If Strategy continues buying at his current rate, he could surpass Bitcoin’s pseudonymous creator, Satoshi Nakamoto, to become the cryptocurrency’s largest single holder within two years.
Galaxy Digital head of research Alex Thorn’s prediction focused on how much one company has shaped the cryptocurrency market.
Preferred stock is being financed for purchase.
Strategy, a financial firm led by Michael Saylor, has poured $7.2 billion into Bitcoin over the past eight weeks, according to Matt Hougan, chief investment officer at Bitwise.
He said this was the “biggest single factor” in Bitcoin’s rise of about 20% from its February low of $62,820. As of Wednesday, Bitcoin is trading near $76,550.
The driving force behind these purchases is STRC, Strategy’s perpetual preferred stock. The company will issue STRC shares and channel most of the funds raised directly into Bitcoin.
Source: Bitwise
One of the reasons investors are attracted to this bond is that it offers an annualized yield of 11.5%, much higher than what junk bonds currently pay.
Hougan said STRC’s yield, backed by more than $40 billion in Bitcoin reserves, looks attractive as private credit falls out of favor with investors. He expects Strategy to raise billions more through this tool.
Strategy’s Bitcoin purchases occurred weekly. The purchase of 3,273 coins for $255 million between April 20 and 26 brought BlackRock’s total holdings to 818,334 BTC, surpassing the approximately 812,300 coins that BlackRock holds on behalf of its clients.
Dividend payments can last for decades
Hougan crunched the numbers for how long Strategy could maintain its dividend promise. At the current Bitcoin price, the company could theoretically continue paying its existing dividends for 42 years.
Saylor argued that if Bitcoin grows by 20% per year, these payments could continue indefinitely. Hougan appears to share this view, saying purchases are likely to continue “for some time.”
ETFs and large individual buyers also contributed to the recovery. Since March 1, ETF inflows have reached $3.8 billion, and purchases by long-term holders have resumed. But Hougan was clear that Strategy’s consistent large purchases were greater than all other factors combined.
Satoshi Holdings closed
Nakamoto’s wallet holds just over 1 billion bitcoins. This is approximately 5.5% of total supply. The strategy requires you to earn approximately 277,660 more coins to match that number.
Weekly purchases this year ranged from 850 coins in February to 34,160 coins per day in April. So the timeline will largely depend on how aggressively the company continues its purchases.
Featured image by MetaAI, chart by TradingView
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