Strategy has decided to take a temporary break from purchasing bitcoin, as announced by CEO Michael Saylor on Sunday. The company will not be adding to its bitcoin holdings this week, ahead of the release of its first-quarter earnings on Tuesday. This pause marks only the second time this year that Strategy, formerly known as MicroStrategy, has halted its regular bitcoin purchase program. The company had previously skipped a weekly purchase between March 23 and March 29.
Currently, Strategy holds a total of 818,334 BTC, accounting for nearly 3.9% of the total bitcoin supply. The company's most recent purchase added 3,273 BTC at an average price of $77,906 per bitcoin. As of Monday morning, bitcoin was trading at around $80,100, representing a 20% increase over the past month.
The pause in bitcoin purchases may seem insignificant, but it comes at a time when Strategy is expected to report a loss of $18.98 per share in its first-quarter results. According to Yahoo Finance data, the company is expected to generate revenue of approximately $125 million, marking a 12.6% increase from the same quarter last year. However, earnings are expected to be lower, with estimates suggesting a loss of $27.33 per share for the March quarter. Strategy's valuation is no longer based on its software business, but rather on its ability to raise capital through its bitcoin-heavy strategy.
As a result, the company's earnings report may be judged more on the sustainability of its capital-raising machine rather than its operating performance. One product that has drawn attention is STRC, a perpetual preferred share that offers a variable monthly dividend, currently around 11.5% annualized. While the product is pitched as a stable source of income backed by Strategy's balance sheet, there are concerns that it may start to resemble credit risk if market sentiment shifts.
The company's ability to raise capital is closely tied to the performance of bitcoin, with higher prices supporting its valuation and enabling it to fund further bitcoin purchases. However, if market sentiment weakens, the same structure may become more fragile.
Saylor has announced that bitcoin purchases will resume the following week, but the earnings report will provide insight into the level of confidence investors still have in the company's strategy.