MSTR Preferred Stock Plunges 78%: Bitcoin Breaks Cost Basis
CryptoQuant analyst Axel Adler Jr. recently highlighted that Strategy's (formerly MicroStrategy) preferred stock MSTR has dropped 78% from its peak, while Bitcoin is down 51% from its all-time high. Strategy currently holds 847,363 BTC at an average cost basis of $75,651, representing a total investment of approximately $64.1 billion. For the first time since the 2022 bear market, Bitcoin's price has fallen below this cost basis. The additional decline of MSTR relative to BTC has reached about 28 percentage points, approaching the upper end of the historical range but still below the 89% drawdown extreme seen at the bottom of 2022.
Defensive Pivot: Reduced Purchases and First Net Sale
Facing price pressure, Strategy has clearly shifted its buying strategy to a defensive posture. Weekly BTC purchases have been cut by about two-thirds. Of the $335.5 million raised through stock issuance, less than 11% was used to buy BTC; the remainder was transferred to dollar reserves. More notably, in late May Strategy executed its first net sale since 2022, selling 32 BTC to cover STRC preferred stock dividend payments. This move marks a transition from continuous accumulation to limited asset monetization.
Risk Analysis and Stress Thresholds
Adler points out that the primary risk is Bitcoin remaining below the $75,000 treasury cost line, which would compress MSTR premiums and block the ATM (at-the-market) equity issuance funding channel. However, Strategy's debt is almost entirely in the form of convertible bonds, with no margin call risk. The base case scenario is a loss of marginal buyers rather than a cascading liquidation. The real stress point would be if the company shifts from selling stock to systematically selling BTC itself to pay preferred dividends and debt interest. If that transition occurs, it could trigger broader selling pressure.