How Strategy keeps buying Bitcoin during market downturns

Key takeaways

• Strategy funds its dip buying chiefly done ATM equity income alternatively than operating currency flow.

• Preferred shares and different financing tools adhd buying powerfulness but make ongoing dividend and involvement obligations.

• A $1.44-billion reserve is intended to trim “forced seller” concerns during prolonged marketplace slumps.

• The model’s constraint is the outgo of capital. Dilution risk, marketplace sentiment and scale regularisation changes tin tighten the loop.

Strategy conscionable spent different $980.3 cardinal connected Bitcoin (BTC), adding 10,645 BTC astatine an mean terms of $92,098 and lifting its full holdings to 671,268 BTC.

It’s the benignant of headline the institution has trained the marketplace to expect. When terms weakness shows up, Strategy treats it similar inventory season.

What makes this circular much absorbing is the backdrop. Bitcoin has been sliding sharply from caller highs, and Strategy’s ain banal often feels that drawdown arsenic a leveraged proxy.

At the aforesaid time, the steadfast has been gathering a $1.44-billion reserve to calm concerns that dividend and involvement obligations could yet unit a Bitcoin merchantability during a prolonged slump.

So, the existent question isn’t whether Strategy wants to bargain dips; it’s however it keeps uncovering the wealth to bash it and however durable that instrumentality is if markets enactment ugly.

The “Bitcoin treasury” model

Strategy treats Bitcoin arsenic its equilibrium expanse centerpiece, utilizing nationalist marketplace financing to turn holdings faster than a emblematic institution could done operating currency flow.

In practice, that means raising superior done instruments specified arsenic at-the-market (ATM) stock income and different issuances, past deploying the proceeds into BTC adjacent erstwhile prices are volatile.

To support the communicative legible for investors, Strategy leans connected a acceptable of Bitcoin-native metrics. The cardinal 1 is “BTC Yield,” which the institution defines arsenic the period-to-period alteration successful Bitcoin per share, its “BPS” ratio, tracking whether each diluted stock is backed by much Bitcoin implicit time.

So, the transportation becomes little “we bought much BTC” and much “we accrued BTC vulnerability per share.”

Did you know? Strategy’s Bitcoin treasury exemplary was formally adopted connected Sept. 11, 2020, erstwhile the company’s committee approved a Treasury Reserve Policy, making Bitcoin its superior treasury reserve asset, alongside excess currency and short-term investments.

How Strategy funds purchases erstwhile BTC is falling

Strategy’s dip buying is financed done the superior markets, mainly by issuing securities and converting that request into Bitcoin.

The institution is unusually explicit astir this successful its filings. In the aforesaid Form 8-K that disclosed the latest 10,645-BTC purchase, it besides stated that the Bitcoin was acquired utilizing proceeds from income nether its ATM programs.

1) The “ATM” pat (common stock)

An ATM programme is fundamentally a lasting authorization to merchantability banal into mean marketplace trading implicit clip alternatively than executing a single, ample superior raise.

In the week tied to the latest Bitcoin purchase, Dec. 8-14, 2025, Strategy reported selling 4,789,664 shares of MSTR for $888.2 cardinal successful nett proceeds.

That setup explains however the institution tin support purchasing adjacent erstwhile the macro situation looks ugly. It allows Strategy to person equity request into Bitcoin rapidly without waiting for a cleanable “risk on” moment.

2) Preferred banal arsenic a 2nd backing lane

Alongside communal stock, Strategy has besides been issuing aggregate preferred series. The Form 8-K lists STRF, STRK and STRD, among others.

During the aforesaid week, the institution reported selling preferred shares arsenic well, including STRD and smaller amounts of different series, arsenic portion of the backing mix.

The trade-off is that preferred shares typically transportation ongoing dividend obligations, which substance much erstwhile prices autumn and sentiment turns. But they besides springiness Strategy different avenue to rise superior erstwhile communal banal conditions are little favorable.

3) Debt and convertibles: Leverage with a agelong fuse

Even erstwhile near-term purchases are funded done ATM flows, Strategy’s broader attack has agelong included indebtedness and convertible-style financing to standard Bitcoin exposure.

If the institution believes semipermanent Bitcoin appreciation outpaces its semipermanent outgo of capital, it volition support stacking arsenic agelong arsenic markets are consenting to money it connected tolerable terms.

Analysts who way the operation often describe it arsenic a premium and leverage machine. When the banal trades astatine a affluent valuation comparative to the worth of its Bitcoin holdings, issuance becomes easier. When that premium compresses, the instrumentality slows.

Put together, it’s a repeatable loop: Issue communal stock, preferred shares oregon debt, rise cash, bargain BTC, people Bitcoin per stock advancement and past effort to prolong capitalist request for the adjacent round.

Because of this, the durability of Strategy’s dip buying, particularly during drawdowns, depends little connected condemnation and much connected whether that loop stays open.

Why downturns tin relation arsenic accumulation periods for this model

On paper, a marketplace downturn is the worst clip to beryllium a serial buyer. Prices are falling, headlines crook negative, and lenders go much selective.

For Strategy, though, the downturn itself is portion of the pitch. The institution is little focused connected timing the bottommost and much connected proving it tin support accumulating done volatility.

The drawback is that “buying the dip” lone works if Strategy’s outgo of superior remains manageable.

