Bitcoin”s recent decline below $76,037 has temporarily put Strategy”s substantial bitcoin holdings of 712,647 BTC in a precarious position. However, the company has reported no immediate financial challenges due to this drop. The primary consequence is that Strategy”s stock now trades at a discount relative to its bitcoin assets, complicating potential new share issuances and slowing down future bitcoin acquisitions.
Despite the current market conditions, Strategy maintains a healthy financial status with $2.25 billion in cash reserves and flexible management options for its $8.2 billion in convertible debt. Notably, the first put date for this debt is not scheduled until the third quarter of 2027. This strategic position allows the company to navigate the financial landscape without the risk of forced selling, as none of its bitcoin holdings are pledged as collateral.
The recent market fluctuation saw bitcoin prices dip below $75,500, momentarily placing the company underwater on its average purchase cost of about $76,037 per coin. This marks a significant moment for Michael Saylor”s firm, as it represents the first time in a considerable duration that their bitcoin position has dipped below acquisition costs.
While the price drop creates a challenging environment for fundraising, it does not trigger immediate liquidity concerns for Strategy. Historically, the firm has financed its bitcoin purchases through the issuance of new shares in at-the-market offerings. This strategy is effective when the stock trades at a premium to its net asset value; however, the current situation has flipped this dynamic to a discount.
In a previous period when Strategy”s shares traded below the value of its bitcoin holdings, the company managed to acquire only about 10,000 additional bitcoins throughout the year. This trend underscores the potential impact on future acquisitions given the current market landscape.
In a positive development, Strategy has announced an increase in the dividend for its Stretch preferred stock by 25 basis points, raising it to 11.25% for February. This marks the sixth increase since the preferred stock began trading in July 2025. The Stretch preferred stock offers monthly cash distributions and adjusts its dividend rate to align with its par value, which currently sits at $98.99, slightly below par.
Bitcoin has experienced a rebound since its weekend dip, recently trading near $78,000. This recovery could potentially provide Strategy with more favorable conditions moving forward, although the underlying issues regarding stock valuation and future fundraising remain relevant.
