Bitcoin extended its decline Thursday as concerns over Strategy’s funding model added pressure to a market already weighed down by rising rate expectations.
The largest crypto asset fell as much as 3.3% to $62,229, moving back toward the $60,000 level it briefly broke below two weeks ago. Bitcoin has now lost roughly half its value since reaching a record high in October.
The latest pressure is centered on Strategy’s Stretch preferred stock, known as STRC. The preferred shares were designed to help Strategy raise capital at a $100 par value and use the proceeds to buy more Bitcoin, while paying holders a double digit annual dividend.
That mechanism becomes harder to sustain when STRC trades below par. The stock has not traded at $100 since May 15, the ex dividend date for last month’s payout, and fell below $83 on Thursday.
Traders are now treating STRC as a proxy for stress in Strategy’s capital structure. If the preferred shares remain below par, Strategy can no longer sell them as efficiently to fund new Bitcoin purchases. Raising capital below par also increases the effective yield the company must pay to buyers.
