Bitcoin near $80,000 puts pressure on the preferred-stock funding behind Strategy's purchases

Bitcoin traded at about $80,380 on Saturday evening in New York, according to CoinDesk. That is below the price Strategy, the largest corporate holder, paid in its most recent disclosed purchase. Strategy and smaller rival Strive now have to divide their cash between buying bitcoin and paying preferred-stock dividends, CoinDesk reports. Their preferred securities have funded purchases of nearly 136,000 bitcoin, and analysts expect this channel to supplement demand from the much larger exchange-traded fund (ETF) market.

The disclosures show where the money is going. On October 12, Strategy reported that it had bought 250 bitcoin for $21.5 million at an average price of $86,194 between October 5 and 11. Over the same week it repurchased 1,932,145 shares of its variable-rate perpetual preferred stock (STRC) for $192.4 million. Its holdings stood at 848,250 bitcoin, bought at an average of $75,444 each. The company also reported a $4.88 billion US dollar reserve set aside for preferred dividends and debt interest.

Bitcoin fell during the same week that gold dropped below $4,000 and technology shares sold off on doubts about AI spending. Because both assets fell, the week does not clearly show bitcoin trading with risk assets or with gold. Both fell as markets raised their expectations for Federal Reserve tightening.

From a sound-money perspective, the model has a built-in mismatch. Fixed cash dividends in dollars are being paid out of a balance sheet whose main asset produces no income. The dollar reserve and the absence of margin loans give Strategy time. They do not change how the model works when the price falls.