Strategy CEO hints at pausing Bitcoin purchases, will the market face a critical turning point?

The CEO of Strategy Company made a thought-provoking tweet last Sunday, stating "Sometimes you just need to hold." The market generally interprets this statement as a signal that the company may pause its purchases of Bitcoin.

As the publicly traded company with the largest number of Bitcoin holdings globally, Strategy has always adhered to the investment philosophy of "Bitcoin supremacy," and the market has become accustomed to its continuous buying operations. Therefore, any pause in purchasing by the company could trigger sensitive market reactions, especially against the backdrop of having increased Bitcoin holdings for 13 consecutive weeks.

As of July 8, Strategy holds a total of 597,000 Bitcoins, accounting for 2.84% of the total supply, far exceeding other listed companies. Its holding scale is even 2.3 times that of the total of the other top 100 listed companies ( excluding Strategy ). According to documents submitted to the U.S. Securities and Exchange Commission, as of June 30, Strategy's digital assets were valued at $64.36 billion, with an average cost of $70,982 per coin. In the second quarter of 2025, its fair value of Bitcoin appreciated by $14 billion.

This means that Strategy is not only a major player in the Bitcoin market, but also an important factor influencing market sentiment. Every move made by the company could trigger a market reaction. Looking back at the several times Strategy paused purchases since 2025, almost all have indicated a short-term market correction. So, will this time be different?

To continue purchasing Bitcoin, Strategy needs substantial capital support. The company has chosen to raise funds by issuing preferred shares. Since February 2025, Strategy has issued three types of preferred shares, namely STRF, STRK, and STRD, corresponding to different yield mechanisms and risk priorities.

The core of this structural design is to allow the Strategy to continuously acquire new capital for Bitcoin purchases without excessively diluting the equity of common stockholders, thus maintaining a virtuous cycle of "issuing shares - buying coins - increasing stock price."

From the market performance perspective, the stock of Strategy (MSTR) is clearly superior to Bitcoin itself, especially under the recent surge of the "crypto US stock" craze. STRK and STRF, as earlier issued preferred stocks, have also performed quite well in the market, while the later issued STRD has shown impressive potential as well.

It is worth noting that in March of this year, the internal senior management of Strategy also participated in the purchase of preferred shares. Several executives, including the CEO and CFO, purchased the company's newly issued preferred shares. This "self-purchase" behavior serves as both a signal and indicates that the company's management has high expectations for future returns.

On June 5, Strategy announced a public offering of 11.7647 million shares of 10.00% Series A perpetual Stride preferred stock at an offering price of $85 per share, with the transaction expected to close on June 10, raising approximately $980 million. Recently, Strategy announced that it has signed a new sales agreement, planning to issue STRD stock to raise $4.2 billion, and expects to "continuously finance on demand and in phases." This funding cycle is accelerating.

However, high leverage operations also bring risks. The strategy has raised nearly $10 billion through preferred shares, convertible bonds, and common stocks, almost all of which have been invested in Bitcoin. While this operation amplifies the paper gains from the rise of Bitcoin, it also increases cash flow pressure, especially with the annual interest expense of 8% to 10% brought by preferred shares.

From a revenue perspective, the company's own "self-generating" ability is relatively weak. In 2024, the company's software business revenue was only $463 million, setting a record low since 2010. In the first quarter of 2025, total revenue was $111.1 million, a year-on-year decline of 3.6%. However, subscription service revenue was $37.1 million, a year-on-year increase of 61.6%, indicating that the transition to cloud services and subscription models has achieved some success.

Another challenge facing the Strategy is the impact of changes in accounting standards. In the first quarter of 2025, the company will adopt the new accounting standard (ASU 2023-08) for the first time, requiring the measurement of crypto assets at fair value. This led the company to disclose an unrealized loss of $5.9 billion in Q1, causing MSTR's stock price to drop by 8% during that quarter.

More challenging is that the company is accused of failing to disclose these floating loss risks in a timely and comprehensive manner, and thus faces a class action lawsuit. The case is currently progressing, and investors can apply to join the class action lawsuit before July 15. Strategy stated that it will actively respond, but did not make any predictions about the outcome of the case.

Despite facing numerous challenges, some analytical institutions remain optimistic about Strategy. TD Cowen reiterated its "buy" rating for Strategy in a research report, maintaining a target price of $590 per share. They believe that Strategy's "equity-BTC cycle" model enables it to use stock issuance revenue to purchase more Bitcoin, thereby driving higher stock prices and further Bitcoin purchases, creating a virtuous cycle.

However, some analysts have pointed out that this model operates smoothly during a bull market, but once it enters a bear market, its debt repayment structure, preferred stock dividends, and cash flow stability will face severe challenges.

According to the current data, Strategy's short-term cash flow can still "barely maintain", and its Bitcoin holdings are the core assets on the company's balance sheet. But this is also where the biggest risk lies: the company's prosperity is almost entirely based on the assumption that Bitcoin prices will remain stable or rise. To some extent, Strategy is no longer a traditional technology company, but more like a "Bitcoin high-leverage asset management platform" with a software business as its facade.