TD Cowen: Strategy’s Bitcoin Buying Binge Has Minimal Influence on Market Dynamics

Despite its headline-grabbing bitcoin (BTC) acquisitions, corporate powerhouse Strategy appears to exert limited impact on BTC prices, according to a comprehensive research note released Monday by TD Cowen.

The findings counter the narrative that Strategy’s steady accumulation of bitcoin is a major force behind the cryptocurrency’s value appreciation. Instead, TD Cowen analysts argue the company’s influence is overstated — its buying activity simply isn’t large enough relative to overall market volumes to significantly move the needle.

A High-Profile Buyer, But Not a Market Mover

Strategy recently added 6,556 BTC to its treasury, funded by $842 million raised through an at-the-market (ATM) equity offering involving 1.8 million new shares. This brings its quarterly bitcoin yield to 12.1%. But when viewed in context, the firm’s impact on the broader market is modest at best.

Over a 27-week span, Strategy’s purchases have averaged just 3.3% of weekly BTC trading volume. While there were a few weeks where it contributed over 20%, there were also eight weeks in which it bought no bitcoin at all. In aggregate, the analysts said, “The company’s activity is too sporadic and proportionally too small to materially affect BTC’s price trajectory.”

Price Correlation Weak to Nonexistent

The study also tested for statistical correlation between Strategy’s weekly bitcoin buys and BTC’s price movements — and found little linkage. A correlation coefficient of 0.25 between weekly purchases and end-of-week BTC prices, and just 0.28 when aligned with price changes, suggests minimal influence.

“These figures support our assessment that Strategy’s buying doesn’t drive short-term market direction,” TD Cowen wrote.

Mining vs. Market: A Misunderstood Comparison

A common criticism of Strategy is that it often buys more bitcoin than is newly mined, implying it puts pressure on the price. But TD Cowen’s report dismantles this theory as well. Over the last six months, secondary trading volume has eclipsed mining volume by a factor of 20 — and even without Strategy’s buying, it’s still 17 times greater.

In such a deep, liquid market, both miners and institutional buyers like Strategy function as price takers, not price setters.

Shareholder Value Is Where Strategy Shines

While the company’s influence on BTC prices may be limited, its execution as a bitcoin-forward treasury operation is paying off. Strategy’s recent activity translated into approximately 5,281 BTC in gains, with nearly $600 million in quarter-to-date value created.

Since the start of 2023, Strategy has tripled its BTC holdings — up 306% — while only increasing its fully diluted share count by 94%. With $1.53 billion in ATM capacity still available, the firm is well-positioned to continue scaling its bitcoin strategy.

“We expect the company to maintain strong BTC yield,” TD Cowen noted, “and while yield rates may taper as bitcoin’s price rises, the dollar value of those gains should remain highly accretive to shareholders.”