MicroStrategy’s Variable Rate Series A Perpetual Stretch Preferred Stock (STRC) fell below $95. This price drop triggered a mandatory 0.5% dividend increase. The hike will cost the company an estimated $53 million annually.
MicroStrategy reportedly paused Bitcoin acquisitions through the STRC vehicle. This mechanism previously provided predictable institutional demand for the cryptocurrency. Analysts from Grayscale suggest the company’s ability to acquire more Bitcoin is now constrained.
The company recently sold 32 BTC to fund dividend payments. This move broke MicroStrategy’s long-held narrative of never selling its Bitcoin holdings. The event represents the first major stress test for the company’s leveraged Bitcoin model.
Market observers fear a potential negative feedback loop. A lower STRC price forces higher dividends. These costs may require further Bitcoin sales to maintain liquidity.