet obligations tied to its preferred-share programs.

Benchmark analyst Mark Palmer dismissed those concerns in a research note on Monday.

"The death-spiral story assumes that Strategy is one bad week from selling bitcoins, and it skips several steps to get there. Before any meaningful bitcoin sale by Strategy, it would need to run through the $1 billion cash reserve it has in place to fund dividend payments," Palmer said.

The concerns intensified after Strategy sold 32 BTC between May 26 and May 31 to help fund distributions related to its STRC preferred shares.

It marked the first sale of Bitcoin by the company since it began accumulating the cryptocurrency in December 2022.

Palmer argued that Strategy's perpetual preferred securities do not create immediate liquidity pressure.

"The company would have to move through a long sequence of failures before its bitcoin reserve, currently valued at almost $55 billion, would even enter the conversation," Palmer said.