Strategy’s Bitcoin holdings $12B below purchase cost; STRC at $81

Strategy held 847,363 Bitcoin as of June 21, acquired for a total of $64.1 billion at an average price of $75,651. With Bitcoin trading around $60,000 to $62,000, the holdings are worth about $52 billion, leaving an unrealized loss near $12 billion relative to the purchase cost.

Strategy’s common stock has fallen below $100, its lowest level in about two years. That decline has narrowed the premium the company previously used to raise capital by issuing shares relative to the value of its Bitcoin holdings. The company’s variable-rate perpetual preferred security, STRC, was designed to trade near a $100 stated amount but is changing hands around $81.

STRC carries an annual dividend of $11.50 based on the $100 stated value, equal to 11.5% of that amount. At the current market price of about $81, the payment represents an effective yield near 14.2% for a new buyer if the dividend rate and declarations remain unchanged. Strategy can reset STRC’s dividend monthly; the company has approximately $10.5 billion of STRC outstanding.

Options activity around STRC shows elevated volume and a defensive tilt. Total options volume reached about 10,400 contracts, above the average daily volume, and the put-call ratio was about 1.35. Open interest is concentrated in calls at the $95 and $100 strikes and in puts at the $90, $85 and $60 strikes. The $60 put would place STRC roughly 40% below its stated $100 amount and would raise the effective yield above 19% at the current dividend level for a buyer holding the payment.

In recent capital actions, Strategy raised about $335.5 million through common-stock sales and used $34.9 million of that to buy 520 Bitcoin. The company increased its dollar reserve to approximately $1.4 billion. Earlier, Strategy sold 32 Bitcoin for about $2.5 million to help fund STRC distributions, its first net Bitcoin disposal since 2022.

Market participants have offered differing views on financing choices for a firm holding large Bitcoin exposures and outstanding preferred shares. Ki Young Ju, chief executive of CryptoQuant, urged a disciplined selling framework, recommending partial sales at cycle highs to deleverage and realize cash for later re-accumulation. Su Zhu, co-founder of Three Arrows Capital, suggested STRC could stabilize as investors who accept higher yield and volatility buy the shares and recommended clarifying how preferred holders would be treated if dividends were suspended.

Joe Burnett, vice president of Bitcoin Strategy at Strive, contrasted Strategy’s structure with systems that allowed immediate redemptions, noting STRC holders cannot exchange shares for the underlying Bitcoin and that the lack of a redemption right reduces the chance of a sudden run. Charles Edwards, founder of Capriole Investments, recommended reducing liabilities and developing revenue sources such as collateralized lending and settlement services to lower dependence on Bitcoin price appreciation and access to capital markets.

Strategy’s holdings still exceed $50 billion at current prices and the company maintains a dollar reserve near $1.4 billion. Possible responses available to the firm include increasing STRC’s dividend to support its market price, issuing common stock at lower valuations, slowing Bitcoin purchases, or selling more of the Bitcoin treasury to meet cash obligations. Each option would alter the company’s cash obligations and financing flexibility while Bitcoin prices remain below the purchase cost.