Perpetual preferred stock has opened a new funding route for bitcoin treasury companies, giving them access to income-focused investors. But the same structure is now creating pressure as dividend costs rise and discounted buybacks begin to compete with bitcoin purchases for cash.
Fidelity Digital Assets and several analysts interviewed by CoinDesk said bitcoin treasury firms such as Strategy and Strive are facing a difficult balancing act. They need enough cash to keep buying bitcoin, while also preserving investor demand for new perpetual preferred share offerings. As the number of shares outstanding grows, so does the dividend bill.
About 136,000 BTC financed in 20 months
These securities sit between debt and common equity in the capital structure. They typically pay regular dividends, carry no voting rights, and have no fixed maturity date. In a research note published Tuesday, Fidelity research analyst Zack Wainwright wrote that perpetual preferred shares have funded the purchase of about 136,000 BTC since the product was introduced 20 months ago, equal to more than 0.5% of bitcoin’s maximum supply.
Strategy, the public company with the largest bitcoin holdings in the world, is the dominant player in this market. Its preferred stock lineup now includes five classes of shares, and its first preferred product, STRK, debuted in February 2025.
Fidelity estimates the bitcoin-focused preferred stock market at about $12 billion. That compares with a global fixed-income market worth roughly $150 trillion, suggesting there is still substantial room for expansion.
Reaching investors who want yield
By selling preferred shares that offer recurring dividends and no fixed maturity, these companies reduce refinancing pressure and attract investors who do not want to hold bitcoin directly.
Mark Palmer, senior equity research analyst at StoneX, said, 「Perpetual preferred stock brings bitcoin to fixed-income investors, a group ETFs have never reached.」
Bitwise Head of Research Ryan Rasmussen made a similar point. He said these products are drawing buyers who might otherwise avoid spot bitcoin exchange-traded funds, though he expects ETFs to remain the larger source of demand. 「Over the long run, I expect ETFs to remain the primary source of demand for bitcoin, while perpetual preferred issuance acts as a second tailwind aimed at a different class of investor, namely income-focused buyers,」 Rasmussen said.
James Butterfill, head of research at CoinShares, said STRC alone currently pays a floating dividend of about 12% and had raised $7.5 billion through late July 2026. That financing comes with an ongoing schedule of dividend payments.
Volatility in the securities adds another layer of risk
Alex Blume, founder and chief executive of institutional bitcoin asset manager Two Prime, said products such as STRC and Strive’s SATA offer more than simple bitcoin price exposure. Their prices also respond to management execution, the issuer’s ability to meet liabilities, and broader capital market conditions.
As an example of that volatility, Blume pointed to STRC briefly falling into the $70 range in late June. He said growing issuance creates internal tension between increasing bitcoin per common share, meeting U.S. dollar-denominated dividend commitments, and avoiding bitcoin sales. Strategy’s preferred stock is currently trading at about $99.40.
Buybacks are starting to compete with bitcoin purchases
Palmer said the core issue is the highly reflexive nature of demand for perpetual preferred shares. For companies to keep using the instrument to fund bitcoin purchases, the securities need to trade near or above par. Butterfill added that once they fall below par, new issuance loses appeal and companies may shift toward buybacks.
According to Butterfill, Strategy’s latest weekly report showed the company spent $193 million repurchasing STRC while buying only 267 BTC over the same period. He added that the company also increased its preferred share buyback authorization to $3 billion.
「Buybacks may reduce future dividend costs, but right now they are directly competing with bitcoin purchases for scarce capital,」 Butterfill said.
He also said that while cash reserves provide some cushion, Strategy had previously been forced to sell some bitcoin to pay preferred dividends.
Spot ETFs remain the bigger demand channel
Butterfill said U.S. spot bitcoin ETFs have recorded about $57 billion in cumulative net inflows and hold roughly $106 billion in assets.
ETF subscriptions directly increase the amount of bitcoin held by the funds, while preferred stock issuance leaves capital allocation decisions in management’s hands. Butterfill said redemptions could reverse ETF buying, but ETFs do not leave behind the same ongoing fixed dividend burden carried by preferred shares.
In his view, preferred stock amplifies market cycles. When external financing conditions are favorable, it can strongly support bitcoin accumulation. When market sentiment weakens, that support can fade quickly.
