Analysis: The Bitcoin engine of Strategy has malfunctioned, putting pressure on all three types of investors

According to Bloomberg, the three types of investors under Michael Saylor's Strategy—Bitcoin holders, leveraged equity traders, and preferred shareholders—are all under pressure. Strategy sold 32 Bitcoins this week, marking the first sale since the end of 2022, breaking the "never sell" promise. Bitcoin has fallen to a four-month low, and Strategy's stock price has dropped about 70% from last year's peak, with STRC preferred shares falling below the $100 par value. STRC has an annualized dividend of 11.5%, and if the market continues to weaken, the pressure to pay dividends will continue to rise.

Analysts point out that increasing the dividend rate will add a $1.7 billion burden, while keeping it unchanged will lead to further price declines. Strategy will vote on Monday to change the dividend to bi-monthly payments to stabilize the price. The Chief Investment Officer of Arca stated that unless Bitcoin rebounds before the cash buffer is exhausted, it will be nearly impossible to protect all stakeholders. StoneX believes that this sale indicates that Strategy can fulfill its obligations without materially reducing its holdings.