The Price of Bitcoin May Be Soaring, But a New Risk Has Emerged for Strategy. Here's What MSTR Investors Need to Know.
In this news:
Bitcoin's (BTC -4.66%) price has risen more than 20% over the past month. The geopolitical conflicts and fears of the debt-driven devaluation of the U.S. dollar fueled that rally.
Shares of Strategy (MSTR -5.36%), which holds 4.02% of Bitcoin's total lifetime supply, have also rallied 35% over the past month. Those gains aren't surprising, since Strategy's 845,050 Bitcoins are worth $63.5 billion -- compared to its enterprise value of $50 billion.
Investors who are bullish on Strategy believe it's undervalued relative to its Bitcoin holdings, and that its stock will eventually trade at a premium to those assets. However, the bears argue that it deserves that discount because it needs to sell its Bitcoins to fund its preferred dividends. Let's see why that's a major risk Strategy's investors can't afford to overlook.
What are Strategy's preferred shares?
Last year, Strategy issued four classes of preferred shares: "Strife" (STRF +0.83%), "Stretch" (STRC -1.29%), "Strike" (STRK -3.53%), and "Stride" (STRD -1.15%). All four stocks have different dividend structures, seniority, yields, and risk profiles.
Data source: Strategy.
Strategy issued its preferred shares to raise more cash to fund its Bitcoin purchases. However, it spent more than $500 million on dividend payments in the first half of 2026, even as Bitcoin's price declined by more than 30% from Jan. 1 to June 30. To cover its dividends without taking on more debt, Strategy sold 3,620 Bitcoins (worth $272 million today) in the first half of 2026.
Strategy's critics claim that this loop of issuing more preferred shares to buy more Bitcoin, then selling that Bitcoin to fund its preferred dividends, is reckless. As long as Bitcoin's price is rising and its preferred shares are trading at or above par, Strategy can continue issuing new shares via at-the-market (ATM) offerings to fund its Bitcoin purchases, dividends, and capex. But if Bitcoin's price plummets, Strategy won't be able to find enough buyers for its new shares. If that happens, most of its cash flow will dry up -- since its legacy software business doesn't generate nearly enough cash to cover all those expenses.
That's why Strategy's stock still trades at a discount relative to its total Bitcoin holdings, and why it fell 60% (against Bitcoin's 32% decline) over the past 12 months. So before you invest in Strategy as a Bitcoin play, you should carefully assess its preferred dividends strategy.
Share the article:
Trending News & Crypto World
.png)
Latest Crypto News
Top Trending Cryptocurrencies on The Market
Current Price
$0.9990
Market Cap
$470.2M -0.01%
24h Volume
$1.3M
Supplies
470.6M / ∞
Current Price
$0.01173
Market Cap
$460.2M 0.81%
24h Volume
$58.9
Supplies
39.2B / ∞
Current Price
$0.6259
Market Cap
$412.6M -2.86%
24h Volume
$37.1M
Supplies
1.0B / 1.0B
Current Price
$0.1775
Market Cap
$411.1M -1.39%
24h Volume
$111.3M
Supplies
2.7B / 2.7B
Current Price
$1.041
Market Cap
$380.1M -0.71%
24h Volume
$17.5M
Supplies
365.0M / ∞
Current Price
$0.006278
Market Cap
$371.4M -2.53%
24h Volume
$1.8K
Supplies
95.0B / 100.0B
Current Price
$0.07791
Market Cap
$367.0M -15.57%
24h Volume
$11.1M
Supplies
10.0B / 10.0B
Current Price
$0.3661
Market Cap
$365.9M -4.70%
24h Volume
$11.6M
Supplies
1.5B / 1.5B
Current Price
$0.04453
Market Cap
$365.1M 5.92%
24h Volume
$8.0M
Supplies
10.0B / 10.0B
Current Price
$0.05358
Market Cap
$361.5M -4.14%
24h Volume
$68.4M
Supplies
10.0B / ∞
Current Price
$0.9994
Market Cap
$357.4M 0.01%
24h Volume
$6.5M
Supplies
357.6M / ∞
Current Price
$0.04686
Market Cap
$356.2M -4.53%
24h Volume
$213.1M
Supplies
10.0B / 10.0B