Strategy’s preferred stock STRC fell sharply below its 100 dollar par value during U.S. trading on Tuesday, hitting a low of 73.62 dollars before closing at 75.69 dollars. The drop, roughly 25% below par, has disrupted one of the company’s key funding channels and intensified pressure on its cash position.
Discount blocks funding route
STRC had been designed as a perpetual financing tool, allowing Strategy to raise capital at relatively low cost without diluting common shareholders. Its pricing relied on staying near the 100 dollar anchor. Now trading well below that level, the company can no longer issue new preferred shares efficiently, effectively shutting down this avenue.
At the same time, the preferred structure carries heavy obligations. Annual cash dividend payouts exceed 1.7 billion dollars across STRC and related instruments such as STRD, STRK, and STRF.
Rising dividend pressure strains liquidity
Company filings show Strategy holds about 1.4 billion dollars in cash, which is not enough to cover a full year of preferred dividends. This gap has forced the firm to prioritize liquidity over expansion.
To rebuild cash reserves, Strategy has leaned on its at-the-market equity program. In the latest week, it sold more than 2.7 million common shares, raising 335.5 million dollars. Only about 10% of that amount was used to acquire Bitcoin, with the bulk retained to strengthen its balance sheet.
Bitcoin accumulation slows
The shift in capital allocation has reduced the company’s pace of Bitcoin accumulation. Its Bitcoin backing per share has declined from 220,900 sats to 218,046 sats, reflecting dilution from new share issuance.
Strategy currently holds 847,363 BTC, valued at about 50.7 billion dollars, representing roughly 4% of Bitcoin’s circulating supply. However, its options are narrowing. Issuing more common shares dilutes exposure, new debt would increase borrowing costs, and selling Bitcoin could pressure the market.
The company already tested the latter approach with a small 32 BTC sale in early June, which coincided with a brief market dip.
Broader market adds pressure
These internal challenges are unfolding alongside weakening demand in the broader cryptocurrency market. U.S. spot Bitcoin ETFs have recorded sustained outflows, signaling a shift in sentiment among larger traders.
June alone saw more than 3.61 billion dollars withdrawn from these funds, including a single-day outflow of 696 million dollars. This marks the largest monthly خروج on record and extends a multi-day streak of net redemptions.
Bitcoin prices have responded by falling to around 58,000 dollars, a 20-month low, while sentiment indicators such as the Fear & Greed Index have dropped to “extreme fear” levels.
Valuation signals growing concern
Strategy’s market valuation has recently slipped below the value of its Bitcoin holdings, reversing the premium it historically commanded. This suggests traders are increasingly factoring in the company’s financial obligations and the possibility of asset sales.
With STRC still trading at a steep discount, Strategy may remain dependent on common share issuance to meet dividend commitments. That dynamic reduces capital available for Bitcoin purchases and introduces the risk that, under further strain, the company could become a source of selling pressure rather than demand.
Worried about Strategy’s funding squeeze and Bitcoin risks? Learn how to navigate sentiment shifts in cryptocurrency market sentiments.
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