Strategy, Strive preferred stock model tests sustainability of bitcoin buying

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Strategy, Strive bitcoin stock model

Highlights

Fidelity Digital Assets estimates the bitcoin-focused perpetual preferred stock market at $12 billion, financing about 136,000 bitcoin purchases since its 2022 introduction and indicating potential for expansion.
Strategy's STRC paid a 12% variable dividend, raised $7.5 billion in 2026 through late July, but rising dividend commitments constrain bitcoin buying capacity and push the firm toward $3 billion in repurchase authorizations.
Price volatility in instruments like STRC, which dropped to the $70 range in late June, highlights tensions between sustaining dividend payouts, repurchases, and bitcoin accumulation for issuers competing with ETFs holding $106 billion in assets.

Preferred funding model gains scale

As reported by CoinDesk, bitcoin treasury companies including Strategy and Strive are relying on perpetual preferred stock to fund bitcoin purchases while trying to preserve investor demand for new issuance.

Fidelity Digital Assets said the securities, which sit between debt and common equity and typically offer regular dividends without voting rights, have financed the purchase of about 136,000 bitcoin over the 20 months since their introduction. Fidelity estimates the bitcoin-focused preferred market at roughly $12 billion, compared with a global fixed-income market of $150 trillion, pointing to room for expansion.

Strategy remains the dominant participant in the segment as the largest corporate bitcoin holder, with five classes of preferred shares outstanding. Its first offering, STRK, debuted in February 2025, and analysts view the company as a key test case for whether the model can remain durable at larger scale.

Market participants say the products are drawing income-oriented investors who may be unwilling to hold bitcoin directly. Mark Palmer, senior equity research analyst at StoneX, said perpetual preferreds have opened bitcoin exposure to yield-focused buyers that exchange-traded funds did not reach, while Bitwise head of research Ryan Rasmussen expects U.S. spot bitcoin ETFs to remain the larger long-term demand channel.

Dividend costs and buybacks compete for capital

As more preferred shares enter the market, issuers face growing dividend commitments that can limit flexibility for future bitcoin purchases. James Butterfill, head of research at CoinShares, said Strategy's STRC, which currently pays a variable dividend of about 12%, raised $7.5 billion during 2026 through late July, but that financing also creates a recurring payout burden.

Analysts said demand for the securities is sensitive to trading levels near par value. Palmer said continued preferred-funded buying depends on the instruments trading at or close to par, while Butterfill said issuance becomes less attractive below par and companies may instead lean toward repurchases.

Butterfill said Strategy's latest weekly update showed $193 million spent on repurchasing STRC alongside the purchase of just 267 bitcoin, and that the company has raised its preferred-stock repurchase authorization to $3 billion. He said buybacks can lower future dividend costs, but they also compete with bitcoin purchases for capital in the near term.

Alex Blume, founder and chief executive of institutional bitcoin asset manager Two Prime, said securities such as STRC and Strive's SATA reflect not only bitcoin price exposure but also management execution, issuer obligations and broader capital-market conditions. He pointed to STRC briefly falling into the $70 range in late June as a sign of possible volatility, adding that greater issuance increases tension between growing bitcoin per common share, meeting dollar-denominated dividend commitments and avoiding bitcoin sales.

Butterfill added that cash reserves provide some protection, although Strategy has already sold some bitcoin to fund preferred dividends. He said U.S. spot bitcoin ETFs have attracted about $57 billion in cumulative net inflows and now hold around $106 billion in assets, with ETF demand rising through net creations but lacking the continuing dividend obligations tied to preferred issuance.

Our earlier coverage of Hainan Rubber’s proposed subordinated perpetual sustainable securities explained how the company planned to refinance offshore debt via notes issued by its majority-owned unit Halcyon Agri and backed by a subordinated guarantee. We highlighted the key instrument features—subordination and the option to defer coupons—and the factors supporting the credit view, including liquidity, state-linked support considerations and the company’s elevated leverage profile.

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