TD Cowen Says Strategy Bitcoin Buying Frenzy Has Minimal Impact on Prices
Despite its growing footprint as a major institutional Bitcoin (BTC) holder, Strategy’s large-scale cryptocurrency purchases appear to have little impact on its price, according to a research report by TD Cowen.
The published findings challenge a popular theory among skeptics: that Strategy’s aggressive buying spree helped support Bitcoin’s value and that prices would fall without continued demand. But analysts said that argument didn’t carry much weight based on the data.
A Big Buyer, But a Small Slice of the Market
Strategy recently issued an additional 1.8 million shares in an at-the-market (ATM) offering, raising an additional $842 million in net proceeds.
The funds were used to purchase 6,556 Bitcoin, increasing the firm’s Bitcoin return for the quarter by 1% to 12.1%. However, when measured against the broader Bitcoin market, these purchases are just a drop in the bucket.
Strategy’s Bitcoin purchases typically account for just 3.3% of weekly trading volume on average, according to TD Cowen analysis. Over the past 27 weeks, the company’s total activity has reached 8.4% of volume.
But that figure was skewed by a handful of weeks when its purchases briefly exceeded 20%. In eight of those weeks, Strategy did not buy any Bitcoin at all.
“Our conclusion is that it does not appear plausible that Strategy’s purchases could have a sustained and significant impact on the price of Bitcoin over most periods,” TD Cowen analysts wrote.
*This is not investment advice.
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