Key facts
- Strategy's preferred stock (STRC) saw a sharp intraday selloff, reaching record lows.
- The STRC security closed at $88.59, below its $100 stated amount and $90 IPO price.
- Arca Chief Investment Officer Jeff Dorman warned that Strategy might need to sell Bitcoin or MicroStrategy (MSTR) stock.
- Dorman estimated a 25% probability of Strategy selling $3 billion to $4 billion in Bitcoin.
- Bitcoin prices declined, falling below $63,000.
- XRP fell 3.4% to approximately $1.15, breaking key support on heavy volume.
Strategy's preferred stock, STRC, experienced a significant selloff, trading as low as $82.50 before recovering to close at $88.59, well below its $100 stated amount and $90 IPO price. This decline has raised concerns about the financing model connected to Michael Saylor's Bitcoin accumulation strategy.
Arca Chief Investment Officer Jeff Dorman suggested that Strategy might be compelled to sell Bitcoin or MicroStrategy (MSTR) common stock to restore confidence in its capital structure. Dorman assigned a 70% probability to Strategy continuing to sell smaller amounts of MSTR stock monthly, a 25% probability to selling $3 billion to $4 billion worth of Bitcoin, and a 5% probability to stopping dividend payments on preferred securities.
Bitcoin also saw a decline, falling below $63,000, which added pressure to crypto-linked securities. The XRP token experienced a 3.4% drop to approximately $1.15, breaking key support on heavy trading volume after a failed attempt to clear a descending trendline near $1.25.