The first sale of Bitcoin from Strategy’s treasury in 41 months was only worth 2.5 million dollars. Measured against a hoard of 843,706 tokens, it is a rounding error. Yet the move—32 BTC sold to cover a dividend on the company’s STRC perpetual preferred stock—has rattled investors more than the token amount suggests. Coming at the same time as the preferred stock itself trades below par, the episode points to a deeper structural pressure on the funding playbook that has turned Strategy into the world’s largest corporate Bitcoin holder.
The company’s common stock now changes hands at €100.92 in European trading, a collapse of roughly 74% from its 52-week high of €391.80. The relative strength index has sunk to 29.9, deep in oversold territory, and the 52-week low of €88.48 is only 14% away. Friday’s losses accelerated after a stronger-than-expected US jobs report—172,000 positions added in May versus 85,000 forecast—pushed the Federal Reserve’s rate-cut expectations further out. Bitcoin slid to around $62,000, and Strategy’s shares followed like a leveraged proxy on the cryptocurrency.
The Preferred Stock Cracks
Far more concerning than the one-time Bitcoin sale is the behaviour of the company’s variable-rate perpetual preferred stock, the STRC series. Designed as a cornerstone of Strategy’s capital-raising machinery, the instrument carries a par value of $100 and pays an annual dividend of roughly 11.5%. That anchor price broke this month: the STRC shares dipped to $94.65, a level that forces the company to either offer a higher effective yield or watch the funding channel narrow. The 30-day average daily trading volume in the preferreds had reached $339 million, and the series had built a market capitalisation of $6.4 billion. When the instrument slips below par, the entire financing model loses momentum.
Strategy has kept the June dividend unchanged at 11.50%, but the market’s message is clear: investors are demanding a steeper return for bearing the Bitcoin and credit risk embedded in the paper. If the discount persists, the company will find it harder and costlier to issue new preferred shares to fund future Bitcoin purchases, shifting the burden onto common equity.
Equity Sales Pick Up the Slack
Recent filings confirm that the common stock is already taking the strain. Between 26 and 31 May, Strategy sold 801,994 Class A shares through its at-the-market programme, raising net proceeds of $128.3 million. No sales of any preferred series were recorded in the same period, leaving $17.51 billion in issuance capacity for the stretch preferreds untouched. The company’s cash reserve stands at $900 million, earmarked for preferred dividends and interest on outstanding debt.
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That reliance on equity dilution is a familiar trade-off for Strategy’s common shareholders, but the loss of the preferred-stock channel would compound the dilution risk at exactly the moment when Bitcoin weakness is already punishing the balance sheet.
A Quarter That Surprised the Pessimists
The strain was already evident in the first-quarter results. Strategy reported a net loss of $12.54 billion, driven by a $14.46 billion unrealised impairment on its Bitcoin holdings after the cryptocurrency fell from roughly $87,000 to $68,000 during the period. The diluted loss per share came in at $38.25, worse even than the most bearish analyst estimate of minus $36.89. Fair-value accounting means every move in Bitcoin flows directly through the income statement.
The average purchase price of the 843,706 Bitcoin now on the books is $75,699, a level that sits more than $13,700 above the current spot price. On the prediction market Kalshi, traders see an almost 80% probability that Bitcoin will trade below $60,000 at some point in 2026. A further leg lower would trigger another wave of impairment charges and put even more pressure on the preferred stock market.
The Analyst View
Not everyone is panicking. Geoffrey Kendrick, an analyst at Standard Chartered, maintains his year-end Bitcoin target of $100,000, arguing that the current sell-off is painful but not structurally damaging. For Strategy, the question is whether the cryptocurrency can recover quickly enough to restore confidence in the preferred stock channel. If Bitcoin rebounds, the STRC discount is likely to narrow and the funding machine can restart. If the weakness persists, what began as a token sale and a sub-par preferred print could evolve into an existential test of the company’s capital structure.
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