Bitcoin has been seeing recurring mid-month strength this year, and it is becoming harder to separate it from Strategy’s (formerly MicroStrategy) expanding preferred-stock machine. The funding channel is helping the company continue to buy the flagship digital asset while adding a growing layer of cost to its balance sheet.
Research firm K33 has tied the pattern to Strategy’s perpetual preferred stock, STRC, which has become a key source of liquidity for the world’s largest corporate Bitcoin holder. The instrument pays dividends at month-end, but investors must own the shares by the 15th to qualify for the payout.
That deadline has turned the middle of each month into a predictable window of demand. Investors buy STRC ahead of the cutoff, driving up its trading volume, and the stock moves back toward its $100 par value.
Once STRC trades at or above par, Strategy can issue new shares through its at-the-market program and use the proceeds to buy more Bitcoin.
Data from STRC.live shows that this loop has become active this week, with STRC returning to par and giving Strategy enough room to fund the purchase of more than 5,000 Bitcoin before Friday’s next ex-dividend deadline.
The move extends a pattern that has made Strategy’s capital markets activity a recurring feature of Bitcoin’s spot-market flow. It also reinforces why STRC has become the most dominant preferred equity in the market.
STRC turns dividend demand into Bitcoin buying
The volume of Bitcoin acquired through this specific funding channel has accelerated aggressively since the start of the year.
K33 research noted that Strategy bought 4,467 Bitcoin using STRC proceeds in January. By March, purchases tied to the preferred stock had climbed to 22,131 Bitcoin.
In April, the figure rose again to about 46,872 Bitcoin, showing how rapidly the instrument has moved from a financing tool to a major driver of the company’s accumulation strategy.
Vetle Lunde, the head of research at the crypto research firm, described the setup as a mechanical source of demand.
According to him, STRC draws yield-focused investors before the ex-dividend date, helping the preferred stock regain par and giving Strategy the market depth needed to issue more shares. The company then converts that demand into spot Bitcoin purchases.
Meanwhile, Strategy is now seeking to tighten the cycle. The company has proposed moving STRC’s dividend schedule from monthly payments to twice-monthly distributions, arguing that more frequent payouts would reduce reinvestment delays and improve market efficiency.
The change would also create more frequent opportunities to raise capital. That could reinforce the mid-month buying pattern, while making Strategy more dependent on a product that carries a far higher cost than its earlier financing tools.
Strategy’s cheap-capital era gives way to preferred equity
While the STRC mechanism is helping to shape BTC’s near-term market performance, institutional researchers are sounding the alarm about the trade’s long-term sustainability.
For much of its Bitcoin accumulation history, the Michael Saylor-led company had relied on common stock issuance and convertible debt.
Both were attractive when Strategy’s equity traded at a wide premium to the value of its Bitcoin holdings, and bond investors were willing to accept low coupons in exchange for exposure to possible stock upside.
However, those conditions have considerably weakened over the past year.
Delphi Digital estimates Strategy’s common stock premium now trades at about 1.24 times its enterprise-value-based net asset value. At that level, issuing common stock offers far less benefit for increasing Bitcoin per share.
Moreover, the convertible-debt window has also narrowed. Strategy carries about $8.2 billion of principal from earlier deals, with repayments scheduled to begin in September 2027.
That leaves STRC as the main financing engine for Strategy’s recent BTC purchases. Because the preferred stock sits below senior debt and convertibles in the capital stack, investors require more compensation for the risk.
STRC’s annualized yield has already risen to 11.5%, a sharp increase from the cheaper financing that supported Strategy’s earlier Bitcoin purchases.
The Bitcoin-per-share trade gets more expensive
STRC still helps Strategy buy Bitcoin without issuing common stock directly for the purchase. That is central to the company’s argument that the program can support growth in Bitcoin per share.
Delphi estimates that about 97% of every $1 billion raised through STRC can be deployed into Bitcoin. At current prices, that can lift Strategy’s Bitcoin-per-share metric at the point of issuance.
The cost arrives afterward. Each $1 billion of STRC creates roughly $115 million of annual dividend obligations. Those payments must be serviced, and Delphi expects Strategy to rely on common stock issuance to meet them.
That turns the preferred program into a delayed dilution mechanism. The Bitcoin bought with STRC proceeds can initially lift per-share exposure, but the recurring dividend bill gradually offsets that benefit as more common stock is issued to fund payments.
Delphi’s model shows the effect fading over time. Bitcoin-per-share growth could exceed 7% in the first year of the program, but fall to just above 3% by the third year as the preferred stock base grows and dividend obligations compound.
The pressure becomes more acute near the $28.3 billion STRC authorization cap. Once Strategy reaches that limit, the preferred-stock engine can no longer keep funding new purchases at the same pace. The dividend bill, however, remains.
Under those conditions, Delphi projects that net Bitcoin-per-share growth could turn negative, shrinking by nearly 6% a year as common issuance is used to service preferred dividends rather than to expand holdings.
A bear market could stress the loop
The larger risk is that STRC’s mechanics work best when Bitcoin is rising, and investor appetite for yield remains strong.
Blockchain research firm House of Chimera has warned that a sustained downturn could create a negative feedback loop.
According to the firm:
“As Bitcoin declines, STRC may need to raise its dividend to maintain investor demand. Yet higher yields also increase Strategy’s monthly cash obligations at the exact moment its BTC holdings are losing value. This creates a structurally fragile feedback loop in which worsening market conditions force the structure to promise ever-larger payouts.”
The House of Chimera’s test suggests that under pessimistic market conditions, Strategy’s $2.5 billion cash reserves could be exhausted within 17 to 22 months.
That would leave the company facing a liquidity squeeze at the same time market access is weakest.
Moreover, the bigger danger is that Strategy could eventually be forced to sell Bitcoin to meet dividend obligations.
Any forced selling would add pressure to the spot market, weaken demand for STRC, and potentially require even higher yields to restore investor confidence.
In House of Chimera’s most severe scenario, the preferred-stock stack could eventually force sales approaching 800,000 Bitcoin.
Strategy moves from accumulation to balance-sheet management
Acknowledging the changing financial realities, Strategy’s corporate posture has evolved.
The company’s recent disclosures point to a more active approach than the earlier “never sell” posture associated with founder and Chairman Michael Saylor.
The focus has shifted toward maximizing BTC Yield, a company metric that tracks the growth of physical Bitcoin holdings relative to the number of outstanding shares. In an X post, Phong Le, president and CEO of the company, said:
“Bitcoin per share (BPS) is our True North. Every day, Strategy uses multivariate models to optimize capital, equity, debt, and credit decisions to maximize annual BTC Yield (growth in BPS). YTD, we’ve achieved 9.4% BTC Yield and $5.0 billion in BTC Gain.”
Keeping those figures positive will become harder as cheap debt rolls off, preferred dividends expand, and the cost of each new Bitcoin purchase rises.
For now, STRC continues to support a reliable mid-month Bitcoin bid. The instrument converts yield demand into fresh capital, and that capital continues to flow into the spot market.
However, the trade is also becoming more fragile. Strategy’s funding machine can still lift Bitcoin in the short term, but the same structure is building a larger dividend burden behind each purchase.
As STRC grows, the question for shareholders and Bitcoin traders becomes whether the company can continue to increase Bitcoin per share after the machine’s cost is fully accounted for.