Michael Saylor’s Bitcoin strategy is encountering significant funding challenges as Strategy’s perpetual preferred stock, STRC, trades at historic lows. This decline impacts the company’s primary mechanism for acquiring more Bitcoin without diluting common stock or incurring new debt. A veteran portfolio manager indicates that Strategy is running out of favorable options to sustain its Bitcoin accumulation.
Strategy, listed on Nasdaq as MSTR, holds the largest corporate Bitcoin reserves among publicly traded firms. For years, the company utilized STRC, nicknamed “Stretch,” as a fundraising engine. Launched in July 2025 through a $2.5 billion IPO, STRC pays an 11.50% annual dividend, distributed semi-monthly in cash, with a monthly adjusted rate designed to keep it near its $100 par value.
The funding mechanism relies on STRC trading above its $100 par value. When this occurs, Strategy issues new shares, directing the proceeds to Bitcoin purchases. This method avoids common stock dilution and breaches of debt covenants. However, STRC is currently trading near $88, marking its lowest level since its launch and an 11% decline over the past month. This price point prevents the company from issuing new shares to fund Bitcoin acquisitions.
Jeff Dorman, chief investment officer at digital-asset firm Arca, offered an assessment of Strategy’s situation on June 17. Dorman, a portfolio manager with nearly two decades of experience, stated that the company’s “MSTR pickle continues.” He outlined two immediate paths to “save $BTC and $MSTR”: either selling a substantial amount of Bitcoin and MSTR to elevate STRC closer to par, or continuing to observe the capital structure deteriorate due to existing uncertainty.
Dorman assigned probabilities to three potential outcomes for Strategy. His base case, at 70%, suggests Strategy will continue selling small amounts of MSTR monthly at “non-accretive levels.” This action would likely push the stock toward 0.70 mNAV while offering STRC holders “a glimmer of hope.”
A less probable scenario, with a 25% chance, involves Saylor selling $3 billion to $4 billion worth of Bitcoin to gain time. This move would provide a significant cash infusion but would reduce the company’s Bitcoin holdings. Strategy currently holds 846,842 BTC, valued at approximately $53.4 billion, alongside a $1.1 billion USD reserve. The company has about $6.754 billion in debt.
The least likely outcome, at 5%, is what Dorman termed the “nuclear option”: eliminating the dividends. While this would halt a $1.7 billion annual cash drain, it would also effectively close capital markets to Strategy for future fundraising. Strategy’s multiple of net asset value (mNAV), a ratio used to assess a company’s stock value against its Bitcoin holdings, stands around 1.15.
The immediate future for Strategy hinges on whether it can stabilize STRC’s trading price or implement one of the more drastic measures outlined by Dorman. The company’s ability to continue its Bitcoin accumulation strategy is directly tied to the performance of its preferred stock. Investors will be watching for any strategic shifts or announcements regarding STRC’s status and the company’s capital allocation.