Strategy's Bitcoin Sale Sparks Concerns Over Preferred Stock Stability

Strategy, a company formerly known as MicroStrategy, has sold a small amount of Bitcoin to fund distributions on its preferred stock, STRC. The sale, which took place between May 26 and May 31, was valued at around $2.5 million and marks Strategy's first disposal of BTC since December 2022.

STRC, which pays an annualized dividend rate of 11.5%, has been trading below its $100 reference price this week. The stock's market price has dropped by 3.8% this month, including a sharper intraday fall. DeFi products tied to STRC, such as Saturn's sUSDat and Apyx's apxUSD, have also declined in value.

The sale of BTC and the subsequent drop in price may raise questions about the stability of preferred stocks backed by companies with significant Bitcoin holdings. Unlike traditional savings products, STRC does not carry FDIC or SIPC protection, making investors more vulnerable to market fluctuations.