This morning, MicroStrategy (doing business as Strategy) announced that it diluted MSTR common shareholders by $285.7 million to buy $285.8 million of bitcoin (BTC).
After deducting fees and expenses included in that purchase, shareholders received no BTC accretion to their shares.
Not only that, after pausing purchases for the first week in April and warning that it might have to sell BTC next year, the firm then took a full week to buy BTC at nearly the worst possible prices it could have paid.
Specifically, from April 7 to April 13, BTC traded at between $74,434 and $86,084. MicroStrategy then decided to deploy more than a quarter of a billion dollars at $82,618, within the top third most expensive part of that range.
However, BTC didn’t trade evenly across that range during that time period, so a volume-weighted average price (VWAP) actually provides a better assessment of the firm’s market-timing abilities.
In fact, BTC traded most of last week in the lower third of that range. Thanks to Donald Trump’s unprecedented tariffs that sent global markets reeling and volatility spiking above 57 on the popular VIX index, BTC crashed to its worst price of the year last week.
MicroStrategy shareholders were hoping that founder Michael Saylor could have taken advantage of those low prices. However, he purchased well above the VWAP.
MicroStrategy paid nearly the worst price for BTC again
Saylor, for his part, has publicly stated that he intends to continue paying premium prices for BTC, because he believes its price is going up forever. “I’m going to be buying the top forever,” he boasted on February 20, 2024.
Since the company began acquiring BTC, MicroStrategy’s total average purchase price IS $67,556.
Nevertheless, the disappointment was evident across social media. Because MicroStrategy uses Coinbase’s OTC desk for many of its purchases, experienced investors pulled up a chart of the Coinbase VWAP that seemingly never exceeded $79,220 for the entire week.
They laughed at Saylor’s “amazing” $82,618 average — 4.2% higher than the highest VWAP price of the week for their chart — and highlighted Saylor’s buy line that nearly topped the chart of much lower prices at which he could have bought.
Of course, Coinbase OTC doesn’t disclose its VWAP publicly, so the exact price isn’t public knowledge. As a private dealer for large, off-market spot transactions that don’t appear in aggregated charting software packages like TradingView, Coinbase OTC reports its VWAP pricing and other details directly to customers.
Read more: MicroStrategy pauses buys, says MSTR shareholders don’t own its bitcoin
Given that a substantial quantity of spot BTC clears with no public record of clearing prices, it’s technically not possible to know whether MicroStrategy actually overpaid for its BTC.
Nevertheless, a simple review of last week’s BTC price chart with vast spans of time trading below $80,000 certainly casts doubt over whether Saylor chose the best time to buy.
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