On-chain data agency Sentora (formerly known as IntoTheBlock) has published an article analyzing potential threats that Michael Saylor’s company, Strategy, may run into as it continues accumulating large amounts of Bitcoin regularly.

Strategy continues weekly Bitcoin accumulation

Earlier this week, Bitcoin permabull, Michael Saylor, announced that his company Strategy made a substantial addition to its $40 billion BTC stash. That purchase took place as Bitcoin traded at the $106,237 level. Strategy bought 4,020 Bitcoins for roughly $427.1 million. This buy has propelled the overall Bitcoin holdings of the company to 580,250 coins valued approximately at $61.41 billion.

This comes in line with the nearly-weekly-purchases pattern followed by Strategy this year. In the middle of May, it bought 7,390 Bitcoins for $764.9 million and 13,390 Bitcoins for a staggering $1.34 billion earlier this month as well. To fund those purchases, the company has been issuing convertible notes and other stocks — MSTR, STRK and STRF. Since Strategy began buying Bitcoin in August 2020, the MSTR price has surged by roughly 2,930%, and it has outperformed Bitcoin by 63% over the past few months.

However, Sentora’s analysts believe that the company’s strategy of holding and accumulating the world’s largest cryptocurrency may face significant hurdles.

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Potential risk factors for Strategy’s further Bitcoin holding

The report published by Sentora shares several key risk factors Strategy may face in the medium to long term.

The first one mentioned is Bitcoin’s price volatility — a sharp drop in the BTC price could lead to substantial losses, the report says. Although, it does not seem to stop Saylor — Strategy has made several Bitcoin acquisitions, taking advantage of big price dips.

The second one is the concentrated asset risk. The company now owns 2.76% of the overall Bitcoin supply, and this exposes Strategy to a significant concentrated risk, the authors of the report believe, since the company’s stock price is closely correlated to Bitcoin (0.8), meaning that a BTC price downturn would cause losses to MSTR.

The debt-financed purchase strategy of the company may lead to liquidity issues or bankruptcy, the report states, should Bitcoin crash or interest rates rise. Such potential issues as shareholder dilution, liquidity challenges and market impact risk were also mentioned in the report.