Strategy’s $5 Million Bitcoin Target: Beacon or Bagholder?

April 09, 2025 at 07:30 AM EDT

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When one thinks about the Bitcoin movement and what company started the trend of using Bitcoin for its treasury, Strategy Inc. (NASDAQ: MSTR) comes to mind. Formerly known as MicroStrategy, its CEO, Michael Saylor, has been a diehard proponent of Bitcoin. The company made a major strategic pivot in August 2020, announcing its first Bitcoin purchase: 21,454 Bitcoins acquired for approximately $250 million.

Since then, companies in the computer & technology sector, like Block Inc. (NYSE: XYZ), and companies in the retail/wholesale sector, like MercadoLibre Inc. (NASDAQ: MELI), have added Bitcoin to their balance sheets as a treasury reserve asset in place of traditional cash holdings. Investors have lauded the decision during the Bitcoin run-up but question it during downturns as Strategy continues to put its fate in Bitcoin by basically converting shares into cryptocurrency through stock offerings. Investors are left to contemplate whether Strategy is a beacon for Bitcoin or a bagholder that went all in for the wrong reasons.

From Critic to Diehard: The Evolution of Mike Saylor

CEO Mike Saylor wasn’t always a proponent of crytocurrency. In December 2013, Saylor dismissed Bitcoin as a gimmick, famously tweeting, “Bitcoin’s days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling.” The infamous collapse of cryptocurrency exchange Mt. Gox followed in February 2014, casting more doubt on Bitcoin’s future.

Over the years, Saylor’s attitude has completely changed. Fast forward to 2025, Saylor was quoted calling Bitcoin, “the world’s first perfect money” as he predicts it will replace gold as the dominant store of value with a long-term target of $5 million per Bitcoin.

The Rationale for Bitcoin Purchases: Hedging Inflation and a Falling U.S. Dollar

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Saylor initially framed Bitcoin as a hedge against inflation and a weakening U.S. dollar, using this argument to fuel even larger investments.

In September 2020, Strategy added another $175 million in Bitcoin, followed by a $650 million convertible note offering in December to finance the purchase of 32,220 more coins.

By the end of 2020, the company held 70,470 Bitcoins worth approximately $1.125 billion, with an average cost of $15,964 per coin.

The move helped legitimize corporate Bitcoin holdings, and in February 2021, electric vehicle giant Tesla Inc. (NASDAQ: TSLA) jumped in, purchasing $1.5 billion of Bitcoin as a treasury asset.

Transforming Into the World’s First Bitcoin Treasury

Strategy aggressively started adding more and more Bitcoin as it climbed higher in the following years. In November 2024, the company rebranded itself as "the world's first Bitcoin Treasury Company" in its earnings reports. It is the largest corporate holder of Bitcoin.

Most recently, it purchased 22,048 Bitcoins in the last week of March 2025 for approximately $1.9 billion. By April 8, 2025, Strategy grew its holdings to 528,185 Bitcoins at an aggregate purchase price of $35.63 billion. The average acquisition cost was $67,458.

Dilution Is Becoming a Concern

While insiders, including its CEO, CFO, and EVP, were busy purchasing Strategy shares in Q1, the threat of dilution is real. Strategy’s increased share count rose 16.2% year-to-date (YTD) and is expected to continue to grow in 2025.

Its debt also rose 220% in 2024 and will continue to grow in 2025. Strategy plans to own $150 billion of Bitcoin, funded by $42 billion in capital raises through 2027.

Saylor’s 3 Catalysts to Send Bitcoin to $5 Million Per Coin

Mike Saylor believes the world needs a non-sovereign store of value. Saylor believes there are three catalysts that will drive up Bitcoin prices to $500,000 in the near future and $5 million in the long term. They are:

The approval of spot Bitcoin ETFs: This catalyst has already happened. There are a number of spot Bitcoin ETFs which enable institutional ownership. It easily allows an institution to put in an order to buy $100 million of Bitcoin through a liquid ETF like the iShares Bitcoin Trust (NASDAQ: IBIT), which has an average daily volume of 45 million shares and $52.46 billion assets under management (AUM) as of April 8, 2025.
Banks custody-ing Bitcoin: If banks would enable loans against Bitcoin by custodying it, then Bitcoin could be integrated into the traditional financial system and increase institutional demand. Saylor stated, “Your bank is going to custody it for you and lend against it.” He believes banks can hold Bitcoin on their balance sheet and enable borrowing against Bitcoin at low interest rates. This is starting to emerge as a trend in the financial sector.
Bitcoin becomes a treasury asset: If more corporations hold Bitcoin as a treasury reserve asset, like Strategy, then it will drive more demand for Bitcoin. Saylor says fair value accounting for Bitcoin is the game changer if companies can report Bitcoin's true market value instead of writing down losses. He stated, "I can mark it up or mark it down on my balance sheet based on fair value, the same way I handle Apple stock or even Treasury bonds."

The latter is gaining momentum as more companies acquire Bitcoin as a treasury reserve asset. This was adopted by GameStop Co. (NYSE: GME) as CEO Ryan Cohen spearheaded this strategy, announcing its plan to invest proceeds from a $1.3 billion convertible note offering into Bitcoin.

Investors in various companies are being exposed to Bitcoin either directly or indirectly. Strategy is a beacon leading the treasury reserve movement, and investors are in for the ride. This also links and couples their stock prices with Bitcoin for better or worse.

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