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Strategy sits on $1.4 billion profit on bitcoin holdings as price surges
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- DeepHorus
Strategy, the company formerly known as MicroStrategy, is sitting on approximately $1.4 billion in unrealized profit on its massive Bitcoin holdings as the cryptocurrency's price surges. The firm's common stock (MSTR) reflected this optimism, rising 10% in Friday pre-market trading to $120, marking its highest level in two months. This turnaround is significant, as the company had faced substantial unrealized losses for much of the year.
The core of Strategy's position is its 840,447 BTC, which were acquired at an average price of $75,385 per coin. With Bitcoin trading at approximately $77,000 at the time of the report, the total value of these holdings exceeds the cost basis by roughly $1.4 billion. This represents a stark reversal from earlier in the year.
For much of the past few months, Bitcoin traded in the low to mid-$60,000s, prompting Strategy to sell around 6,916 BTC. The company had been navigating a period of significant unrealized losses, which peaked at about $13 billion in July when Bitcoin dipped to $58,000. This loss represented over 20% of the company's total Bitcoin cost basis.
A key strategic priority has been shoring up the company's balance sheet and preferred stock. Strategy has repurchased roughly $347 million of its perpetual preferred stock, STRC, over the past four weeks. This aggressive buyback, using over a third of its $1 billion authorization, is aimed at restoring STRC to its $100 par value.
The company has also bolstered its liquidity, increasing its U.S. dollar reserve to $4.8 billion. This cash pile provides approximately 2.8 years of coverage for dividend payments and other corporate obligations, offering a financial cushion. The effort to stabilize STRC appears to be gaining traction, with the security trading at $95.62, up 35% from its June low of $71.
Beyond its own actions, Strategy may benefit from improving sentiment in the broader digital credit market. The perpetual preferred security SATA, issued by Strive Asset Management, briefly returned to its $100 par value on Thursday for the first time in two months. This market recovery could provide a potential tailwind for STRC and similar digital credit securities.
The developments underscore Strategy's high-risk, high-reward Bitcoin treasury strategy, which continues to be a closely watched barometer for corporate cryptocurrency adoption. As Bitcoin's price recovers from its lows, the company's financial position and stock performance are directly tied to the volatile asset's movements. Market participants will be monitoring both Bitcoin's trajectory and Strategy's ongoing capital management efforts.
