- Strategy’s STRC preferred shares hit a record 17.5% discount to their $100 par value last week and remain at an ~13% discount, while common stock MSTR fell to its lowest since May 2024 — both reflecting deep investor concern about the company’s funding model.
- CryptoQuant’s head of research argues Strategy should pause Bitcoin purchases and rebuild its cash buffer to ~$2.8 billion (24 months of dividend coverage), down from $1.4 billion currently after falling 36% since the start of 2026.
- Strategy is paying an 11.5% annual yield on STRC (effective yield ~13.17% at current discounted prices), and the company is funding Bitcoin purchases primarily through common equity sales — not the preferred shares it had pledged to prioritize.
- At the start of June, Strategy disclosed it had sold 32 Bitcoin — its first sale since 2022 — a symbolically significant crack in Saylor’s “never sell” narrative, even if the quantity was negligible versus $57B in total holdings.
What Happened?
Strategy Inc. — Michael Saylor’s Bitcoin-accumulation vehicle — is under sustained financial pressure after months of Bitcoin price weakness. The company sits at a notional $11 billion loss on its total Bitcoin holdings. Its STRC preferred shares, which carry an 11.5% annual yield reset monthly, fell to a record 17.5% discount to their $100 par value last week, and remain at an ~13% discount. MSTR common stock has hit multi-year lows. Meanwhile, Strategy’s dollar cash buffer has fallen 36% this year to just $1.4 billion — partly due to a May repurchase of $1.5 billion in 0% convertible notes — leaving limited cushion to support STRC dividends. Between June 15-21, Strategy bought $34.9 million of Bitcoin funded entirely through common stock sales, not the preferred share issuances it had pledged to prioritize.
Why It Matters?
Strategy’s model depends on a virtuous flywheel: raise capital at low cost, buy Bitcoin, Bitcoin appreciates faster than obligations compound, repeat. That flywheel is now running in reverse. The STRC discount reflects market skepticism about whether Strategy can sustainably pay the 11.5% dividend if Bitcoin stays depressed. The June 32-Bitcoin sale — negligible in dollar terms, enormous in narrative terms — cracked the “never sell” commitment that underpinned investor confidence. More structurally: as spot Bitcoin ETFs see outflows ($2.4B in June alone) and speculative interest fades, Strategy has become the marginal buyer of last resort for Bitcoin. If Strategy slows or stops buying, it removes a key source of demand support for the asset it holds almost exclusively.
What’s Next?
According to CryptoQuant’s Julio Moreno, the path back to STRC trading at par requires rebuilding the cash reserve to ~$2.8 billion — providing 24 months of dividend coverage. That means pausing Bitcoin purchases and potentially issuing equity to shore up liquidity rather than deploy it into more crypto. Strategy is not technically required to sell Bitcoin to support STRC; it can raise the dividend yield or issue equity to signal capacity to pay — tools already in use. But those are delay tactics, not solutions, if the underlying Bitcoin price trend doesn’t reverse. The company’s viability as currently structured hinges on Bitcoin appreciating meaningfully from current levels before its obligations compound further.
Source: Bloomberg
