Strategy ties next Bitcoin buys to recovery in preferred shares

Strategy CEO Phong Le said the company plans to restart Bitcoin purchases after its Stretch preferred shares climb back to their $100 par value, tying its next crypto buys to investor demand for its financing tools. For retail investors watching Bitcoin or Strategy stock, the message is clear: the company’s buying pace now depends on capital markets, not just its appetite for BTC.

Le told Bloomberg TV on Tuesday that Strategy wants Stretch, which trades under the ticker STRC, to return to par before it sells more of the preferred stock. Preferred shares are stock-like securities that often pay dividends and sit ahead of common stock in a company’s capital structure. Par value is the face value attached to the security, in this case $100.

Le said issuing more Stretch shares is central to Strategy’s capital plan because the company believes it can increase Bitcoin per share for shareholders when the preferred stock trades at the right level. He also said he did not know how long it would take for STRC to regain its par value.

Strategy has paused Bitcoin buying

Strategy has not purchased Bitcoin since late June, according to the company’s purchase tracker. Instead, the firm has focused on building a larger cash cushion.

The company raised $467 million through a common-stock sale and increased its U.S. dollar reserve to $3 billion, according to figures cited by Decrypt. That reserve is enough to cover two years of dividend payments, Le said.

Le described the shift as part of Strategy’s move from a Bitcoin treasury company toward what he called a broader digital capital platform. A treasury company in this context is a firm that holds Bitcoin as a major balance-sheet asset and raises money through stocks or debt to buy more of it.

Why STRC’s price matters

STRC has traded below its $100 par value since mid-May and was changing hands around $89 on Wednesday, according to Yahoo Finance. When preferred shares trade below par, selling new shares can be less attractive because the company may need to offer investors a discount or higher effective yield to raise money.

Le told Bloomberg TV that building the dollar reserve has helped support investor confidence in STRC. He said the company learned over recent months that having liquid access to U.S. dollars for one, two or three years is valuable, and he noted that STRC had recovered from the mid-$70s to near $90 as the reserve grew.

Le also pushed back on concerns that Strategy is pulling back from its role as a major Bitcoin holder. He said the company is “not going anywhere.” Data from BitcoinTreasuries.net identifies Strategy as the largest known corporate holder of Bitcoin, with more than 840,000 BTC. That equals roughly 4% of Bitcoin’s maximum supply of 21 million coins.

Le said Bitcoin’s market is much larger than Strategy, citing daily trading volume of $30 billion to $40 billion. He also said the company’s recent $216 million in sales did not move the market.

The main stress case Le identified was far lower Bitcoin prices. He told Bloomberg TV that Strategy would need to consider risks tied to its debt if Bitcoin fell into the $8,000 to $10,000 range.

This story draws on original reporting from Decrypt.