As Bitcoin’s price slump continues to rattle equity-linked crypto firms, Strategy Inc. (previously known as Microstrategy) is pivoting its capital-raising playbook to preferred stock issuance in a bid to secure fresh funding for its Bitcoin accumulation strategy.
Chief Executive Phong Le said the company would increasingly rely on perpetual preferred shares to fund purchases of the top cryptocurrency, reducing dependence on common equity sales that often exacerbate dilution and volatility for existing shareholders.
“We will start to transition from equity capital to preferred capital,” Le said during a Bloomberg appearance on Feb. 12, adding that the preferred product would be “a big one” for Strategy in 2026.
The instrument in focus is Stretch (STRC), a variable-rate perpetual preferred stock designed to offer income stability while maintaining a close link to the company’s digital asset holdings.
Currently paying an annualised dividend of 11.25%, Stretch resets its rate monthly and targets a $100 par value, a mechanism engineered to minimise the sharp price swings that have increasingly defined Strategy’s common shares.
STRC, which first launched in July 2025, is now one of several preferred offerings used by Strategy to raise capital without eroding shareholder value through common stock dilution.
It reclaimed its par value at the close of trading last Wednesday for the first time since mid-January, an outcome Le called “the story of the day.”
Strategy views Stretch and its related offerings, such as STRK, as suitable vehicles for institutions like insurers and pensions, which seek digital exposure without direct price correlation.
By sitting above common stock and below debt in the capital stack, preferred shares offer priority on dividends while sacrificing voting rights, an appealing tradeoff for stability-focused allocators.
Strategy’s Bitcoin rattles shareholders
Strategy’s high-beta exposure to Bitcoin has once again put its balance sheet under pressure, amplifying volatility not just for the company but also for shareholders who often bear the brunt of sharp price swings.
Over the past three weeks, the firm raised $370 million through common stock and another $7 million via preferred issuance, channelling those funds directly into Bitcoin purchases.
Its total holdings have now surpassed 714,000 BTC, acquired at an average cost of roughly $76,056 per coin.
But the math isn’t working in the company’s favour, for now.
Bitcoin’s sharp drop from its 2025 peak of nearly $120,000 to as low as $60,000 earlier this month has left Strategy sitting on more than $6 billion in unrealised losses.
Market data compiled by Artemis places the paper loss closer to $9.2 billion, accounting for broader declines since the start of the year.
The ongoing slump has not spared Strategy’s own stock, which fell more than 5% on Feb. 11 and is down over 19% year-to-date.
Yet, Strategy remains confident in the durability of its funding architecture and its strong cash reserves, which continue to serve as a critical buffer against market stress.
As of January, Strategy held $2.25 billion in cash reserves, enough to cover more than 30 months of interest and preferred dividend payments.
And while the firm’s reliance on leverage has drawn criticism, Le and Executive Chairman Michael Saylor have continued to present Strategy’s balance sheet as resilient, even under duress.
Speaking recently on CNBC, Saylor downplayed concerns about forced liquidation, saying the firm could refinance its debt “even if Bitcoin fell to $8,000.”
“It’s a feature of a high-volatility asset, not a flaw in the model,” he told investors earlier this month.
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