- Strategy’s Bitcoin purchases have minimal impact on Bitcoin’s price, according to TD Cowen research, with purchases typically accounting for only 3.3% of weekly trading volume.
- Despite limited market influence, Strategy has increased its bitcoin holdings by 306% since early 2023, while only expanding its share count by 94%.
Strategy’s bitcoin purchases have little to no impact on the cryptocurrency’s price, according to new research from TD Cowen. The findings, published Monday, challenge the popular theory that the corporate bitcoin holder’s aggressive buying is artificially propping up the market. Data shows that Strategy’s purchasing activity represents just a small fraction of overall bitcoin trading volume.
Strategy recently raised $842 million through an at-the-market (ATM) offering, using the proceeds to purchase 6,556 bitcoins. This increased the firm’s bitcoin yield this quarter by 1% to 12.1%. However, these purchases are relatively insignificant when compared to broader market activity.
The TD Cowen analysis reveals that Strategy’s bitcoin buys typically account for only 3.3% of weekly trading volume on average. Over the past 27 weeks, the company’s total activity amounted to just 8.4% of volume, with this figure skewed by a few weeks where buying briefly exceeded 20%. The company made no purchases at all during eight of those weeks.
“Our conclusion is that in most periods, it doesn’t appear plausible that Strategy’s purchases could have had a sustained, material impact on the price of bitcoin,” TD Cowen analysts wrote in their report.
Little Correlation Between Purchases and Price
The research further examined the statistical relationship between Strategy’s buying activity and bitcoin’s price movements. The results showed a correlation coefficient of just 25% between weekly purchase volume and bitcoin’s price at week’s end. When comparing purchases to weekly price changes, the correlation rose only slightly to 28%.
Given that a correlation coefficient close to zero suggests little to no relationship, these findings indicate Strategy’s actions have minimal influence on short-term market movements, much less any sustained price impact.
Another common criticism addressed in the research is the claim that Strategy frequently purchases more bitcoin than is mined in a given period. While technically true, this argument misunderstands market dynamics, as secondary bitcoin trading outpaces new mining supply by nearly 20 times over the past six months.
Building Value Without Market Disruption
Despite its limited influence on bitcoin prices, Strategy has generated significant value for its shareholders. Last week’s purchases created an estimated incremental gain of 5,281 bitcoins, bringing quarter-to-date gains to nearly $600 million.
Since the beginning of 2023, Strategy has increased its bitcoin holdings by 306%, while only expanding its fully diluted share count by 94% — demonstrating the effectiveness of its approach to using bitcoin as a strategic treasury asset.
With $1.53 billion in remaining ATM capacity and board approval for larger share authorizations, the company is well-positioned to continue this strategy without disrupting the market it’s investing in.
“We expect Strategy will continue to drive positive BTC Yield for the foreseeable future,” the analysts concluded.
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