Strategy’s Bitcoin bet sinks $12 billion underwater as STRC traders brace for more pain

A notable development has hit the crypto markets. Strategy’s Bitcoin holdings have fallen roughly $12 billion below their purchase cost, placing the company’s capital-raising model under its sharpest pressure since it accelerated its Bitcoin treasury strategy. The company held 847,363 Bitcoin as of June 21, acquired for an aggregate $64. 1 billion at an average price of $75,651.

With the top crypto recently trading near $60,000 to $62,000, the position was worth about $52 billion. Strategy Bitcoin Purchases (Source: Strategy Tracker) Against that backdrop, Strategy's MSTR common stock has fallen under $100, its lowest level in about two years. While this substantial unrealized loss does not compel Strategy to sell its holdings or create an automatic margin call, it significantly weakens the conditions that allowed the company to repeatedly issue securities, buy more Bitcoin, and expand a treasury that became central to its market valuation.

Market Dynamics

Strategy’s accumulation model has worked most efficiently when its common shares traded at a premium to the value of the Bitcoin on its balance sheet. That premium allowed the company to raise capital through stock sales while limiting the number of new shares issued. As Bitcoin and Strategy’s stock have declined, that advantage has narrowed.

The pressure has since spread to STRC, the company’s variable-rate perpetual preferred stock, which is trading well below the $100 stated amount Strategy designed it to track. Preferred Shares Fall Further Below Target Strategy created STRC as an income-oriented security intended to trade near its stated $100 price. The company can reset its dividend rate monthly to influence investor demand and support the market price.

The security currently pays an annual dividend of 11. 50 per share based on the stated amount. STRC has nevertheless fallen to about $81, almost 20% below the level the company seeks to maintain.

Market Impact

Strategy Preferred Stock Offerings Effective Yield (Source: Strategy) At $81, the current payment represents an effective annual yield of about 14. 2% for a new buyer, assuming Strategy’s board continues to declare the dividends and the rate remains unchanged. The lower share price does not increase the amount Strategy pays on its existing STRC shares.

It does show that investors are demanding a larger return to hold the security, and makes additional preferred-stock issuance less efficient. Strategy could raise the dividend rate to encourage buying and help move STRC closer to $100. However, such an adjustment would add to the company’s recurring cash requirements.

Meanwhile, keeping the rate unchanged would preserve liquidity but could leave the preferred stock trading at a persistent discount. That trade-off has become more consequential as concerns over Strategy’s Bitcoin exposure and cash needs increase. The company has about $10.

Crypto markets are watching this development closely as investors weigh its potential impact on prices.