Matt Hougan: "Bitcoin's Rise, All Thanks to Strategy"

▲ Strategy (MSTR), Bitcoin (BTC)/AI generated image

It has been claimed that Strategy's aggressive buying strategy has driven Bitcoin's (BTC) recent rally.

According to crypto-focused media outlet BeInCrypto on April 29 (local time), Bitwise Senior Analyst Matt Hougan diagnosed that Bitcoin's recent rebound was driven by Strategy's continuous buying spree. Strategy invested approximately $255 million last week alone, acquiring an additional 3,273 BTC. Hougan evaluated this large-scale capital inflow as a key catalyst for supplying market liquidity and ensuring downside rigidity. Strategy's cumulative Bitcoin holdings now amount to 818,334 BTC, accounting for approximately 3.9% of the total circulating supply.

Strategy fully financed this Bitcoin purchase by selling its own shares (MSTR), solidifying its Bitcoin accumulation model utilizing the capital markets. The company sold 1,451,601 shares of common stock last week, securing approximately $255 million. Notably, the company's newly introduced variable dividend preferred stock, STRC (Stretch), is emerging as a major funding engine for Bitcoin purchases. STRC is regarded as an innovative financial product that pays monthly cash dividends, converting Bitcoin returns into stable dividend income.

STRC preferred shares offer a high dividend yield of 11.5% annually, attracting significant capital from traditional financial investors. Michael Saylor, Chairman of Strategy, expressed confidence that even if Bitcoin's price rises by just 2% annually, STRC's dividends could be permanently covered without further stock issuance. Indeed, funds raised through STRC issuance during March alone amounted to $1.18 billion, significantly surpassing the $396 million generated from common stock sales over the same period. STRC holders have now become the core capital lifeline driving Strategy's Bitcoin accumulation machine.

Hougan analyzed that even during a period of somewhat stagnant inflows into Bitcoin spot ETFs, Strategy's buying activities are driving market demand. He added that Strategy's process of transforming Bitcoin from a mere asset into the underlying asset of financial products is injecting new vitality into the market. Specifically, STRC's structure, which offers stability similar to money market funds (MMF) while supporting Bitcoin's upside potential, has become an attractive alternative for institutional investors.

However, there are also concerns about Strategy's aggressive fundraising methods. This is due to the criticism that fundraising through stock issuance could dilute the value of existing shareholders, along with the risk that leverage could work in reverse if Bitcoin's price declines. Nevertheless, Phong Le, President of Strategy, clearly stated the company's intention to further expand its Bitcoin treasury strategy, based on the introduction of fair value accounting standards and credit rating resets. Strategy is mobilizing all means in the capital markets toward its goal of holding 1 million BTC.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*