Strategy suggests pausing the increase in Bitcoin holdings, will the market face an important turning point?

The CEO of Strategy Company recently made a poignant statement on social media, saying, "Sometimes you just need to hold." This remark was interpreted by the market 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 consistently upheld an investment philosophy of "Bitcoin First." Investors have become accustomed to the company making "buy" its core strategy. Therefore, whenever Strategy suspends its purchasing activity, it draws significant attention from the market, especially against the backdrop of having increased its Bitcoin holdings for 13 consecutive weeks prior.

As of July 8, the total amount of Bitcoin held by Strategy has reached 597,000 coins, accounting for 2.84% of the total supply. This figure not only far exceeds that of other listed companies, but is also 2.3 times the combined holdings of the top 100 listed companies (excluding Strategy).

According to documents submitted to the U.S. Securities and Exchange Commission by Strategy, as of June 30, the company's digital assets were valued at $64.36 billion, with an average cost of $70,982 per coin. In the second quarter of 2025 alone, the fair value of its Bitcoin increased by $14 billion.

This means that Strategy is not only an important participant in the Bitcoin market but also a key factor influencing market sentiment and price trends. Based on data since 2025, each time the company pauses its purchasing behavior, it almost always indicates a short-term market correction. So, will this time be different?

In order to continuously purchase Bitcoin, Strategy requires significant financial support. The company has chosen to raise funds by issuing preferred shares. Starting from February 2025, Strategy has issued three types of preferred shares, namely STRF, STRK, and STRD, each corresponding to different yield mechanisms and risk priorities.

The core goal of this structural design is to allow the Strategy to continuously attract new capital without excessively diluting the equity of common stockholders, providing funding support for its ongoing purchase of Bitcoin, thereby maintaining a virtuous cycle of "issuing shares - purchasing Bitcoin - rising stock prices."

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

It is worth noting that the internal senior management of Strategy also participated in the purchase of preferred shares. According to public information, several executives, including the CEO and CFO, purchased the company's newly issued preferred shares. This "self-purchase" behavior not only conveys a signal but also reflects the company's strong expectations for future returns.

On June 5, Strategy announced a public offering of 11,764,700 shares of 10.00% Series A perpetual Stride preferred stock, with an offering price of $85 per share, and completed the settlement on June 10, raising approximately $980 million. Recently, the company also announced the signing of a new sales agreement, planning to issue STRD stock to raise $4.2 billion, and expects to adopt a "demand-driven, phased" approach for continuous financing.

However, although this high leverage operation amplifies the book profits brought by the rise of Bitcoin, it also increases the cash flow burden, especially the annual interest expenses of 8% to 10% from preferred stocks. As of now, MSTR's market value is approximately 112.9 billion USD, with a corporate valuation of around 120 billion USD, corresponding to a net asset multiple of 1.7. Although it is still within a reasonable range, the elasticity of this figure mainly relies on two factors: the sustained strength of Bitcoin prices and the smooth and stable external financing environment.

From a revenue perspective, Strategy'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 decrease of 3.6%. However, subscription service revenue reached $37.1 million, a year-on-year increase of 61.6%, indicating that the company has achieved some success in transitioning to cloud services and subscription models.

Another challenge faced by Strategy recently is the class action lawsuit. The reason is that the company adopted new accounting standards (ASU 2023-08) for the first time in the first quarter of 2025, which requires the measurement of crypto assets at fair value. This led to the company disclosing an unrealized loss of $5.9 billion for the single quarter of Q1, directly causing MSTR's stock price to drop by 8% in that quarter.

Some investors believe that the company has failed to disclose these unrealized loss risks in a timely and comprehensive manner. Currently, a well-known law firm has initiated a class action lawsuit against Strategy in court, accusing it of "making false and misleading statements" during the period from April 2024 to April 2025, which is suspected of violating federal securities laws.

Despite these challenges, some analysts remain optimistic about Strategy. Reports indicate that the company may become a long-term survivor of the crypto financial model due to its scale, holdings, and counter-cyclical ability, and has a higher probability of being included in the S&P 500 index in the second quarter of 2025.

However, some analysts warn that although the operating model of Strategy performs well in a bull market, once it enters a bear market, its debt repayment structure, preferred dividend payments, and cash flow stability will face severe challenges.

Overall, Strategy is no longer a traditional technology company in the conventional sense, but rather resembles a "Bitcoin high-leverage asset management platform". Its future development largely depends on the price trend of Bitcoin and the market's continued confidence in its business model.