As bitcoin’s (BTC) price has fallen since Donald Trump took office, it is converging toward the corporate cost basis at Strategy.
Michael Saylor’s giant BTC holding company owns 499,226 coins acquired for an average of $66,360 apiece. Today, a concerningly slim, 27% cushion separates BTC’s declining price from the company’s cost basis.
For years, Strategy (formerly MicroStrategy) enjoyed a generous price cushion between BTC and its prior purchases. For example, in celebration of Trump’s January 20 inauguration, BTC hit an all-time high of $108,786 — 73% above Strategy’s average purchase price of $62,691 at the time.
There have been even better times, such as 2021 or mid-2024, when the price of BTC was more than double Strategy’s cost basis.
However, crypto entered a bear market shortly after Trump entered the White House. The president continued to promote memecoins, declined proposals for buying Saylor’s recommended 4 million BTC or Cynthia Lummis’ recommended 1 million BTC for any US Strategic Bitcoin Reserve, and vacillated on tariff policies that decimated broad markets, including BTC.
As BTC’s price has declined, it has revealed Saylor’s dwindling power. Although the run-up to Trump’s inauguration was an ideal environment for him to tell stories about what BTC could do during Trump 2.0, the world is learning what the currency is actually doing during Trump 2.0.
So far, it’s not doing well.
BTC price cushion and Strategy share premium down 50% YTD
Bitcoin is currently trading around $84,500 and has wiped approximately 50% off Strategy’s cost basis cushion since the day Trump took office. The premium investors are willing to pay for Strategy shares (MSTR) above its BTC holdings has similarly halved from above 3.4X on November 20 to approximately 1.8X per basic share today.
Most of Strategy’s BTC purchases since November 18, 2024, are in the red. On November 18, Strategy bought 51,780 BTC at $88,627. Since then, it made several more large BTC purchases, including four purchases over $100,000.
Naturally, this caused Strategy’s dollar cost average to spike from slightly under $40,000 at the beginning of November to its current $66,360.
Saylor recently announced his intention to buy a memetic quantity of BTC: $21 billion. Of course, he has not actually purchased that much yet. On March 10, he announced the start of the preferred share sale. To date, he hasn’t even spent his first billion.
This morning, Strategy announced it had purchased 130 BTC — its second-smallest purchase in history besides a paltry 32 BTC buy in late March 2024.
Read more: Why have MicroStrategy insiders been dumping MSTR?
The long road to $21 billion more bitcoin
It’s too early to tell whether this morning’s relatively small BTC purchase is a sign that Saylor is dialing back his intentions.
The long road from today to actually spending $21 billion to acquire BTC is also an example of the difficulty of keeping a corporation’s cost basis down and not converging toward BTC’s price itself.
There are claims that Strategy’s purchases directly influenced the price of BTC in 2024, with one estimate suggesting that the company was behind 28% of last year’s capital inflows.
That’s far from a holistic analysis of all sources of demand for BTC, however, with other estimates placing Strategy below 1% of BTC trading volumes — most of which is offshore, crypto-to-crypto, and not traceable to USD.
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