A growing group of public companies now exist mainly to buy and hold bitcoin, and their buying habits can shape the market.
Even as bitcoin's price slid this week, two of the best-known "bitcoin treasury" companies kept buying. Strive, an asset manager turned bitcoin holder, disclosed in a filing on Tuesday, Oct. 13, that it bought 3,311 bitcoins for about $280 million, its largest purchase since January. Strategy, the company formerly known as MicroStrategy and the biggest corporate holder of bitcoin, reported on Oct. 12 that it bought 250 bitcoins, a much smaller amount than its usual weekly buys.
What a bitcoin treasury company is
A bitcoin treasury company is a publicly traded business that holds large amounts of bitcoin as its main asset and raises money, often by selling stock, preferred shares or debt, to buy more. Strategy pioneered the approach under executive chairman Michael Saylor and now holds about 848,250 bitcoins, according to Bitcoin Treasuries data cited by The Block.
Buying these stocks is a way for some investors to get bitcoin exposure through a brokerage account. But the stock price doesn't track bitcoin one-to-one. It can trade above or below the value of the bitcoin the company holds, depending on how investors feel about the company's strategy, its debt and how much new stock it issues.
The details of this week's buys
Strive paid an average of about $84,500 per bitcoin, including fees, according to its filing with the Securities and Exchange Commission. That brings its total to 32,773 bitcoins. With bitcoin trading near $82,000 this week, those latest coins are already worth less than Strive paid.
Strive has funded much of its buying with a type of preferred stock called SATA. Preferred stock usually pays a fixed dividend and gets paid before common stock if a company runs into trouble, but common shareholders can be diluted, meaning their slice of the company shrinks as more shares are issued. Strive said its bitcoin per common share still rose 1.72% after the purchase.
Strategy's smaller purchase drew attention because the company has often bought thousands of bitcoins at a time. Saylor publicly praised Strive's purchase, Benzinga reported, while Strategy itself bought about 85% less.
Why it matters
Treasury companies have become a meaningful source of demand for bitcoin. When they slow their buying, or face pressure to sell to pay debts or dividends, it can affect the broader market. Their reliance on raising fresh money also means they tend to buy more when their own stock prices are high and may struggle when prices fall.
What this means for your wallet
If you're considering a bitcoin treasury stock, understand that you're taking on two layers of risk: bitcoin's price swings and the company's financial decisions, including how much debt and preferred stock it issues. When bitcoin drops, these stocks can fall even further.
For many people, simpler options such as buying a small amount of bitcoin directly or through a spot bitcoin ETF may be easier to understand. Whatever route you choose, keep crypto to a small part of your overall savings, and make sure your emergency fund and retirement contributions come first.
This article is for education only and is not financial advice. Everyone's situation is different.
Content on The Evergreen Edit is for educational and informational purposes only and is not individualized financial, investment, tax or legal advice. Learn more.
This article is for educational purposes only and isn't personalized financial, tax or legal advice. Consider talking with a qualified professional about your situation.
Kiara Miller — Founder & Editor
Kiara Miller is the founder and editor of The Evergreen Edit. He has been doing independent finance research for two decades and reviews every article before it's published.
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