Strategy STRC Faces Pressure Over Bitcoin Reserve as Preferred Stock Declines

Strategy STRC's Bitcoin reserve has come under scrutiny as its preferred stock traded below its $100 par value, raising questions about the company's capital structure and dividend obligations.

Michael Saylor defended Strategy's Bitcoin-backed funding model in an X post, stating that the company's Bitcoin and cash holdings are approximately $48 billion above outstanding debt. Since 2022, Strategy has raised over $60 billion in capital, which was used to buy Bitcoin.

Saylor recalled the 2022 crypto bear market when Strategy would have owned approximately 130,000 BTC valued at around $2.6 billion. During that time, Bitcoin fell below $16,000 and Strategy's debt exceeded the value of its Bitcoin and cash by about $300 million.

Investors are concerned about the fall in shares, with Bitcoin critic Peter Schiff suggesting that Bitcoin investors may pursue legal action against Strategy and Saylor, citing a potential violation of SEC marketing rules. Arca Chief Investment Officer Jeff Dorman estimated a 25% probability of a Bitcoin sell-off to alleviate capital-structure pressure.