Bitcoin Plummets Lower as Strategy's STRC Dives Further From $100 Mark

By André Beganski

The price of Bitcoin continued to turn lower on Thursday as Strategy’s flagship preferred stock notched another record low after U.S. markets opened.

Not long after the opening bell, Stretch (STRC), the product that currently offers an 11.5% annual dividend, fell 8% to $74.13, according to Yahoo Finance. That marked a more than 25% drift from its $100 par value, at which Strategy engineered the preferred stock to trade.

Meanwhile, Bitcoin plunged. The leading digital asset by market cap fell to $58,188 before ticking back up to $59,273 as of this writing, a 3.3% decrease over the past day, according to CoinGecko. The drop exacerbated losses, following the cryptocurrency’s fall to a 21-month low on Wednesday.

Strategy’s stock price has been hammered in recent weeks as STRC’s swoon has tested faith in Executive Chairman and co-founder Michael Saylor’s vision for “digital credit.” The company’s common MSTR shares tumbled 7% to $87.50 before firming to $87.89 apiece.

Liquidations across the crypto market rapidly accelerated as Bitcoin and other assets fell Thursday. CoinGlass data shows more than $1.44 billion in positions liquidated over the past 24 hours, dominated by long positions—or bets that an asset's price will increase—at $1.2 billion. Bitcoin is leading the carnage with $658 million in total liquidations.

On Wednesday, Saylor linked confidence in STRC and similar products to the original digital asset, saying in an X post, “Digital Credit is income for investors who believe in Bitcoin.”

Still, analysts and investors have fixated on the company’s balance sheet in recent weeks, particularly the Bitcoin-buying firm’s so-called USD Reserve. The pile of cash represents Strategy’s cushion for managing dividend payments and debt.

Since the start of this year, those funds have worn relatively thin. In January, given STRC’s size, the company had enough cash to cover dividends for seven years at $2.25 billion. But at this point, the firm has earmarked enough money to cover 14 months of routine payouts.

Analysts at JPMorgan and CryptoQuant have argued that Strategy needs to rebuild its reserves to ensure confidence in STRC. The South Korean analytics firm went as far as to say earlier this week that Strategy should stop buying Bitcoin immediately.

Since Strategy repurchased a portion of its debt at a discount, the company has taken several steps to rebuild its cash stockpile to $1.4 billion by issuing common shares. That has chipped away at growth in the company's core metric, Bitcoin owned per share, however.

STRC is designed to trade at $100, and when the preferred stock trades at or above that level, Strategy issues more shares in order to bankroll its acquisitions. The company has hiked the dividend seven times, resulting in additional recurring costs, which can be deferred.

At the beginning of this month, Strategy disclosed that it sold 32 Bitcoin for $2.5 million—its first sale since 2022. The move, intended to show preferred stockholders that the company was willing to pare its holdings to keep dividends flowing, has led some analysts to think that more liquidations could be coming.

At the digital asset’s current level, Strategy’s stockpile of 847,363 Bitcoin was close to $50 billion, or roughly $14 billion underwater.

Editor's note: This story was updated after publication with additional detail.

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