Crypto
Strategy Bought Back $205M of STRC and No Bitcoin
Strategy bought no bitcoin from October 19 to 25 and spent $204.9 million buying back its STRC preferred stock instead, ending a five-week buying streak. It holds 848,517 BTC at an average cost of about $75,446, roughly 6% below where bitcoin traded on Monday, just under $80,000.
The largest corporate holder of bitcoin spent last week buying something else. In a filing on Monday, October 26, Strategy reported that between October 19 and 25 it repurchased 2,068,459 shares of its STRC preferred stock for $204.9 million, an implied price of about $99.06 a share, paid from its USD Cash balance. It sold no common stock through its at-the-market programme and neither bought nor sold bitcoin, ending a five-week buying streak, The Block reported. Holdings stay at 848,517 BTC, bought for $64.02 billion in total, or about $75,446 per coin including fees.
STRC is a perpetual preferred share with a $100 par value and a variable dividend that Strategy resets monthly. The rate has been 12% a year since July, and the company has said it will recommend keeping it there until STRC shows sustained trading near $100, Crypto Briefing reported. Buying shares back slightly below par does two things at once: it retires securities that cost 12% a year to carry, and it supports a price the company has tied its dividend policy to. Strategy still has $956.8 million left under its preferred buyback authorisation and $1.0 billion for its common stock, with $4.83 billion in its USD Reserve and $242.4 million in USD Cash.
The pause also reflects the funding side. Strategy pays for bitcoin mainly by selling its own shares, and that works best when the stock trades at a rich premium. MSTR fell 6.9% last week to $146.02, The Block reported, and MSCI's new rules on "non-operating" companies could push it out of the provider's indexes. Steve Lee of Neoclassic Capital told The Block that an exclusion could reduce demand for the shares and make stock sales a less attractive way to fund purchases. Zerocap's weekly note lists the MSCI eligibility list on November 11 and Strategy's third-quarter results on October 29.
Bitcoin is not far above the company's cost. It was around $79,722 on Tuesday afternoon in Sydney, according to the ABC, after a third straight weekly decline of about 2% and a close below its 50-day moving average for the first time since August, Zerocap said. About $436 million of mostly long positions were liquidated in four hours on Saturday. Zerocap's desk sees a daily close below $80,000 opening the way to $76,000 to $77,000, and says a recovery needs $84,000. Options traders are split: CoinDesk reported that front-end puts cost more than calls on Deribit, while one wallet on the Derive platform bought 800 bitcoin calls at $90,000 expiring November 6, about $68 million in face value, a bet on a rally after the US midterm elections.
Friday adds a mechanical event: about $10.9 billion of bitcoin options expire on Deribit on October 30, roughly $7.0 billion of calls and $3.9 billion of puts, and the Fed decides two days earlier. Strategy's average cost now sits about 5% to 6% below the market. A week without purchases is not a change of strategy, but it shows that when its own securities look cheap, the company is willing to buy them before it buys more bitcoin.