Severe Dislocation of Preferred Stock STRC: Market Panic Spreads
Jiang Zhuoer, founder of Leibite Mining Pool, posted on social media that MicroStrategy's preferred stock STRC has experienced severe dislocation, falling to as low as $73, well below its par value. This phenomenon reflects the growing panic among US equity market participants towards Bitcoin. As a preferred stock linked to Bitcoin's price, STRC's price movement is often seen as an indicator of market sentiment towards MicroStrategy's overall risk exposure. The dislocation suggests that investors' concerns about Bitcoin's future have spilled over into MicroStrategy's equity market.
MSTR BTC Purchases Decline: Company Shifts to Dividend Payments
Jiang detailed MicroStrategy's recent capital operations. Over the past three weeks, MSTR has raised funds by issuing common stock. In the first two weeks, half of the proceeds were used to purchase Bitcoin, totaling approximately 1,500 BTC. However, in the third week, the situation changed markedly: the amount of shares sold doubled while BTC purchases plummeted to just 520 BTC, with most of the funds retained to pay dividends on STRC preferred stock. Jiang believes this is a clear signal of the company's pessimistic outlook on the market. He predicts that in the coming months, MSTR's BTC purchases will continue to decline sharply, and may even cease altogether, as the company redirects cash to pay STRC dividends to maintain returns for preferred shareholders.
Debt Ratio Only 10%: Jiang Zhuoer Says Blow-Up Risk Extremely Low
Addressing market concerns about a potential MSTR blow-up, Jiang emphasized that STRC is preferred stock, not debt. The company is only required to pay dividends and does not need to repay principal, so there is no risk of debt default. Currently, MSTR's debt ratio is only about 10%, indicating very low financial leverage. Even if Bitcoin's price falls significantly, as long as there is no decade-long bear market, MSTR can fully cover dividend payments through operating cash flow or continued financing, and will not become insolvent. Jiang concluded that market fears of an MSTR blow-up are overblown, and the dislocation of STRC reflects short-term panic rather than fundamental problems.