Analysis: Strategy's Bitcoin engine malfunctions, three types of investors face pressure

On June 5, according to Bloomberg, the three types of investors in Michael Saylor's Strategy — Bitcoin holders, leveraged equity traders, and preferred shareholders — are all facing pressure. Strategy sold 32 Bitcoins this week, the first sale since late 2022, breaking its "never sell" promise. Bitcoin fell to a four-month low, Strategy's stock price dropped about 70% from its peak last year, and STRC preferred stock fell below its $100 par value. STRC's annualized dividend is 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 would add a $1.7 billion burden, while maintaining it would lead to continued price declines. Strategy will vote on Monday to change the dividend payment to twice a month to stabilize the price. Arca's Chief Investment Officer stated that unless Bitcoin rebounds before the cash buffer is depleted, protecting all stakeholders will be nearly impossible. StoneX believes this sale indicates Strategy can meet its obligations without substantially reducing its holdings.