Strategy maintained its Bitcoin position at 845,050 BTC, the second consecutive place...

Why did Strategy choose to repurchase preferred shares instead of Bitcoin?

Last week, Strategy spent approximately US$139.3 million to buy back its STRC preferred stock while keeping its Bitcoin position unchanged. This shows that its capital allocation strategy is becoming more flexible in the context of pressure on the company's equity valuation. According to regulatory filings, the company bought back 1.42 million STRC shares between September 8 and September 13. The repurchase was funded by its US dollar cash reserves rather than through asset sales or new financing.

During this period, Strategy did not conduct any bitcoin buying and selling operations, maintaining its position unchanged at 845,050 BTC for the second consecutive week. At current prices, the position is worth approximately $65.7 billion. The company's cumulative cost of purchasing Bitcoin is approximately US$63.7 billion, with an average cost of US$75,412 per coin. This means that Strategy still has approximately $2 billion in unrealized gains at current market prices.

The suspension of Bitcoin purchases is remarkable because Strategy has used most of its available capital for years to expand its Bitcoin holdings. However, its recent new framework gives management greater freedom to simultaneously balance supporting preferred securities, common stock and liquidity reserves with accumulating bitcoin.

How can the new capital framework change Strategy's priorities?

Strategy's "Digital Credit Capital Framework" mainly limits its U.S. dollar reserves to paying dividends and interest on preferred shares and creates dedicated authorization lines for securities buybacks. The company initially approved a $1 billion repurchase plan covering its digital credit securities, with STRC having priority. Last week, the authorization was increased to $2 billion, expanding Strategy's ability to intervene when preferred stock trading prices reach levels that management deems attractive.

In addition, Strategy approved a $1 billion share repurchase program and expanded its Bitcoin monetization program to allow companies to sell up to $5 billion in Bitcoin to fund reserves, dividends, interest payments and securities buybacks. This framework marks a shift from the simple model of nearly every financing transaction in the past that ultimately increased Bitcoin holdings. Strategy can now allocate capital defensively, support lower-than-expected securities trading, or use Bitcoin itself as a source of funding.

Investor Revelation

Strategy's decision to spend US$139 million to buy back STRC while leaving Bitcoin positions unchanged suggests that capital allocation is no longer entirely driven by Bitcoin accumulation. Investors now need to focus on preferred stock support, cash reserves and potential Bitcoin monetization operations simultaneously, and combine them with the Bitcoin balance in company headlines.

Why is Strategy's valuation more important today?

The change comes at a time when Bitcoin custodian companies are trading prices well below the valuation premiums seen during their peak in 2025. The contraction in valuations undermines the advantage of issuing highly valued equity to acquire more Bitcoin, making share buybacks more economically relevant.

Strategy's common stock is down about 71% from its peak, and its corporate market capital-to-net asset value ratio is now around 1.1. A ratio close to 1 means that investors place relatively little premium on the operating and financing structure surrounding underlying Bitcoin positions. This makes undifferentiated equity offerings less attractive and less advantageous than it had before when Strategy had a huge premium to the value of its Bitcoin net asset. As a result, repurchase securities can more directly compete for capital with additional Bitcoin purchases.

Strategy common stock fell 4.7% last week, closing at $130.97 on Friday; Bitcoin fell 3.9% over the same period. The similarities in the movements of the two assets further reinforce the fact that Strategy's valuation remains closely tied to Bitcoin despite the increasingly complex financing structure behind it.

Is Strategy moving away from Bitcoin accumulation?

The company still holds more bitcoins than the treasury of any other listed company, and its 845,050 BTC represents more than 4% of the maximum supply of 21 million bitcoins. Nearly 200 listed companies now adopt some form of Bitcoin custody strategy, but none comes close to Strategy's scale. Twenty One holds 43,514 BTC, followed by Metaplane (43,000), MARA holds 35,577, and Bitcoin Standard Treasury Company holds 30,021.

Just because we haven't purchased for two consecutive weeks doesn't mean Strategy has given up accumulating. It does suggest that within a larger financing system, Bitcoin purchases now compete with other capital uses. This distinction will be critical if Strategy stocks and preferred securities continue to trade around asset value. The lower the valuation premium, the more management may prefer repurchase, liquidity management, or selective bitcoin sales rather than continuing to issue securities to purchase additional bitcoins.