Strategy suggests pausing the increase in holdings, Bitcoin may face an important turning point

The CEO of Strategy Inc. recently made a profound statement on social media: "Sometimes you just need to hold on." The market widely interprets this statement as a signal that the company may pause its purchases of Bitcoin.

As the publicly listed company holding the most Bitcoin in the world, Strategy has always adhered to the investment philosophy of "Bitcoin First". Investors have also become accustomed to its core strategy of viewing "buying" as paramount. Therefore, every time Strategy pauses its accumulation, it attracts significant market attention, especially in the context of having continuously increased its Bitcoin holdings for 13 weeks prior.

As of July 8, Strategy holds a total of 597,000 Bitcoins, accounting for 2.84% of the total Bitcoin supply. This not only far surpasses other listed companies, but its holdings are even 2.3 times the sum of the top 100 listed companies excluding Strategy.

According to the documents submitted to the U.S. Securities and Exchange Commission by Strategy, as of June 30, the company's digital assets were valued at $64.36 billion, with an average cost of $70,982 per coin. In the second quarter of 2025, its Bitcoin fair value total increased by $14 billion.

Strategy is not only a giant whale in the Bitcoin market but also an important factor affecting market sentiment. Every move the company makes can trigger the market's sensitive nerves. Observing several pauses in buying behavior since 2025, they have almost all indicated a short-term market correction. So, will this time be different?

To continuously purchase Bitcoin, Strategy requires a large amount of capital. Therefore, the company chose to raise funds by issuing preferred shares. Since February 2025, Strategy has issued three types of preferred shares, namely STRF, STRK, and STRD, corresponding to different yield mechanisms and risk priorities.

The core of this structural design lies in allowing the Strategy to continuously leverage new capital influx without severely diluting the equity of common shareholders, providing funding for its ongoing Bitcoin purchases, thereby maintaining a virtuous cycle of "issuing shares - buying coins - increasing stock price."

In terms of market performance, the stock (MSTR) of Strategy significantly outperforms Bitcoin itself, especially driven by the recent "crypto US stock" craze. STRK and STRF, as earlier issued preferred stocks, have also shown very favorable market performance, while the later issued STRD has also demonstrated impressive potential.

It is worth noting that in March, this preferred stock issuance plan attracted high-level executives from within the company to participate personally. According to documents disclosed by the U.S. Securities and Exchange Commission, several insiders from Strategy purchased the company's latest preferred stock, including the CEO, CFO, and other executives. This "self-purchase" behavior serves as a signal and conveys the company's strong expectations for future returns.

However, this high-leverage operation also carries risks. According to Strategy's financial report, it has raised nearly $10 billion through the issuance of preferred shares, convertible bonds, and common stock, almost all of which has been invested in Bitcoin. This practice amplifies the paper gains brought by the rise in Bitcoin, but it also increases the cash flow burden, especially the annual interest expenses of 8%-10% from preferred shares.

From the revenue perspective, the company's own "hematopoietic" capacity is relatively weak. In 2024, the company's software business revenue is only $463 million, setting a record low since 2010. The total revenue in the first quarter of 2025 is $111.1 million, a year-on-year decrease of 3.6%. Although subscription service revenue has increased, the company still needs to rely on "continuous financing" to maintain operations and pay preferred dividends.

The strategy also faces legal risks. The company disclosed an unrealized loss of $5.9 billion due to the initial adoption of new accounting standards in the first quarter of 2025, leading to a class action lawsuit. Investors accuse the company of failing to timely and comprehensively disclose these loss risks.

Nevertheless, some analysts remain optimistic about Strategy. TD Cowen reiterated its "buy" rating on Strategy in a research report and maintained its target price of $590 per share. They believe that Strategy's "equity-BTC cycle" model allows it to use stock issuance revenue to purchase more Bitcoin, thereby driving higher stock prices and further Bitcoin purchases, creating a virtuous cycle.

However, the success of this model largely depends on the continuous rise or stability of Bitcoin prices. In a sense, Strategy is no longer a traditional technology company; it is more like a "Bitcoin high-leverage asset management platform" packaged in software. In the future, the development of Strategy will largely depend on the trends of the Bitcoin market and its own risk management capabilities.