Shares of Strategy (MSTR) are soaring 12% in premarket trading Monday after Bitcoin (BTC) surged above the $90,000 threshold over the weekend. The cryptocurrency was set in motion after President Trump announced plans to create a U.S. Crypto Strategic Reserve.
In a bid to make the U.S. the “Crypto Capital of the World,” Trump wants to stockpile cryptocurrencies like Bitcoin, Ethereum (ETH), XRP (XRP), Solana (SOL), and Cardano (ADA). If the U.S. government begins buying up bitcoin, it will likely raise the price of the crypto, which boosts Strategy’s value since it has been on a bitcoin buying binge.
Strategy (formerly known as MicroStrategy) owns 499,096 bitcoin, making it the biggest corporate Bitcoin holder. As CEO Michael Saylor has purchased bitcoin every week for several months, except for one time before Strategy’s earnings report, it is likely the company will have bought even more of the crypto over the past week.
Strategy has spent more than $33 billion on its crypto purchases, giving it an average purchase price of approximately $66,357 per bitcoin. Saylor’s idea is to turn Strategy into a Bitcoin Treasury Company, betting on the long-term rise of the crypto to turn cheap debt into valuable digital capital. So far, Saylor’s plan has been working.
Last week, however, Bitcoin’s price was in a downward spiral and had fallen as low as $78,659, but spiked to over $94,000 on Saturday following Trump’s announcement. As Strategy’s stock is so closely tied to bitcoin, its shares are rocketing higher on the news too (where stocks don’t trade on the weekends, the crypto market is open 24/7).
While the potential for a strategic reserve of crypto is generally positive for Bitcoin and Strategy, because it will hoard other crypto makes Bitcoin less special. It might also lead to greater government regulation and control of cryptocurrencies.
