Why Saylor’s Billion-Dollar Bitcoin Purchases Have Little Impact on Prices: Expert Analysis

In a recent video presentation, Joe Burnett, the Director of Market Research at Unchained, an organization focused on Bitcoin financial services, examines a conundrum faced by many retail investors: how can Strategy (formerly MicroStrategy) acquire “tens of thousands of Bitcoins” without significantly affecting the market price? According to Burnett, Michael Saylor’s large-scale purchases do not represent an influx of genuine demand, but rather a strategic reallocation within the Bitcoin market.

Understanding Bitcoin’s Price Stability

Burnett begins by noting that Bitcoin’s remarkable rise from “the $16,000 lows of 2022 to $95,000 now” has often coincided with the release of long-held coins. He highlights on-chain metrics, particularly the “hodl wave,” which indicates that as prices rise, “older coins begin to circulate,” signifying that experienced holders are more inclined to sell during bullish phases. These coins are then acquired by new groups such as “Strategy, ETF investors, institutions, governments, and, of course, additional individuals.”

Although Strategy is certainly a part of this mix, Burnett emphasizes that the company’s trading approach is designed to minimize any disruptive effects on the market. “They adopt a methodical and patient strategy, executing numerous small buy orders over extended periods,” he explains, referencing Saylor’s public statements favoring an approach that invites “sellers to engage without engaging in competitive bidding.” This method enables long-term investors to convert their holdings into cash while avoiding drastic shifts in market dynamics.

Further Insights

The discussion takes an interesting turn as Burnett proposes an “additional theory” regarding why Strategy’s purchases do not lead to sharp price surges: the structure of their funding. He illustrates this with an effective analogy: “If you sell one Bitcoin on Kraken and purchase one Bitcoin on Coinbase, what impact does that have on the price? None,” he asserts. “That is an economically neutral exchange.” Burnett argues that the balance-sheet strategies employed by Strategy mirror this neutrality but on a corporate level.

When the company generates funds through new stock offerings, “someone acquires that stock instead of investing in Bitcoin,” he clarifies. Strategy then converts the equity raised into Bitcoin. “The net effect? A mere shift in exposure, with no new demand.” He further explains that this logic holds for convertible-note programs as well. Hedge funds that invest in these notes often hedge their bets by shorting MSTR shares, leading to an increase in float rather than pulling funds from unrelated asset classes. “In both scenarios… the money flowing into Bitcoin is first taken from a Bitcoin derivative, MSTR shares,” he adds, highlighting the zero-sum nature of the transactions.

The Need for Fresh Capital

Burnett compares this situation to the movement of funds that followed the establishment of US spot Bitcoin ETFs in early 2024. While billions were invested in products from major firms like BlackRock and Fidelity, “billions also exited GBTC,” he observes, resulting in overall Bitcoin demand remaining relatively stable: “From A to B. No new demand.”

Further Insights

So, what exactly would constitute demand that could influence prices? Burnett is clear: it requires funds that “enter Bitcoin without withdrawing from another Bitcoin proxy.” He suggests possibilities such as corporate treasuries from Apple, sovereign wealth funds, or individual investors reallocating real estate or bond investments directly into Bitcoin. By this standard, Strategy’s operations resemble internal market maneuvering rather than actual new capital inflows.

Burnett stresses that his perspective should not be construed as a critique of Saylor. He regards the Strategy chairman as “an exceptional Bitcoin educator” whose approach to accumulation is “ingenious.” However, he warns that the market implications are “more complex than they may initially seem.” In fact, he speculates that the imminent launch of Saylor-endorsed STRF funds—aiming at fixed-income investors instead of equity stakeholders—may provide the genuine external capital that could ultimately “cause Bitcoin’s price to soar.”

Until such outside demand emerges, the Bitcoin market will likely continue to absorb Strategy’s substantial purchases with unexpected stability. As Burnett puts it, “Saylor can acquire a significant amount of Bitcoin without affecting the price much because he’s buying from long-term affluent holders and doing so in a manner that minimizes immediate market impact.” For traders anticipating significant market reactions each time the software company submits a new filing, this insight may be both a sobering yet enlightening revelation.

At press time, BTC was priced at $94,971.