Oil, Inflation, and Fed Risk. Why MicroStrategy Still Wants More Bitcoin Now?

Oil ended October at $117.64 a barrel. US inflation is 3.7%, and two Federal Reserve officials wanted another rate hike last week. Yet Michael Saylor is signaling that Strategy (formerly MicroStrategy) could announce another Bitcoin purchase on Monday. On Sunday, Saylor posted his Bitcoin-buying chart with the caption: We found room for even more orange. Why Buy Bitcoin When the Economy Looks Worse? This is high-conviction accumulation: buying through uncertainty because you expect an asset to gain value over years. It can also be contrarian investing. The danger is overconfidence when evidence changes. Saylors belief is clear. In Thursdays earnings release, he declared: Were at the beginning of the next bitcoin bull market. Meanwhile, expensive oil is feeding inflation. Gasoline prices rose 34.2% over the year to September. The Fed held rates at 3.75%4% on October 28, although two officials favored an increase. Chair Kevin Warsh noted a stable correlation between oil prices and market interest rates this year, though he said that link had recently weakened. Higher yields can make safer assets more attractive than Bitcoin. They can also complicate Strategys fundraising. The Hidden Risk for MSTR Shareholders MicroStrategy holds 848,517 BTC, worth about $66 billion on Sundays chart, against a $64 billion purchase cost. Its paper profit has narrowed. October purchases totaled 334, 250 and 267 BTC across three weeks. Strategy then paused, spending $204.9 million buying back STRC, its dividend-paying preferred shares. It also sold 5,552 BTC in the third quarter to help pay preferred dividends and finance buybacks. Strategy often issues new MSTR shares to buy Bitcoin. That can dilute shareholders even as total holdings rise. Its Bitcoin-per-diluted-share measure fell 3.7% this year. MSCIs new rules also threaten MSTRs index membership, potentially forcing passive funds to sell. Mondays filing will show whether Strategy bought again. For shareholders, the more important test is whether each share represents more Bitcoin afterward.