Strategy’s STRC perpetual preferred stock plunged as much as 26% below its $100 par value, hitting a record low as Bitcoin dropped to $58,000 — its weakest level since October 2024. The preferred shares briefly traded at $74 before recovering to around $77.50, while the company’s common stock, MSTR, fell below $87, marking a decline of more than 50% in just over a month.
Selling pressure grows alongside Bitcoin weakness
The sharp decline came as market unease intensified ahead of a $10.6 billion Bitcoin options expiry, which weighed broadly on digital assets. The drop has renewed scrutiny of Chairman Michael Saylor’s strategy of issuing preferred shares to fund Bitcoin purchases, particularly as market conditions turn less favorable.
STRC carries an 11.5% annual cumulative dividend, a structure that has enabled continued Bitcoin accumulation but comes with steep financial commitments. Public filings show annualized preferred dividend obligations have climbed to roughly $1.2 billion, nearing the company’s approximately $1.4 billion in cash reserves.
Liquidity concerns come into focus
Analysts examining on-chain data have suggested the firm consider pausing Bitcoin acquisitions to preserve liquidity and manage debt. Castle Island Ventures general partner Nic Carter Walsh said the company’s near-term risks are tied more to its convertible notes than its asset coverage, emphasizing the importance of refinancing and maintaining balance sheet flexibility.
Recent actions highlight those pressures. Strategy repurchased $1.5 billion in convertible notes, reducing total convertible debt to $6.7 billion, but in doing so consumed a significant portion of its available cash.
At the same time, the company’s cash reserves have fallen sharply this year while dividend obligations have surged nearly fourfold, reducing its ability to cover payouts from more than seven years to roughly 14 months.
Broader impact across related assets
The weakness extended beyond STRC. Strive’s SATA perpetual preferred stock dropped to about $84 after trading near $100 earlier this month, reflecting broader stress across similar instruments tied to Bitcoin exposure.
Bitcoin exposure drives valuation pressure
Strategy’s financial position remains closely tied to Bitcoin’s price. The company currently holds 847,363 Bitcoin acquired at an average price of about $75,651, leaving it with an unrealized loss exceeding $11.8 billion based on current prices. The holdings are valued at approximately $52.24 billion, below the total acquisition cost of $64.1 billion.
A widening gap between the company’s market capitalization — about $36.5 billion — and the value of its Bitcoin holdings has added to trader concern, signaling skepticism about the strength of its balance sheet and the possibility of forced selling if market conditions worsen.
Capital structure under scrutiny
The declines in STRC and MSTR reflect growing market concern over Strategy’s highly leveraged model, which relies heavily on debt and preferred stock issuance to acquire Bitcoin. As Bitcoin falls, the sustainability of this approach is increasingly questioned.
Equity research firm Benchmark maintained its Buy rating and $570 price target, describing the current volatility as a test of the company’s capital framework. The firm noted that STRC’s variable dividend structure was not designed to maintain stability around its par value.
Still, the combination of rising payout obligations, declining liquidity, and Bitcoin price volatility has sharpened focus on whether the company may need to adjust its aggressive acquisition strategy in the near term.
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