Bitcoin fell 21% in ten days to briefly test $61,000, its lowest level in four months, after a major corporate holder said it would repurchase part of its debt and temporarily halt new bitcoin purchases. The move has sharpened concerns that tighter short-term liquidity could eventually force the company to sell some of its holdings, removing a major source of demand from the market.
Strategy’s balance sheet shift rattles sentiment
The Virginia-based firm, Strategy, holds 126,016 bitcoin worth about $9.31 billion. It disclosed on May 15 that it used $1.38 billion in cash, raised through recent equity issuance, to buy back convertible notes. The announcement came as its preferred stock, STRC, dropped below $100, the threshold required to issue new shares under its current structure.
The STRC Series A Perpetual preferred stock pays an 11.5% annual dividend distributed monthly and allows new share issuance when the stock trades at or above $100. With STRC now below that level, Strategy has temporarily lost access to a key funding channel, tightening its financial flexibility and raising questions about how it will finance future bitcoin purchases.
Funding window narrows after aggressive capital raise
Over the first five months of 2026, Strategy raised $7.5 billion through preferred stock, a flow of capital that had previously helped underpin bitcoin’s stability by providing steady buying power. Following the buyback of convertible notes, the firm’s cash balance stands at about $900 million.
Analysts estimate that cash buffer would cover its obligations for roughly six months if Strategy cannot reopen the equity spigot. The pause in bitcoin purchases removes a consistent, price-insensitive buyer from the market just as broader liquidity conditions appear to weaken.
Leverage remains modest, limiting forced selling risk
Despite the market anxiety, Strategy’s balance sheet metrics suggest limited immediate risk of forced bitcoin sales. The company reports a net leverage ratio of 11%, calculated as debt against assets, a level described as conservative even if bitcoin falls toward $30,000.
Its debt documents offer additional cushions. There are no clauses in its convertible bonds that mandate bitcoin liquidations if market liquidity deteriorates. The company is also allowed to sell equity below a market-adjusted net asset value, giving it the option to raise capital by diluting existing MSTR shareholders instead of increasing debt or selling bitcoin.
Preferred dividends can be deferred and accumulate for later payment, providing further flexibility under liquidity stress and giving management room to maneuver if credit or equity markets become less receptive.
Market fears focus on potential impact of any bitcoin sales
Some analysts warn that any decision by Strategy to sell even a portion of its holdings could amplify downward pressure on bitcoin. Given the firm’s large position, a visible disposal could trigger a negative feedback loop if buyers step back and price declines accelerate.
So far, however, there are no formal indications that the company is preparing to sell. Strategy’s current capital structure and leverage profile still offer buffers against urgent asset disposals, and management has signaled a preference for equity-based funding alternatives.
ETFs outflows, on-chain flows deepen uncertainty
The broader market backdrop is reinforcing the cautious tone. Spot bitcoin ETFs have recorded net outflows, with U.S.-based products posting a combined net outflow of $483.80 million in the latest reporting period. Traders are watching these figures closely as a proxy for institutional appetite.
On-chain activity has also added to unease. On June 2, wallets linked to the defunct Mt. Gox exchange moved 10,300 BTC, the first major outflow from that cluster in more than a year. The transfer fueled speculation about potential future distributions and additional supply overhanging the market.
Market volatility metrics reflect the rising uncertainty. The 30-day historical volatility index has ticked higher, signaling that participants are bracing for wider price swings even as conditions stop short of outright panic.
Focus shifts to STRC price and reopening of demand
For now, the path of both bitcoin and Strategy’s buying program may hinge on STRC’s performance. A sustained recovery of STRC above $100 would reopen the preferred stock issuance channel and could restore the company’s capacity to act as a large, steady bitcoin buyer.
Until that happens, the market must absorb regular selling pressure without one of its most reliable sources of demand. With STRC below $100 and spot ETF flows negative, many analysts see a sustained move in bitcoin above $70,000 as unlikely in the short term, barring a sharp shift in macro conditions or a rapid improvement in capital markets.
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