Strategy's Bitcoin treasury stalls as STRC crashes 25% below par
In brief
- STRC preferred stock fell to $71 Friday, 25% below $100 par value
- Strategy faces $8 billion in cash demands over two years from dividends and debt
- Market-to-net asset value dipped below 1, erasing valuation premium
- Bitcoin fell below $60,000 as Strategy common shares hit two-year low
The Cash Crunch Emerges
STRC fell to a record low near $71 on Friday before recovering to about $75, leaving it roughly 25% below par. The preferred stock is designed to trade near $100, but the gap widened as market confidence eroded.
Strategy faces an $8 billion cash wall over the next two years, including preferred dividend obligations and convertible debt. That's a significant constraint for a company built on the premise of continuous Bitcoin accumulation through capital raises.
Glenn Cameron, global head of institutional at Ooramp Bitcoin, estimates the scale of the burden. Cameron puts Strategy's annual preferred dividend burden near $1.7 billion, with STRC alone accounting for roughly $1.2 billion. That estimate is based on about 104.9 million STRC shares and an 11.5% annualized rate on the preferred stock's $100 stated amount.
The Premium Evaporates
Strategy's enterprise market-to-net asset value slipped below 1 on Friday, briefly erasing the premium that had long separated the company from other corporate Bitcoin holders. This matters. When enterprise market-to-net asset value is below parity, it suggests investors are no longer paying extra for Strategy's ability to accumulate Bitcoin through public-market financing.
Strategy's common shares fell to a two-year low of $82 on Friday. Meanwhile, Bitcoin was also struggling under the $60,000 mark, adding pressure to the broader macro environment.
The variable dividend rate on STRC was structured to pull the security toward its $100 stated value—but Friday's action suggests even that mechanism can't overcome the market's repricing of the company's fundamental model.
The question now is whether Strategy can service its obligations while Bitcoin prices remain subdued, or if the cash wall forces a recalibration of the company's aggressive accumulation strategy.
