Bitcoin Preferred Shares: The Billion-Dollar Dilemma of Strategy and Strive

A new financial instrument is redefining how companies buy bitcoin on a large scale. The so-called perpetual preferred shares, issued by companies like Strategy (formerly MicroStrategy) and Strive, have already financed the acquisition of around 136,000 bitcoins in the last 20 months. This represents over 0.5% of the cryptocurrency's maximum supply.

The problem is that this model carries an embedded contradiction. As the volume of preferred shares in circulation grows, the commitments for dividends also increase, directly competing with the capital available for new bitcoin purchases. It is a balancing act that is starting to show its tensions.

How the Preferred Shares Model Works for Buying Bitcoin

Perpetual preferred shares occupy an intermediate space in the capital structure: they sit between debt and common stock. They offer regular dividend payments, do not confer voting rights, and crucially, have no maturity date. This eliminates the refinancing pressure that exists in traditional debt securities.

Strategy, the world's largest corporate holder of bitcoin, is the protagonist of this market. The company has already issued five different classes of preferred shares, starting with STRK in February 2025. According to data from Fidelity Digital Assets, the total market for bitcoin-focused preferred shares has already reached around $12 billion.

To put it in perspective, the global fixed income market totals $150 trillion. There is plenty of theoretical room for growth. But the relevant question is not the potential size of the market. It is whether the dividend mechanics can sustain the model in the long term, as we have already discussed in previous analyses of the crypto market.

The Audience That Bitcoin ETFs Do Not Reach

A central argument in favor of preferred shares is that they reach a different investor profile than spot bitcoin ETFs. While ETFs attract those seeking direct exposure to the price of the cryptocurrency, preferred shares appeal to income investors, accustomed to regular cash flows.

According to analysts at StoneX, perpetual preferred shares have brought bitcoin to fixed income investors that ETFs have never reached. It is a relevant market segment: pensioners, income funds, and conservative allocators who would never buy bitcoin directly.

However, analysts at Bitwise caution that ETFs should remain the largest demand channel in the long term. The data supports this view. Spot bitcoin ETFs in the United States have already accumulated approximately $57 billion in net inflows and hold about $106 billion in assets. The preferred shares, with their $12 billion, act as a second demand engine, not as a substitute.

This dynamic between different investment vehicles in bitcoin reflects a maturation of the market that we have been following in our financial coverage.

The Tension Between Dividends and Bitcoin Purchases

Here lies the central dilemma. Take STRC, one of the preferred classes from Strategy that currently pays a variable dividend of around 12%. This class alone raised $7.5 billion from 2026 until the end of July. All this capital raised carries a recurring cost of dividends in dollars.

The problem becomes concrete when the price of the preferred shares falls below par value. This happened with STRC, which fell to the $70 range at the end of June before recovering to around $99.40. When shares trade below par, issuing new series becomes less attractive. The company starts to consider buybacks instead of new issuances.

This is exactly what Strategy did in its latest weekly update: it spent $193 million buying back STRC shares while purchasing only 267 bitcoins. The company also increased its authorization for preferred share buybacks to $3 billion.

Buybacks reduce future dividend costs, but compete with bitcoin purchases for the same capital. It’s an equation that doesn’t add up without concessions.

The Reflexivity of the Model Concerns Analysts

Analysts at StoneX describe the demand for preferred shares as "reflexive." While the shares trade close to par value, new issuances are viable and fund additional bitcoin purchases, which in turn support the investment thesis. It’s a virtuous cycle.

When sentiment deteriorates, the cycle reverses. Preferred shares fall below par, new issuances dry up, bitcoin purchases decrease, and pressure on dividends remains. According to researchers at CoinShares, preferred shares amplify the cycle: they support purchases when conditions are favorable, but that support weakens when market sentiment worsens.

There is also the specific risk of each issuer. Products like STRC and SATA from Strive do not only offer exposure to the price of bitcoin. The investor is exposed to management competence, the issuer's financial obligations, and capital market conditions. It’s an additional layer of risk that does not exist in an ETF, as we detail in analyses of cryptocurrency ETFs.

What This Means for the Investor

Strategy has already sold bitcoin to finance dividend payments on preferred shares, according to analysts. This is a line that, once crossed, fundamentally changes the narrative. A company whose thesis is to accumulate bitcoin indefinitely starts selling the asset to meet financial commitments in dollars.

For those investing in bitcoin via ETFs, the dynamics are simpler: redemptions can reverse demand, but do not leave a continuous commitment to dividends. For those buying preferred shares, the equation is different. The yield of 10% to 12% per year is attractive, but carries credit risks, volatility, and dependence on market conditions that go far beyond bitcoin’s fluctuations.

The model of perpetual preferred shares has brought a new source of relevant demand for bitcoin. But the sustainability of this mechanism depends on something that no financial structure controls: the direction of the market. As long as bitcoin rises, the cycle feeds back into itself. If it falls, dividends remain due, regardless of the price.

This content is informational and educational and does not constitute investment advice. Past performance is not a guarantee of future results.