Strategy hits pause on Bitcoin binge after $14b Q2 windfall

After amassing 2.8% of Bitcoin’s total supply, Strategy takes a brief hiatus, reporting zero BTC acquisitions for the first time in three months. Meanwhile, a $14 billion unrealized gain in Q2 proves the company’s treasury play works.

According to a Form 8-K filed with the U.S. Securities and Exchange Commission on July 7, Strategy made no Bitcoin (BTC) purchases between June 30 and July 6, marking its first week without adding to its treasury since early April.

The buying freeze comes just as the Tysons Corner, Virginia-based firm reported a staggering $14.05 billion unrealized gain on its digital asset holdings for Q2, offset by a $4.04 billion deferred tax expense. With 597,325 BTC now worth $64.4 billion at current prices, Strategy’s aggressive accumulation strategy has delivered a $22 billion paper profit on its $42.4 billion total investment.

Strategy’s Bitcoin pause: a calculated move or sign of market fatigue?

The abrupt halt in Strategy’s relentless Bitcoin buying spree raises questions about what’s next for the company that now holds nearly 3% of Bitcoin’s total supply. While Michael Saylor’s quip about “some weeks you just need to HODL” played well on social media, the real story lies in the numbers.

The $14 billion Q2 windfall underscores the success of Strategy’s aggressive accumulation strategy, but the pause suggests a moment of recalibration rather than retreat.

The Form 8-K filing reveals more than just a week of inactivity. Strategy’s last Bitcoin purchase came on June 29, when it added 4,980 BTC for $531.9 million at an average price of $106,801 per coin. Since then, the company has held steady, even as Bitcoin’s price fluctuated between $105,000 and $110,000.

Coming on the heels of a $14.05 billion unrealized gain, Strategy may be pausing to recalibrate its tax position or rebalance its funding sources, especially after exhausting much of its initial $42 billion capital raise plan. Notably, the firm incurred a $4.04 billion deferred tax expense tied to that fair value gain, and while unrealized gains don’t generate cash, tax liabilities do.

Strategy’s acquisitions have been fueled by a mix of stock sales and debt offerings. In Q2 alone, the company raised $6.8 billion from at-the-market sales of its Class A common stock ($MSTR) and three perpetual preferred stock offerings: STRK, STRF, and STRD.

These instruments, with dividend yields ranging from 8% to 10%, have allowed Strategy to tap into investor appetite for yield while avoiding outright dilution. But the funding model isn’t without risks. The company’s “42/42” plan, which is an expansion of its original $21 billion target, now aims to raise $84 billion by 2027 through equity and convertible notes.

While this aggressive approach has worked so far, it leaves Strategy exposed to shifts in investor sentiment, particularly if Bitcoin’s price stagnates or declines.