‘We sell the credit, we buy the Bitcoin’: Saylor’s triple flywheel in his own words
But can Strategy sustain its Bitcoin accumulation amid rising preferred-stock buybacks?
Michael Saylor’s Strategy’s common and preferred stock, MSTR and STRC, have reportedly reached a combined market capitalization of $475 million, up 3,467% over the past year.
According to Token Terminal data, these blockchain-based tokens provide investors with digital exposure to Strategy’s securities, with $204 million on Ethereum, $118 million on BNB Chain, and $80 million on Solana.
This comes as Strategy’s daily trading volume has outpaced the entire TradFi industry.
Is Bitcoin a driving factor?
Explaining the reason behind these surges, Saylor argued how rising Bitcoin [BTC] prices are acting as a catalyst strengthening the company’s balance sheet and described this momentum as a “triple flywheel.”
We sell the credit. We buy the bitcoin. We drive up the price of the bitcoin. We drive up the premium in the common stock. We can issue the common stock. We can buy the bitcoin. As the bitcoin goes up, the reserves go up. The risk on the credit goes down. The credit spreads compress. We sell more credit. We buy more bitcoin.
In fact, execs at Saturn Credit, a structured finance protocol for digital credit, even took a step ahead and explained the business model for Strategy when they said,
We’re serving two sets of shareholders or market participants. It’s the fixed income oriented credit investors. And then it’s the Bitcoin maximalists that want to outperform Bitcoin and own amplified Bitcoin as MSTR.
All of this happened along the same time as STRC was trading at $99.49 at press time after a hike of 0.32%. This, and MSTR stock, was trading at $141.40 at press time after a hike of 1.13% in the past trading session.
Meanwhile, Bitcoin was trading at $81,447.23 after a hike of 2% in the past 24 hours.
Strategy’s shaky market dynamics
However, according to AMBCrypto’s previous report, Strategy spent nearly $888 million on preferred-stock buybacks compared to $290 million on Bitcoin purchases between 14th September and 18th October, reducing its cash reserves from $1.3 billion to $447.3 million.
Meanwhile, whales accumulated 88,987 BTC, far exceeding Strategy’s 3,466 BTC purchases. As expected, these dwindling cash reserves and dividend obligations have now prompted a question: Are these limiting Strategy’s future Bitcoin accumulation?
But since STRC remains the biggest and most liquid US perpetual preferred despite everything, the answer seems like a clear ‘No.’
Final Summary
- Strategy’s daily trading volume has reached $2.90 billion and also outpaced the entire TradFi industry.
- STRC was trading at $99.49, and MSTR stock was trading at $141.40 at press time.
