Strategy is set to announce its third-quarter financial results after the US market closes on Thursday, with its bitcoin position now sitting just 6% above the average purchase price. This narrow cushion marks a significant shift for the company, which remains the world’s largest corporate bitcoin holder.
Bitcoin exposure narrows
Strategy currently holds 848,517 BTC, according to a filing dated October 26. The company acquired this massive stake at an average cost of $75,446 per bitcoin. With bitcoin prices hovering near $80,000, the total value of Strategy’s holdings is estimated around $68 billion, giving the company a paper gain of approximately $4 billion relative to the $64 billion it invested.
Conditions have turned less favorable in the fourth quarter. An October 5 filing from Strategy valued its bitcoin at around $83,500 per coin at the end of September. Since then, bitcoin’s price drop has resulted in an unrealized loss of about $3 billion, even as two months remain in the current quarter.
Tax offset and profit impact
Tax accounting also played a pivotal role in the third quarter results. In June, when bitcoin traded below Strategy’s average purchase price, the company wrote off a $4.12 billion tax asset that could have been used to offset future taxes. As bitcoin prices recovered, Strategy reinstated this tax credit in the third quarter, adding roughly $4 billion to reported profit.
Analysts estimate that if bitcoin falls below $75,446, the value at which the company bought its coins, the tax credit would begin to reappear on the balance sheet. Should the price drop toward $58,500, the entire $4 billion credit would be reinstated.
Strategy’s filing indicated that the company added back the $4.12 billion tax asset in the third quarter, boosting profit figures as bitcoin traded above the average purchase price.
ETF impact and recent moves
Meanwhile, investors in US spot bitcoin ETFs are starting to feel the pressure. Glassnode calculates that the average purchase price for these ETF investors is about $81,500, placing them nearly 2% in the red given current market prices.
Over the past week leading up to October 25, Strategy did not increase its bitcoin holdings. The company chose instead to deploy its available funds for a share buyback program focusing on its STRC preferred shares.
With bitcoin’s price showing volatility near Strategy’s average acquisition cost, many institutional and retail investors are closely watching for signs of deeper losses or a potential rebound.
Given the current uncertainty surrounding large single-holder moves and ETF performance, keeping a close eye on live bitcoin price levels is crucial. CryptoAppsy’s real-time price alerts can help investors track bitcoin’s fluctuations directly referenced in this quarter’s filings, ensuring timely awareness of any shifts that might impact major holdings or ETF positions.
