Strategy's funding engine stalls as STRC slides 25% below par value

Strategy Inc.'s preferred stock funding engine seized up in June, sending MSTR to a two-year low and STRC to a record 25% discount below its $100 par value.

"Strategy should develop a systematic, fundamental-driven approach to bitcoin purchase timing rather than buying whenever capital is available," Julio Moreno, head of research at CryptoQuant, said in a report. "Buying at cycle tops and accumulating during bear markets has resulted in rapid unrealized loss growth."

MSTR tumbled 8% to $86 on Thursday, its lowest since February 2024, extending a June decline of more than 43%. STRC, the perpetual preferred stock designed to trade near $100, fell to $75 — a 25% discount to its intended peg. The company's cash reserve has shrunk 38% since the start of the year to $1.4 billion, while annualized dividend obligations have roughly quadrupled, according to a Monday filing. Dividend coverage has been reduced to just 14 months from more than seven years.

The breakdown of Strategy's funding model threatens to slow or halt the company's bitcoin acquisition engine, which has been the single largest corporate demand driver for the cryptocurrency. With all bitcoin purchased in 2024, 2025 and 2026 now underwater, the company holds an aggregate unrealized loss of more than $13 billion. Any forced sale would crystallize those losses at scale.

The sell-off accelerated after Strategy conducted a rare sale of bitcoin holdings on June 26, spooking investors who had taken the company's long-term holding narrative at face value. Michael Saylor, the executive chairman, subsequently reaffirmed Strategy's commitment to Bitcoin, but the damage to confidence had already been done.

"The real damage is to credibility, not the company's ability to keep paying dividends," said Alexander Blume, CEO of Two Prime, a bitcoin-focused investment adviser. "Saylor's repeated pivots and deviations from his stated plans, alongside poor performance of STRC and MSTR, have broken that trust."

STRC's collapse has direct consequences for Strategy's ability to raise fresh capital. When the preferred stock trades near its $100 par, the company can efficiently issue new shares through its at-the-market program and use the proceeds to buy more bitcoin. When it trades at $75, that mechanism slows.

"Strategy looks highly unlikely to be a meaningful buyer of bitcoin for the foreseeable future," Blume said.

The company still holds about $50 billion in bitcoin at current prices, providing a long-term buffer against liquidity stress. Its $1.4 billion cash reserve can cover dividend obligations for roughly 10 months. But with the enterprise multiple to net asset value compressing to just 1.05 — down from the premiums that long supported the bull thesis — the market is pricing in a future where Strategy's bitcoin acquisition machine may never restart at full power.

This article is for informational purposes only and does not constitute investment advice.