STRC Preferred Stock Discount Signals Market Panic
Jiang Zhuo'er, founder of mining pool Labit, posted on social media that MicroStrategy's preferred stock STRC has experienced a significant de-anchoring, dropping to as low as $73. This reflects the growing panic sentiment among U.S. stock market investors towards Bitcoin. Preferred stocks typically carry fixed dividend payments, and the sharp price decline indicates that investors are worried about MicroStrategy's outlook and its large Bitcoin holdings.
MSTR's Three Consecutive Weeks of Equity Issuance Show Weakening BTC Purchases
Jiang noted that MSTR has raised capital by issuing common stock for three consecutive weeks. In the first two weeks, the company used half of the proceeds to buy Bitcoin, accumulating a total of 1,500 BTC. However, in the third week, the share issuance amount doubled, but Bitcoin purchases plummeted to only 520 BTC. Most of the remaining capital was retained to pay dividends on STRC. Jiang interprets this as a clear signal that the company is pessimistic about the near-term outlook for Bitcoin. He expects MSTR's Bitcoin purchases to decline sharply in the coming months, and may even stop completely, diverting funds to STRC dividend payments instead.
Low Leverage and Preferred Structure Limit Downside Risk
Jiang emphasizes that STRC is a preferred stock, not a debt instrument. The company is only obligated to pay dividends, not to repay principal. This means that even if the value of MicroStrategy's Bitcoin holdings declines, there is no forced repayment pressure. Currently, MSTR's debt-to-asset ratio is only about 10%, a very low level. Unless a Bitcoin bear market persists for a decade (making it impossible for the company to raise funds elsewhere to pay dividends), there is virtually no risk of a blow-up. Jiang's analysis alleviates some investor concerns about MicroStrategy's financial safety.