MicroStrategy sold 32 Bitcoin (BTC) between May 26 and May 31 to help fund dividends on its preferred stock, its first such sale since 2022. Now, its STRC shares are trading below their $100 par value.

The sale was small next to the 843,706 BTC the company holds. Still, it raised a sharper question for investors. Can MicroStrategy keep buying Bitcoin if the engine behind those purchases stalls?

Strategy, formerly MicroStrategy, built its treasury through capital markets rather than business operations. Its Variable Rate Series A Perpetual Stretch Preferred Stock, known as STRC, became the main tool for that effort.

STRC pays an 11.50% annual dividend and is designed to trade near $100. When it holds that level, MicroStrategy can issue more shares at par and turn the cash into Bitcoin. The preferred program has funded more buying than spot ETFs this year.

During the latest reporting period, the company sold no new STRC shares. Issuance stalled while the stock sat below par, cutting off its cheapest route to fresh Bitcoin and adding to talk of a weakening funding loop.

“Below $100, STRC can’t fund new BTC purchases. MSTR is also depressed. That leaves one option to cover $1.7B/year in obligations: Sell Bitcoin,” one user posed.

Follow us on X to get the latest news as it happens

The funding machine has not stopped completely. MicroStrategy sold 801,994 MSTR shares in the same week, raising about $128 million in net proceeds. It also keeps a $900 million cash reserve for dividends and interest.

That cushion means near-term obligations look covered. The strain shows in the mix. MicroStrategy is leaning on common stock and reserves instead of issuing STRC at par, and it reached for its Bitcoin to cover a payout.

Executives have previously detailed when it sells Bitcoin, framing such moves as a last resort.

The company also raised the STRC dividend earlier this year to defend the peg. Critics see a turning point worth a real selling debate.

THE STRC PARTY IS OVER … It wont peg to $100 and therefore Saylor wont be able to use it to raise. It may not peg for a while… This is one of the reasons Bitcoin is dumping,” stated one analyst

MicroStrategy maintained the 11.50% rate for June and left billions in STRC capacity open for later sales, signaling confidence the model recovers once Bitcoin firms up.

Bitcoin traded near $67,252 on June 3, below MicroStrategy’s average purchase price of $75,702, according to the company filing.

With the treasury underwater on paper and STRC below par, the coming weeks will test whether the preferred engine restarts or MicroStrategy keeps reaching for other funding.

The post STRC Falls Below $97 as Latest Bitcoin Sale Challenges MicroStrategy’s Capital Turbine appeared first on BeInCrypto.

Bitcoin price in Telegram @btc_price_every_hour

23 +