Bitcoin’s recent sharp drop followed Strategy’s announcement to buy back part of its corporate debt, temporarily halting its aggressive Bitcoin accumulation. This move tightened the company’s short-term liquidity and prompted fears among traders that Strategy might be forced to sell off some of its large Bitcoin holdings.
Before this, Strategy had built the largest known Bitcoin reserve by acquiring over 126,000 BTC for nearly $9.31 billion since early 2026. However, it used $1.38 billion of newly raised cash—garnered from issuing preferred stock—to fund the debt buyback. This substantially reduced Strategy’s available cash to around $900 million, which experts say covers dividend payments for only about six months.
Strategy’s preferred stock, traded as STRC, enables the company to issue new shares when the price reaches $100. The shares carry a variable dividend currently set at 11.5% annually, paid monthly. Yet, after the buyback news, STRC’s price slipped below the $100 threshold, increasing dividend pressure on the company. Over the first months of 2026, Strategy had raised $7.5 billion through preferred stock issuances, supporting Bitcoin’s broader price rally.
Despite these constraints, Strategy’s financial stance remains relatively conservative. Its 11% net leverage ratio—which measures debt against assets—illustrates a manageable risk profile. Even if Bitcoin prices drop to $30,000, the company’s holdings are considered sufficient to cover its liabilities without triggering automatic liquidations. Notably, no debt covenants force the firm to sell Bitcoin under current conditions.
In case the convertible debt market tightens further, Strategy could choose to issue new shares at a discount to boost liquidity. While this might be perceived negatively by investors and depress share prices, it would maintain the company’s overall solvency. The situation contrasts with previous market crashes where forced selling created downward spirals in digital assets.
Meanwhile, Bitcoin struggles to surpass the $70,000 mark, hindered by ongoing net selling pressure in spot ETFs and Strategy’s current inactivity in purchasing. The acceleration of Bitcoin’s recent price correction, falling more than 20% over ten days, retested levels not seen in several months.
Market watchers remain alert to Strategy’s next steps, weighing the potential impact on Bitcoin’s price trajectory. Analysts warn that any actual Bitcoin sale by Strategy could deepen the market’s downward momentum, creating a feedback loop that intensifies selling pressure across the sector.