Strategy Holds Firm on Bitcoin Strategy as Price Dips to $85K

TLDR

• The strategy continues to buy Bitcoin despite a 5% price drop, focusing on the long-term strategy rather than short-term volatility.
• CEO Phong Le attributed recent price weakness to tight liquidity and central bank actions, not Bitcoin fundamentals.
• The company uses a dollar-cost averaging approach, with an average Bitcoin purchase price of $74,000.
• MicroStrategy created a $1.44 billion reserve fund to cover preferred dividends and interest obligations for up to three years.
• The firm holds about 670,000 Bitcoin valued at $57 billion, supporting growth through reserve-backed financial products.

Strategy continues to buy Bitcoin despite recent market volatility and a 5% price decline to around $85,000. CEO Phong Le confirmed the company remains committed to its long-term strategy during an interview with Fox Business. He emphasized that the company does not base its decisions on short-term price moves but on broader macroeconomic trends.

Liquidity Conditions, Not Bitcoin Fundamentals, Drive Short-Term Volatility

During the interview, Le stated that the recent pullback is driven by tight liquidity and risk-off flows, not Bitcoin’s fundamentals. He pointed to central bank activity, particularly from the Fed and the Bank of Japan, as contributing to the decline. “You have economic factors, like the central banks of the US and Japan. I think you are seeing risk-off factors, lower liquidity,” Le said.

Strategy sees Bitcoin as a generational technology and capital markets breakthrough with long-term growth potential. Le said, “It’s a macroeconomic innovation, and it’s a capital markets breakthrough. And that makes it a singular asset class.” He compared Bitcoin’s volatility to other emerging technologies like AI, which also experience frequent swings.

Despite recent losses, the company has not adjusted its approach and continues to acquire Bitcoin when capital issuance allows. Le added, “We don’t really think about the price so much.” The company follows a dollar-cost averaging strategy with an average purchase price of $74,000.

Strategy Builds Liquidity Buffer to Support Long-Term Obligations

Strategy has established a reserve fund of $1.44 billion to cover preferred dividends and interest obligations. Le explained that annual preferred outlays are about $800 million, and the fund is designed to support two to three years of payments. “Two to three years makes sense for us,” he said when asked about the reserve’s duration.

The company modeled different scenarios and based the fund size on expected Bitcoin cycles and liquidity needs. He said that even if Bitcoin declined by 50%, the company could meet its obligations until at least 2065. Strategy holds Bitcoin reserves equivalent to 72 years of dividend payments.

Le said that Bitcoin would only need to rise 1.4% annually for the reserve to support long-term payouts. He emphasized that the company is building a “bulletproof balance sheet” for future decades. The company is also developing financial products like Stretch, a preferred instrument offering 10.75% annual returns.

Bitcoin Reserves and Product Innovation Drive Growth Strategy

Strategy now holds approximately 670,000 Bitcoin, representing a $57 billion reserve on its balance sheet. The company is also expanding its reach through digital capital products aimed at institutional investors. Le said their goal is not only to hold Bitcoin but to innovate within the digital finance space.

He stated that Stretch, their new product, delivers monthly tax-deferred returns and supports further accumulation of Bitcoin. The company also maintains its software business, valued between $2 billion and $3 billion. However, the primary engine of growth remains tied to its Bitcoin strategy and reserve-backed financial products.

Le confirmed that the dividend commitment tied to Stretch is firm, though the board can defer payments if necessary. He acknowledged that the company’s long-term success relies on continued belief in Bitcoin’s global adoption. “You have to believe that Bitcoin is a generational asset class,” he concluded.

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