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Strategy (NASDAQ: MSTR) owns 4% of all the Bitcoin (CRYPTO: BTC) in existence. Not 4% of the Bitcoin that trades on a given day; 4% of every coin that will ever exist. The company formerly known as MicroStrategy holds 845,050 of them. And in late August, after a summer of quietly selling, it started buying again. In three weeks, Strategy added 4,603 coins for a total price of $370 million. The average price was $80,318 per coin.
So a massive Bitcoin whale is getting back in the blockchain pool. Will these purchases raise the water level?
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The bucket and the reservoir
A holding that large should move the market. But Strategy never offered to sell hundreds of thousands of coins at once, and its largest Bitcoin buy ever only added 55,500 coins in one week. It was 0.28% of the supply available at the time, just before Thanksgiving 2024.
The smaller August splurge represented just 0.02% of Bitcoin’s market cap.
But market cap counts coins nobody is selling, while price is set by the much smaller pool of coins changing hands that day. And Strategy’s latest buy wasn’t even huge relative to daily Bitcoin trades. According to data from CoinMarketCap, the cryptocurrency’s daily trading volume hovered around $30 billion in the last month. Even if Strategy made a single bulk purchase, it would have accounted for roughly 1.2% of that day’s Bitcoin volume.
These are rounding errors, not game-changing and market-moving price boosters. That’s a Bitcoin buyer adding a bucket of water to a massive reservoir, using a skinny hose in the middle of the night, specifically so nobody notices.
That last part may sound silly, but it’s quite real. Big buyers use over-the-counter desks instead of crypto brokerages precisely to avoid moving market prices with their large orders.
Strategy already ran this experiment, at 10 times the size
If the scale argument doesn’t convince you, the track record should. Back in January, Strategy dropped $3.4 billion on 35,932 coins at prices around $91,519 and $95,284. Then Bitcoin fell off a cliff.
The next several holding reports show Strategy’s average purchase price sliding from $87,974 to $67,710 in mid-February. Three and a half billion dollars of buying, and the market shrugged and kept going down. Anyone expecting $370 million to do the heavy lifting will be disappointed.
Source: finance.yahoo.com