Bitcoin News Today: Strategy Slides After Pausing Bitcoin Buys, Raising $748M in Equity Sale

Strategy Inc (MSTR) shares slid sharply on Tuesday before stabilizing in after-hours trading as investors processed the company's recent decision to pause Bitcoin purchases. The stock, which had swung between $156.5 and $162.7 during the regular session, closed near the lows at around $157.9. The move underscored a broader shift in how the market is viewing the company's evolving strategy.

The key development came in a Form 8-K filing that revealed no Bitcoin was purchased during the week of December 15–21. Instead, Strategy raised $747.8 million through the sale of 4.535 million shares of Class A common stock. The cash reserve now stands at $2.19 billion, a significant jump from the $1.44 billion initially announced in early December.

Strategy also disclosed that its USD reserve is intended to support preferred dividends and interest on outstanding debt, signaling a more conservative approach to liquidity management. The company emphasized that the reserve could grow further, particularly as it expands its preferred securities offering, including the Stretch product line with a 10.75% yield.

A Shift in Strategy and Market Interpretation

The decision to pause Bitcoin purchases has split the market. Some see it as a prudent move to build a financial buffer in anticipation of a potential "crypto winter," while others interpret it as a sign of waning momentum. The recent capital raise through equity issuance has also reignited concerns about dilution, a key issue for investors who have long debated whether Strategy's premium to Bitcoin is sustainable.

Citi analysts adjusted their price target for Strategy, cutting it from $485 to $325 while maintaining a "Buy" rating. The move reflects broader uncertainty as Bitcoin weakens and alternative exposures, such as spot ETFs, gain traction. These products offer simpler, less leveraged ways for investors to gain exposure to Bitcoin, challenging Strategy's role as a leveraged proxy.

Risks and Structural Challenges

A growing structural risk for Strategy is the potential exclusion from major stock indices. MSCI is reviewing whether to exclude companies with significant digital asset holdings, which could reduce passive demand for Strategy's shares. Analysts have warned that such a move could trigger significant outflows, especially if other index providers follow suit.

The company's financial forecasts also remain heavily tied to Bitcoin's performance. Strategy's FY2025 guidance hinges on the year-end BTC price range of $85,000 to $110,000, with wide-ranging implications for operating and net income. As a result, investors are closely watching Bitcoin's movements, particularly as volatility increases in the lead-up to year-end.

What This Means for Investors

With the market bracing for a holiday-shortened trading session and a Christmas Eve early close on December 24, liquidity will be a key factor. Any sharp movements in Bitcoin overnight could ripple into Strategy's premarket activity, as it remains one of the most closely watched equities tied to crypto.

Investors will also be monitoring the next weekly update on Bitcoin purchases and capital-raising activity. The market's reaction will likely depend on whether Strategy continues to prioritize cash reserves or resumes large-scale BTC accumulation.

In the broader context, Strategy's repositioning as a "capital markets platform" is central to its narrative. CEO Phong Le has emphasized the potential for U.S. banks to adopt full-stack Bitcoin services, a trend that could bolster demand for diversified instruments like preferred securities. However, the success of this strategy will depend on whether investors continue to see value in the company's unique structure.

For now, the market remains divided. Bulls view the cash reserve as a strategic buffer, while bears see it as a signal that the company is losing its edge as a leveraged Bitcoin play. The coming weeks will test which interpretation gains ground.