Strategy, the software company formerly known as MicroStrategy, said its Bitcoin‑focused financing model is under pressure as its variable rate perpetual preferred stock, STRC, traded about 25% below its $100 stated value. The decline sent the stock to a low of $71 on Friday before it recovered to roughly $75, raising questions about the company’s ability to fund continued Bitcoin purchases through capital markets.

For years the firm sold equity and preferred securities at premium valuations to buy Bitcoin, creating a loop where higher market prices funded more purchases and reinforced its status as the largest corporate Bitcoin holder. The market‑to‑net asset value (mNAV) metric, which includes debt, cash and preferred equity, slipped below 1, indicating that investors no longer paid a premium for the company’s Bitcoin accumulation capability.

Analysts estimate that Strategy may need about $8 billion in cash over the next two years, driven by $1.7 billion in annual preferred dividends — about $1.2 billion from STRC alone — and $4.5 billion of convertible notes that could be redeemed for cash between September 2027 and June 2028. The company holds roughly $1.4 billion in cash, which it has built by selling securities in a weaker market, a move that preserves liquidity but increases dilution risk. Investor sentiment is reflected in options trading, with notable open interest in July 17 contracts at the $60 strike, suggesting bets on further declines. The preferred stock’s effective yield rose to about 15% at the $75 level, indicating that investors demand higher compensation than the stated dividend rate.

Comments from industry figures highlighted the strain. Brad Garlinghouse, chief executive of Ripple, told CNBC that reliance on preferred equity and other financing tools diverts focus from the utility of digital assets, while acknowledging Bitcoin’s long‑term potential. Michael Saylor, Strategy’s executive chairman, responded that volatility tests any capital structure and that the firm remains focused on disciplined capital allocation and long‑term value creation.

The situation underscores a shift in market focus from the size of Strategy’s Bitcoin holdings to the health of its balance sheet. Whether the company can restore investor confidence without altering its accumulation strategy remains to be seen.