When its banal trades astatine a meaningful premium comparative to the worth of the Bitcoin it already holds, issuing equity tin look accretive to the company’s Bitcoin per stock narrative.

When that premium narrows, thing that often happens erstwhile Bitcoin and different hazard assets are sliding, issuance becomes much expensive, dilution hurts more, and each incremental acquisition is harder to justify.

This is wherever the strategy becomes reflexive. Strong equity request makes backing easier, which supports much Bitcoin buying and tin reenforce demand.

In a sustained drawdown, the loop tin tally successful reverse. Weaker sentiment compresses the premium, tightens backing and slows accumulation. Strategy tin inactive bargain successful that environment, but the gait is dictated by marketplace appetite for its paper, not by however “cheap” Bitcoin looks connected a chart.

Did you know? Strategy is known for buying the dip. In precocious March 2025, it scooped up 22,048 BTC for astir $1.92 billion, astir $86,969 per coin, according to its March 31 filing covering purchases made betwixt March 24 and March 30.

The $1.44-billion “USD Reserve” and what it’s for

The astir nonstop reply Strategy has offered to the “What if this drawdown lasts?” question is its $1.44-billion reserve, a currency buffer explicitly acceptable speech to wage preferred banal dividends and involvement connected outstanding debt.

The institution says the reserve was funded utilizing proceeds from the merchantability of Class A communal banal done its ATM program.

This matters due to the fact that Strategy’s superior stack is present portion of the story. Preferred dividends and indebtedness involvement bash not hold politely for Bitcoin to recover. If markets frost and the institution cannot contented comfortably, those payments go the constituent wherever critics commencement asking whether Bitcoin holdings mightiness ever beryllium utilized to plug the gap.

Strategy is trying to preempt that narrative. In its Dec. 1 release, the steadfast said it intends to support capable successful its USD Reserve to money astatine slightest 12 months of these payments, with the extremity of gathering toward 24 months oregon much implicit time. It besides stated that the reserve presently covers 21 months of dividends.

In short, it’s a “no forced selling” signal, aimed astatine making the downturn survivable portion the BTC buying instrumentality keeps running.

Dilution, higher carrying costs and index-rule pressure

The archetypal constraint present is dilution.

Strategy’s accumulation loop works due to the fact that it tin routinely merchantability caller securities, particularly communal stock, done its ATM programme and person that request into Bitcoin. The flip broadside is that the stock number rises implicit time, which is wherefore the institution encourages investors to justice show done Bitcoin per stock metrics alternatively than earthy BTC totals.

In a downturn, dilution becomes a louder critique due to the fact that the banal terms is usually weaker astatine the aforesaid clip the institution is issuing into the market.

Next comes the carrying cost.

Preferred dividends and indebtedness involvement are fixed obligations. When superior becomes much expensive, those obligations bash not shrink. The institution past needs caller issuance, capable currency connected manus — hence the USD Reserve — oregon different liquidity root to support payments boring.

The longer the drawdown lasts, the much investors absorption connected whether financing remains unfastened connected tenable terms.

Then there’s scale and regularisation sensitivity.

Inclusion successful large indexes tin enactment marginal request for the stock, but classification frameworks are inactive evolving for firms whose halfway communicative is integer plus treasury management. MSCI’s consultation connected however to dainty companies with important Bitcoin treasuries is 1 of the clearest ticker items due to the fact that an unfavorable result could alteration however immoderate funds are allowed to clasp oregon size the exposure.

Did you know? During the 2022 crypto crash, Strategy, past known arsenic MicroStrategy, recorded a $917.8-million insubstantial nonaccomplishment connected its Bitcoin holdings successful Q2 2022, disclosed with its net connected Aug. 2, 2022.

Why net tin plaything wildly now

There’s different crushed Strategy tin look “more volatile” connected insubstantial than it feels operationally: accounting. New US guidance for crypto held by companies, ASU 2023-08, moves qualifying crypto assets onto a just worth basis, with unrealized gains and losses flowing done nett income each reporting period.

That means a crisp Bitcoin determination precocious successful a 4th tin materially plaything header earnings, adjacent if the institution did not merchantability a azygous coin and thing changed successful its day-to-day liquidity.

For investors, reported nett tin present lucifer a proxy for Bitcoin’s chart. In a downturn, that tin amplify antagonistic optics, adjacent erstwhile Strategy is inactive backing buys done issuance and currency reserves.

What keeps the “strategy” running

Strategy’s downturn buying looks relentless due to the fact that the institution has built a repeatable mechanism: merchantability paper, rise cash, bargain Bitcoin, past measurement occurrence successful Bitcoin per stock terms. The question going guardant is whether that mechanics stays inexpensive and unfastened erstwhile markets stay stressed.

• Watch however overmuch country Strategy inactive has successful its ATM programs and whether it continues converting issuance into purchases astatine thing adjacent to the existent pace.

• Watch whether the $1.44-billion USD Reserve remains a increasing cushion oregon becomes a reminder that dividends and involvement are existent bills that indispensable beryllium paid careless of Bitcoin’s mood.

• Keep an oculus connected however scale providers and classification bodies dainty integer plus treasury companies due to the fact that shifts determination tin subtly alteration the excavation of buyers that supports the full loop.