Strategy’s STRC perpetual preferred stock, the primary engine behind its recent bitcoin accumulation, slid to a record low on Thursday, falling as much as 26% below its $100 par value.
At the same time, Strategy’s common shares dropped to their lowest levels since February 2024 as bitcoin sank to $58,000.
STRC traded as low as $74 before recovering to around $77.50, while MSTR dropped below $87, extending a decline of more than 50% in just over a month.
The pressure came as bitcoin briefly returned to the $58,000 level for the first time since October 2024, ahead of a massive $10.6 billion quarterly options expiry on Friday.
Focus shifts to financing
Before Strategy began issuing preferred shares, skeptics often argued that MSTR was little more than a leveraged proxy for bitcoin that would unravel in a prolonged bear market.
The company shook off much of that criticism after weathering the 2021-2022 downturn and watching MSTR rally over 450% in the years that followed.
Now, instead of focusing solely on bitcoin’s price, investors are scrutinizing the financing structure Michael Saylor built to power the BTC accumulation engine.
For roughly a year, Strategy has tapped preferred securities like STRC to fund purchases. Unlike common stock, these carry cumulative dividend obligations — 11.5% annually in STRC’s case.
What can Strategy do?
Onchain analytics firm CryptoQuant argued Strategy should pause bitcoin purchases and rebuild cash reserves, noting annualized preferred dividend obligations have climbed to roughly $1.2 billion while cash reserves fell to around $1.4 billion.
Castle Island Ventures general partner Matt Walsh said outstanding convertible notes may now be a bigger near-term challenge than the preferred shares.
Walsh wrote:
“This does not look like an asset coverage problem today. It looks like a timing and capital markets problem.”
The pressure spread to Strive’s perpetual preferred stock, SATA, which fell to a record low near $84.
Not everyone is bearish. Benchmark reiterated its Buy rating and $570 price target, calling the declines a stress test rather than a structural breakdown.
