Oil, Inflation, and Fed Risk. Why MicroStrategy Still Wants More Bitcoin Now?
Oil ended October at $117.64 a barrel and US inflation sits at 3.7%, yet Strategy is signaling a potential new Bitcoin purchase on Monday despite the risks.
Strategy’s executive chairman Michael Saylor posted a chart on Sunday showing room for even more Bitcoin, suggesting the company could announce a new purchase on Monday.
The company holds 848,517 BTC, worth about $66 billion on Sunday’s chart, against a $64 billion purchase cost, but its paper profit has narrowed.
“We’re at the beginning of the next bitcoin bull market.”
Economic Headwinds
Strategy’s plan comes as expensive oil feeds inflation, with gasoline prices rising 34.2% over the year to September.
The Federal Reserve held rates at 3.75%–4% on October 28, although two officials favored an increase. Chair Kevin Warsh noted a stable correlation between oil prices and market interest rates this year.
Higher yields can make safer assets more attractive than Bitcoin and complicate Strategy’s fundraising.
Shareholder Dilution and Index Risk
Strategy often issues new MSTR shares to buy Bitcoin, which can dilute shareholders even as total holdings rise. Its Bitcoin-per-diluted-share measure fell 3.7% this year.
MSCI’s new rules also threaten MSTR’s index membership, potentially forcing passive funds to sell.
Strategy paused Bitcoin purchases in October, spending $204.9 million buying back STRC, its dividend-paying preferred shares, and sold 5,552 BTC in the third quarter to help pay preferred dividends and finance buybacks.
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