Even though Strategy Solutions is becoming a bigger player in the bitcoin (BTC) world as a major corporate holder, it turns out their large bitcoin purchases don’t actually move the price needle much, according to a new research report from TD Cowen.

These findings, hot off the press on Monday, challenge a common idea held by bitcoin skeptics. The theory goes that Strategy’s constant and aggressive buying is what’s keeping bitcoin’s price artificially high, and if they ever stopped, the whole thing would come crashing down. But, based on the figures, the analysts at TD Cowen say this just isn’t the case.

Big Spender, Small Market Impact

Strategy recently went back to the market, issuing another 1.8 million shares under their “at-the-market” (ATM) offering. This move brought in an extra $842 million in net funds. And what did they do with it? They bought another 6,556 bitcoins, naturally! This boosted their bitcoin yield for the quarter by a nice 1%, bringing it to 12.1%. Sounds impressive, right? However, when you zoom out and look at the entire bitcoin market, these purchases are really just a tiny splash in a massive ocean.

According to the TD Cowen deep dive, Strategy’s bitcoin buys typically make up only about 3.3% of the total weekly bitcoin trading volume – on average. Looking at the past 27 weeks, their total activity adds up to 8.4% of the overall volume. Now, that 8.4% is a bit skewed because there were a few weeks where their buying suddenly jumped to over 20% of the volume. Interestingly, in eight of those weeks, Strategy didn’t actually buy any bitcoin at all.

The TD Cowen analysts summed it up by saying, “Our takeaway is that most of the time, it just doesn’t seem likely that Strategy’s purchases could have had a real, lasting effect on bitcoin’s price.”

Correlation? Not Really.

To dig even deeper, the analysis looked at whether there was actually a connection between Strategy’s bitcoin buying and what was happening with bitcoin prices. And guess what? The link was statistically weak. When they measured the correlation between Strategy’s weekly bitcoin buying volume and the price of BTC at the end of each week, it only came in at a measly 25%. And when they compared purchases to weekly price changes? The correlation only bumped up slightly to 28%.

For those keeping score, a correlation around 0 basically means there’s little to no connection. So, these numbers suggest that there’s hardly any link between what Strategy is doing and short-term bitcoin price moves – let alone any kind of long-term price influence, the research paper explained.

But What About Outbuying the Miners?

Here’s another common point of debate: people often say Strategy buys more bitcoin than is even being mined during the same period, which they argue puts pressure on the price to go up. While technically true, the analysis reveals this argument misunderstands a core part of how the bitcoin market functions.

Over the last six months, trading of bitcoin that’s already out there—the secondary market—has been almost 20 times greater than the volume of newly mined bitcoin. Even if you take Strategy’s buys completely out of the picture, secondary market activity is still about 17 times larger than the new supply from mining. In this kind of environment, pretty much everyone, from miners to buyers, are just reacting to the price—not really setting it themselves.

TD Cowen put it plainly: “As we’ve shown, their purchases are just a tiny piece of the total bitcoin trading volume. So, the idea that they’re somehow having a profound or even noticeable impact on bitcoin’s price just doesn’t seem to add up, in our view.”

Building Real Value, Not Just Hype

So, while Strategy’s impact on the overall bitcoin market might be a bit overblown, the value they’ve created for their own shareholders is much harder to ignore.

Just last week’s purchases are estimated to have generated an extra 5,281 bitcoins in gains. That brings their gains for the quarter so far to nearly $600 million! And going all the way back to the start of 2023, Strategy has boosted its bitcoin stash by a whopping 306%, while their total number of shares has only increased by 94%. That’s a pretty impressive performance for a company using bitcoin as a key part of its financial strategy.

With $1.53 billion still available under their ATM capacity, and the board giving the green light for an even larger share authorization, Strategy is well-positioned to keep doing what they’re doing – continuing to invest in bitcoin without causing chaos in the very market they’re banking on.

“Looking ahead, we expect Strategy to keep generating positive BTC Yield for the foreseeable future,” the analysts wrote. “While the BTC Yield will probably decrease somewhat if bitcoin prices keep climbing, the actual dollar value of the gains from Strategy’s Treasury operations could still be hugely beneficial for shareholders.”

Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.