Strategy’s preferred stock STRC opened Monday at $87.79, still 12% below its $100 par value, and Cantor Fitzgerald thinks that discount is the single most important number to watch if you want to understand where Michael Saylor’s bitcoin accumulation machine goes next.
The Wall Street investment bank published a note to clients Monday after meeting with Saylor, coming away convinced that management views getting STRC back to par as the prerequisite for everything else. The logic is mechanical: when the preferred trades at a discount, issuing new shares dilutes existing holders too much to be worthwhile. The capital engine idles. Bitcoin purchases slow to a trickle. That’s precisely what happened over the past two months, when STRC crashed 13% below par and weekly BTC buys shrank dramatically.
Minutes before the Cantor note hit terminals, Strategy announced it had sold $216 million of bitcoin to fund upcoming STRC dividends. The sale underscores how different the playbook has become: a company that built its identity on never selling now treats BTC liquidations as a routine treasury operation when preferred shareholders need their checks.
The Preferred Stock Becomes the Foundation
Cantor’s framing flips the conventional investor hierarchy on its head. Analysts led by Ramsey El-Assal argued that STRC is not competing with common shareholders for scraps; it’s the load-bearing wall that holds up the entire structure. Fix the preferred, and the common follows.
“This makes it a good time to either buy STRC, capturing both the spread to par as well as the instrument’s substantial yield, or to buy shares of MSTR common, which should rally as the overall capital structure moves to firmer footing,” the note read.
The math behind that claim is straightforward. At $87.79, STRC offers roughly an 11.5% dividend yield based on the current payout schedule. But the spread to par adds another layer: a buyer at today’s price collects that yield while also sitting on a potential 14% capital gain if the stock returns to $100. That’s a combined return profile that, on paper, looks attractive relative to other fixed-income alternatives.
The catch, of course, is that “if.” STRC has been below par for weeks. Getting it back requires management to convince the market that dividend coverage is bulletproof, that cash reserves are deep enough to survive a prolonged bitcoin drawdown, and that the company won’t be forced into fire sales that crater BTC’s price and their own balance sheet simultaneously.
Cantor noted that Strategy has already increased its dividend coverage from roughly 10 months to 18 months, a meaningful buffer but not an infinite one. The analysts expect management to keep building that cushion until the market believes it, with buybacks available as a backup tool if cash reserves alone don’t move the needle.
The company’s broader capital plan, announced earlier this month, laid out up to $2 billion in potential buybacks alongside expanded cash reserves. That announcement calmed some nerves, but STRC has yet to reclaim par. The gap between announcement and market conviction remains stubbornly wide.
JPMorgan’s Warning About Two-Way Risk
Not every bank shares Cantor’s optimism. JPMorgan published a report last week arguing that Strategy’s willingness to sell bitcoin for dividends creates problems the company didn’t have before.
The concern is structural. When Strategy held bitcoin and refused to sell under any circumstances, investors faced one-directional risk: BTC goes down, MSTR goes down, but at least you knew the company wasn’t going to dump coins into a falling market and accelerate the decline. Now that policy has changed. If bitcoin drops sharply and Strategy needs cash for dividends, the company becomes a forced seller at exactly the wrong time.
JPMorgan called this “two-way risk,” a scenario where investors now have to worry about both the price of bitcoin and the possibility that Strategy’s selling activity worsens whatever drawdown is already underway. The bank argued this adds uncertainty and market volatility that didn’t exist under the old model.
Saylor has pushed back on this framing. In May, he dismissed concerns about bitcoin sales as a “nothing burger,” telling CoinDesk that any sales would be offset 20-to-1 by purchases. The implication was that occasional dividend-funding liquidations are rounding errors in a strategy designed to accumulate aggressively over time.
Monday’s $216 million sale tests that claim. Strategy’s bitcoin holdings are substantial, likely north of 800,000 BTC based on prior filings, so $216 million represents a tiny fraction of the overall stack. But the precedent matters. Each sale normalizes the next one. If bitcoin remains range-bound or declines further, and STRC stays below par, the sales could become more frequent and larger.
The Cantor note didn’t directly rebut JPMorgan’s concerns but did offer a different lens. By treating STRC as the foundation rather than a competing interest, Cantor implied that short-term bitcoin sales are acceptable if they stabilize the preferred and eventually allow the company to resume larger-scale accumulation. The question is whether that sequencing works in practice or whether the sales erode investor confidence in the accumulation thesis before the capital engine restarts.
Convertible Debt and the Clock
Strategy carries convertible debt with maturities scattered over the next several years. Bears have argued that these obligations represent a ticking clock: if bitcoin drops far enough, and STRC remains impaired, the company might struggle to refinance or repay.
Cantor dismissed this concern, arguing that Strategy should either restart its STRC-driven capital engine before major repayments come due or refinance the debt on acceptable terms. The bank’s confidence appears to rest on the assumption that bitcoin won’t collapse to levels that make both outcomes impossible simultaneously.
This is where the analysis gets circular. STRC needs to recover for Strategy to raise cheap capital. Cheap capital lets the company buy more bitcoin. More bitcoin (at higher prices) supports the balance sheet and makes STRC safer. STRC recovers. The flywheel spins.
