Strategy proposes Euro STRE share offering to fund Bitcoin buys

Key Takeaways

What’s behind the Euro-focused preferred stock?

To raise more funds for BTC buys. 

How have BTC and MSTR performed against the broader equities market? 

The Nasdaq Composite has outperformed MSTR and BTC. 

Michael Saylor’s Strategy (formerly MicroStrategy) is seeking more funds in the European markets to advance its Bitcoin [BTC] plans. 

In a statement on the 3rd of November, the BTC corporate treasury pioneer announced a plan to raise €350 million (approximately $378 million) via a new preferred stock, denominated in Euros, called Stream [STRE]. 

The firm will now have 5 stocks as part of its war chest for raising capital. They include the common stock, MSTR, and other preferred shares, such as Strife [STRF], Strike [STRK], Stride [STRD], and Stretch [STRC]. 

These are shares with dividend rates, and some are convertible to MSTR, allowing Strategy to sell them to fund BTC purchases. 

Strategy’s holdings hit 641.2K BTC

The firm added 397 BTC (approximately $45.6 million) on the 4th of November, bringing its total stash to 641,205 BTC.

Most of the funds for the recent bid were generated from the sale of MSTR, STRF, and STRK shares, according to an SEC filing. 

Overall, however, the pace of BTC buys has cooled off. Apart from a mega buy of 21,000 BTC ($2.4 billion) in July, the rest has dropped to below 500 BTC. 

Source: CryptoQuant

Strategy began its BTC bet in 2020 with an initial purchase of 21.4K BTC, worth $250M at the time. The firm now holds about  $66 billion worth of BTC, with an unrealized profit of around $19 billion following the recent market decline. 

Notably, its capital raising strategy has come under pressure recently, as the market-to-net-assets-value (mNAV) of its holdings is at risk of falling below 1. 

If that happens, the company will no longer be allowed to sell MSTR shares to fund additional Bitcoin purchases.

Source: Bitcoin Treasuries

According to analysts, the expansion into the Eurozone with a preferred stock could offer the necessary breathing room for the firm to buy more BTC, especially during discounted windows like the current one. 

Meanwhile, MSTR stock dropped 3.5% to $264, at press time, following BTC’s extended pullback below $105,000. 

On a YTD (year-to-date) basis, MSTR was down 8% while BTC was up 11%. Nasdaq Composite, on the other hand, was up 23%, underscoring that equities have outperformed BTC and its equivalent exposures.