TD Cowen analysts evaluated the Strategy’s treasury activity against Bitcoin trading volume and price action over the past six months.
TD Cowen Says Strategy Bitcoin Buying Frenzy Has Minimal Impact on Prices
Despite its growing footprint as a major institutional Bitcoin (BTC) holder, Strategy’s large-scale cryptocurrency purchases appear to have little impact on its price, according to a research report by TD Cowen.
The published findings challenge a popular theory among skeptics: that Strategy’s aggressive buying spree helped support Bitcoin’s value and that prices would fall without continued demand. But analysts said that argument didn’t carry much weight based on the data.
A Big Buyer, But a Small Slice of the Market
Strategy recently issued an additional 1.8 million shares in an at-the-market (ATM) offering, raising an additional $842 million in net proceeds.
The funds were used to purchase 6,556 Bitcoin, increasing the firm’s Bitcoin return for the quarter by 1% to 12.1%. However, when measured against the broader Bitcoin market, these purchases are just a drop in the bucket.
Strategy’s Bitcoin purchases typically account for just 3.3% of weekly trading volume on average, according to TD Cowen analysis. Over the past 27 weeks, the company’s total activity has reached 8.4% of volume.
But that figure was skewed by a handful of weeks when its purchases briefly exceeded 20%. In eight of those weeks, Strategy did not buy any Bitcoin at all.
“Our conclusion is that it does not appear plausible that Strategy’s purchases could have a sustained and significant impact on the price of Bitcoin over most periods,” TD Cowen analysts wrote.
*This is not investment advice.
