Since Donald Trump took office, Bitcoin (BTC) prices have fallen, and it has converged on the strategic corporate cost basis.
Michael Saylor’s huge BTC holding company owns 499,226 coins acquired for an average of $66,360. Today, the slim 27% cushion, which is of concern, distinguishes the decline in BTC prices from the company’s cost base.
For years, the strategy (previously micro-strategic) enjoyed generously priced cushions between BTC and its previous purchases. For example, to celebrate Trump’s January 20th inauguration, BTC reached an all-time high of $108,786 – 73% above the average purchase price for the strategy At the time it was $62,691.
There were even better times, such as 2021 and mid-2024, when BTC prices exceeded the cost base of the dual strategy.
However, Crypto entered the bear market shortly after Trump entered the White House. The president continued to promote memokine, rejecting Saylor’s recommendation to purchase 4 million BTC or Cynthia Lummis’ recommended 1 million BTC, recommended 1 million BTC for the US strategic Bitcoin reserve, shaking over a tariff policy that destroyed a wide range of markets, including BTC.
As BTC prices fell, Saylor’s shrinking power became apparent. While Trump’s preparation for the inauguration was an ideal environment for him to tell a story about what BTC can do with Trump 2.0, the world is learning what currency is actually doing during Trump 2.0.
So far, that hasn’t worked.
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BTC price cushions and strategies reduce premium by 50% YTD
Bitcoin currently trades around $84,500, and has been taking the strategy’s cost-based cushions by about 50% since Trump took office. Premium investors are willing to pay for strategic stocks (MSTRs) that exceed BTC holdings. Similarly, it has increased from over 3.4 times the share on November 20th to about 1.8 times the share of today.
Most BTC purchases for strategies after November 18th, 2024 are in red. On November 18th, the strategy purchased 51,780 BTC for $88,627. Since then, it has bought some more large BTC. Four purchases over $100,000.
Naturally, this has resulted in a sharp rise in the strategy’s dollar average from under $40,000 at the beginning of November to the current $66,360.
Saylor recently announced $21 billion, which is intended to purchase BTC’s Memetomation volume. Of course, he hasn’t actually bought that much yet. On March 10th, he announced the start of preferred stock sales. To date, he has not spent his first billion.
This morning, the strategy announced that it had purchased 130 BTC. This is the second smallest purchase in history, along with just a handful of 32 BTC purchases in late March 2024.
Read more: Why are MicroStrategy Insiders dumping MSTR?
A long road to $21 billion Bitcoin
It’s too early to tell if this morning’s relatively small BTC purchase is a sign that Saylor is returning his intentions.
The long road to actually spending $21 billion to actually acquire BTC is also an example of the difficulty of curbing the company’s cost base and not converging on the BTC price itself.
There are allegations that the strategy purchase had a direct impact on BTC prices in 2024, with one estimate suggesting that the company is behind last year’s capital inflows 28%.
This is far from an overall analysis of all sources of demand for BTC, with other estimates placing strategies under 1% of BTC trading volume. Most of them can’t be tracked offshore, from crypto to crypto to USD.