But the flywheel can also spin backward. If bitcoin drops, STRC suffers, capital raising stalls, no new bitcoin gets bought, the balance sheet weakens, STRC drops further. That’s the “death spiral” scenario that has hovered over the company for months and prompted the $4 billion capital plan designed to break the loop.
Cantor’s bet is that management has enough tools, cash reserves, potential buybacks, and selective bitcoin sales, to arrest any downward spiral before it becomes self-reinforcing. The alternative view is that those tools consume resources (cash, bitcoin) faster than they generate confidence, and the spiral continues.
Monday’s market reaction offered a mixed verdict. MSTR traded down 3.4% to $97.34 in early action, with bitcoin hovering near $61,800. The stock’s decline suggests investors remain skeptical that the capital plan is working, even as Cantor urged them to buy.
The Mechanics of a STRC Recovery
For STRC to return to par, buyers need to believe that dividend payments are secure over a multi-year horizon and that the instrument won’t suffer dilution or structural impairment. Cantor outlined two pathways to that confidence.
First, cash reserves. The jump from 10 to 18 months of dividend coverage was step one. If Strategy continues building that buffer, perhaps toward 24 or 36 months, the market might conclude that even a prolonged bitcoin bear market wouldn’t threaten dividend continuity. At that point, STRC becomes a yield instrument with a bonus optionality on bitcoin recovery, and par or better becomes reasonable.
Second, buybacks. If cash reserves don’t move the stock, management can repurchase STRC in the open market, reducing the float and signaling that the company believes the discount is unjustified. Buybacks are expensive when the stock is below par (you’re spending cash to retire shares at prices that reflect distress), but they can be effective at anchoring sentiment.
Cantor expects the company to test the market repeatedly until one approach works. That implies a period of active management, frequent announcements, and continued attention to the preferred market that might feel unusual for a company historically focused on bitcoin accumulation and not much else.
Strategy’s dividend structure also changed recently, shifting to semi-monthly payments starting July 15. More frequent payouts can appeal to income-focused investors but also require tighter cash management. Each payment cycle is a mini-test of the company’s liquidity position.
What Common Shareholders Should Watch
Cantor’s note was bullish on MSTR common as well, but with a caveat: the common rallies after the preferred recovers, not before. If you own MSTR and STRC is still at a discount, you’re waiting for a sequence of events that hasn’t started yet.
The relationship between the two instruments matters. When STRC trades at par or above, Strategy can issue new preferred shares at attractive terms, raise cash, and buy bitcoin without diluting common shareholders excessively. That’s the scenario where MSTR benefits from the capital engine. When STRC is below par, issuance is impractical, and the common loses access to that accumulation tailwind.
So the irony is that common shareholders have a vested interest in the preferred recovering, even though the preferred sits above them in the capital structure and gets paid first. A healthy STRC is good for everyone because it unlocks the funding model.
Cantor also noted that as STRC stabilizes, Strategy regains access to lower-cost capital. This is a subtler point. When preferred shares trade at a premium to par, the effective cost of capital drops because the company raises more cash per share issued. Conversely, a discount means expensive capital, if any. The spread between current STRC prices and par is, in effect, a measure of how impaired the funding model is.
Investors tracking Strategy’s BTC treasury holdings can monitor the relationship between bitcoin prices, STRC levels, and accumulation pace to gauge whether the capital engine is restarting or still stuck.
The Broader Market Context
Strategy’s situation plays out against a backdrop of bitcoin trading near $61,800, down from highs earlier this year but not in freefall. The price is high enough that Strategy’s balance sheet remains solvent by comfortable margins, but low enough that STRC is under pressure and the accumulation thesis faces headwinds.
The company’s original pitch was simple: buy bitcoin, hold forever, never sell, benefit from long-term appreciation. That pitch has evolved. Now it includes preferred dividends, selective sales, cash reserve management, and buyback programs. The complexity is a response to real constraints, but it also makes the investment case harder to evaluate.
Cantor’s note attempts to simplify the picture by identifying STRC as the key variable. If you believe STRC will return to par, the note argues, the rest of the thesis follows. If you don’t, or if you think the tools available to management are insufficient to force that recovery, then the complexity becomes a liability rather than a feature.
Monday’s $216 million sale, the largest in recent memory, tests whether the market interprets these liquidations as prudent treasury management or as a sign of strain. The answer will show up in STRC’s price over the coming days. If the stock holds near $87 or drifts lower, Cantor’s thesis faces a credibility test. If it starts climbing toward $90 and beyond, the bank’s logic gains traction.
Either way, the next few weeks will reveal whether Strategy’s balance-sheet repair is working or whether the death-spiral concerns have more staying power than management wants to admit.
For investors trying to track market sentiment and understand where risk appetite stands, Strategy has become a useful barometer. The company’s fate is tied tightly enough to bitcoin that its stock prices reflect both crypto-specific dynamics and broader capital-markets conditions. A recovery in STRC would signal that fixed-income investors are willing to bet on bitcoin-adjacent instruments again. Continued distress would suggest the opposite.
Saylor’s meeting with Cantor appears designed to reset the narrative after a difficult stretch. Whether the narrative change translates into price change is the only question that matters now.
