Saylor Defends MicroStrategy Bitcoin Strategy Against Dilution Criticism After $1.1B Purchase
MicroStrategy executive chairman Michael Saylor on Tuesday pushed back against accusations that the company’s aggressive Bitcoin acquisition strategy is diluting shareholder value, following a $1.1 billion BTC purchase last week that brought the firm’s total holdings to over 226,000 Bitcoin.
The defense comes as on-chain data reveals that roughly 50% of all Bitcoin in circulation—about 9.8 million coins—are now sitting on unrealized losses, according to Glassnode metrics. The figure has sparked debate among analysts about whether this signals a potential market bottom or further downside risk.
Also read: Why Is the Crypto Market Crashing? Trade War Fears and Fed Policy Trigger Broad Sell-Off
Saylor Responds to Dilution Concerns
Speaking on a quarterly earnings call, Saylor argued that MicroStrategy’s convertible note offerings and at-the-market equity programs are necessary tools to accumulate Bitcoin at scale, not a sign of financial weakness. “We are not diluting shareholders—we are converting fiat currency into the hardest asset on earth,” Saylor said. “The alternative is holding cash that loses 7% purchasing power annually.”
Critics have pointed to the company’s roughly 22% increase in outstanding shares over the past two years as evidence of dilution. However, Saylor countered that the company’s Bitcoin-per-share metric has actually risen, as the pace of BTC acquisition has outpaced share issuance.
Also read: Bitcoin and XRP Surge on March 27: What Drove the Rally?
MicroStrategy’s stock (MSTR) has fallen 35% year-to-date, tracking Bitcoin’s decline from its all-time high of $73,700 in March 2024 to current levels near $58,000.
Half of Bitcoin Holders Underwater
The broader market backdrop adds weight to the dilution debate. Data from CoinMarketCap and Glassnode shows that 50.2% of Bitcoin’s circulating supply was acquired at prices above current spot levels. The last time such a high percentage of holders were in loss was during the bear market trough of November 2022, when Bitcoin traded near $16,000.
“Historically, when 50% or more of supply is underwater, it has preceded major bottoms,” said James Butterfill, head of research at CoinShares, in a note to clients. “But the current macroeconomic environment—persistent inflation and Fed rate uncertainty—makes this cycle harder to predict.”
Bitcoin has traded in a tight $55,000–$62,000 range for the past three weeks, with low volatility suggesting traders are waiting for a catalyst. The next Federal Reserve meeting on September 18 could provide direction, as markets price in a 65% chance of a 25-basis-point rate cut, per CME FedWatch data.
What This Means for Investors
For MicroStrategy shareholders, the central question is whether Saylor’s bet will pay off as it did in 2023, when Bitcoin rallied 155% and the stock surged 340%. The company’s current market cap of $21 billion is roughly 1.3 times the value of its Bitcoin holdings, implying investors are paying a premium for the corporate structure.
“Saylor is essentially running a leveraged Bitcoin ETF with a software company attached,” said Brian Armstrong, CEO of Coinbase, in a social media post last week. “It works in bull markets, but the drawdowns are brutal.”
MicroStrategy has no plans to sell its Bitcoin, according to its latest 10-Q filing. The company has instead authorized a new $2 billion at-the-market equity offering to fund additional purchases, a move that has drawn fresh scrutiny from short sellers including Kerrisdale Capital.
