Key Takeaways:
Arca's Jeff Dorman warns the company may be forced to sell billions in Bitcoin or common stock to defend its preferred share structure, as STRC hits a record low.
Strategy's STRC preferred stock fell to a record low of $87 on June 18, roughly 13 percent below its $100 par value, after Arca Chief Investment Officer Jeff Dorman warned the company may need to sell as much as $4 billion in Bitcoin or common stock to stabilize the instrument. The slide has forced Strategy to pause its at-the-market issuance program, cutting off a key funding channel the company uses to buy Bitcoin, according to market data.
"Strategy may have to sell billions of dollars worth of Bitcoin or issue common stock to ease concerns about its STRC preferred stock," Dorman said. The warning comes after Strategy sold 32 Bitcoin for about $2.5 million in late May to fund STRC dividend payments, the company's first Bitcoin sale since it began accumulating the digital asset in 2022.
STRC traded at $87 as of the US afternoon session, widening from $96.34 on June 17 and $89 on June 18. The preferred stock, which pays a variable rate currently set at 11.50 percent on a semi-monthly schedule, has now lost roughly 13 percent of its par value since launching in July 2025. The first semi-monthly record date is set for June 30, with a payment of $0.48 per share due July 15, subject to board declaration. A 100-share position would collect $96 across the two July payouts at the current rate, though the June 30 reset could alter that figure.
Why STRC's slide threatens Strategy's Bitcoin accumulation model
Strategy holds about 846,842 Bitcoin, roughly 4 percent of the total supply that will ever exist, making it the largest corporate holder. The company's Bitcoin accumulation model has depended heavily on issuing preferred securities and other capital instruments, with STRC serving as the primary vehicle. When the stock trades above par, Strategy issues new shares through its ATM program and uses the cash to buy Bitcoin. With STRC now at $87, that channel is closed.
Market maker QCP estimated that Strategy has approximately 7.5 months of liquidity remaining to fund STRC dividend payments, according to a note cited by market participants. The firm said the company could eventually face difficult decisions involving additional capital raising, further shareholder dilution, or additional Bitcoin sales. Strategy has built a $1.1 billion US dollar reserve to cover preferred dividends and debt, while still buying 1,587 Bitcoin through separate sales of its common stock, the company disclosed last week.
Bitcoin traded near $64,000 on June 18, implying a paper loss of roughly $11,658 per coin against Strategy's average acquisition cost. The company's common stock, MSTR, fell about 6 percent to $109 on Thursday, extending its decline as the STRC discount deepened.
Competitive pressure and insider selling add to the strain
Additional pressure has emerged from rival products in the preferred securities market. Strive's SATA preferred stock currently trades above $99 and offers a yield of 13.69 percent, drawing income-oriented investors away from Strategy's preferred securities, according to market data.
Insider selling has also weighed on sentiment. Director Jarrod Patten exercised options on 1,500 Class A shares at a strike price of $18.236 and sold the shares at around $134 each, generating approximately $200,000 in proceeds. Over the past three months, Patten has sold 55,750 Strategy shares for total proceeds approaching $9 million. Chief Executive Officer Phong Le, Chief Financial Officer Andrew Kang, and former Executive Vice President Wei-Ming Shao also sold millions of dollars worth of Strategy stock earlier this year.
Analysts at Benchmark and TD Cowen have pushed back against concerns that the Bitcoin sale signals a broader deterioration in Strategy's approach. However, with STRC trading below par and Bitcoin purchases effectively paused, the question of whether Strategy can restore access to its preferred-share funding model remains open. The June 30 rate reset on STRC will be the next key event, determining whether the company can narrow the discount and resume its Bitcoin accumulation program.
This article is for informational purposes only and does not constitute investment advice.
