The State of Strategy

The Bitcoin Flywheel

Strategy (MSTR) operates as both a Bitcoin treasury and an enterprise AI software company, but the business is heavily weighted toward the Bitcoin treasury side. Its core mission is simple: aggressively buy and hold Bitcoin as the company's primary reserve asset. The selling point is the "Bitcoin Flywheel", which is a set of innovative corporate financing structures Strategy has built to raise cash and buy more BTC. There are three ways it raises cash:

1. At-The-Market (ATM) Equity Offerings: Strategy sells newly issued common stock (MSTR) directly into the open market.

2. Senior Notes: Strategy sells institutional bonds that pay low interest.

3. Preferred Shares: Strategy issues permanent, non-callable stock (like its STRC line) to raise upfront cash by offering retail investors high-yielding fixed dividends.

About 65% of capital raises come through the ATM offering, 25% through preferred shares, and the remaining 10% through senior notes. These financing methods have allowed Michael Saylor to purchase nearly one million BTC since the company first became a Bitcoin treasury in late 2020. Because almost two-thirds of its capital comes from the ATM offerings, it's critical that MSTR keeps its mNAV above 1x. Any issuance below that heavily dilutes the stock. Saylor himself has set the dilution threshold at 1.22x, though as we've recently seen, it's willing to run the ATM below that level.

When the market is running hot, like it was in late 2024, MSTR trades as levered BTC. The stock traded above 3x mNAV at one point, meaning it commanded a 200% premium over the actual value of its spot Bitcoin treasury. But the downside can be just as brutal once reflexivity kicks in, which is exactly what we're seeing now. Market participants have started speculating whether this is turning into a Ponzi-type situation. Despite the pressure on MSTR's capital structure, we believe it will survive this BTC drawdown. In this piece, we'll break down its current situation and discuss how it can be played from an investor's perspective.

Strategy's Capital Structure

As of June 22, 2026, Strategy holds 847,363 BTC at an average cost basis of roughly $75,651. We've outlined its entire capital structure below:

The Debt Problem 

Strategy has several preferred shares trading on the market: STRC, STRK, STRF, and STRD. Of these, STRC is by far the largest, making up roughly 51% of the total raised among the four. It offers the biggest yield (11.5%) and is the most liquid of the group. Its target par value is $100, though it's currently trading below that at $88.

Each month, MSTR has to pay $142M to all preferred shareholders, $100M of which goes to STRC holders alone. That debt burden is the core driver behind the fear surrounding the company right now. As noted above, MSTR has $1.4B in cash, giving it roughly 10 months of runway on dividend payments. And because STRC and the other preferred products are all trading below par, Saylor can't tap those lines for more cash, which leaves him with two options: sell BTC or keep diluting MSTR.

Those two options are kind of like choosing between a knife and a gun. If MSTR keeps getting diluted, shareholders dump the stock, the mNAV implodes, and every share sold from that point forward dilutes it even further. On the other hand, selling BTC to raise cash isn't great either, as any hint of MSTR offloading large tranches of Bitcoin crushes the price of BTC, which shrinks MSTR's own balance sheet and nukes the mNAV. This is known as the "reverse reflexivity loop", and it's the reason the market is questioning MSTR's health.

*MSTR can suspend dividend payments at any time, but we're not factoring that in here, since doing so would be suicidal for the stock.

Can Strategy Actually Go Under?

Despite the debt obligations, Strategy is unlikely to ever implode the way FTX did. It holds 847,363 BTC, which at current prices gives it a roughly 32-year runway on debt obligations. Even if BTC dropped 75% from here, it would still be able to fund those obligations for another 8 years. There's really only one scenario where MSTR goes under: BTC trading to zero.

That said, the short-term outlook is genuinely bearish. If MSTR drops another ~25% from here, the mNAV collapses further, and every ATM offering from that point becomes brutally dilutive. And if it is forced to sell a large block of BTC, that crushes the market too. It feels like Strategy is stuck between a rock and a hard place. But it's worth keeping in mind that MSTR currently has 10 months of runway, and funding another 10 months would only require selling about 22,000 BTC. The market can easily absorb that kind of supply, as it has shown in the past by absorbing the German government's 50,000 BTC sale in 2024 without much trouble. The secondary effects of a sale wouldn't be pleasant, but MSTR can easily survive it.

Where We'd Get Involved

Sentiment around MSTR right now is about as bad as we've ever seen it. There was a stretch in 2022 when mNAV sat firmly below 1x, but the company had no debt obligations at the time, so the risk of MSTR going under was essentially zero. With the introduction of leverage into the capital structure, this time is undoubtedly different, though, as they say, with great leverage comes great responsibility.

Even so, we don't think that the negative sentiment around MSTR has hit its low yet. We expect MSTR to trade 30–40% below its current price of $108. If that decline plays out, sentiment will likely turn overwhelmingly bearish, and that's the point where we'd start fading it. Even if MSTR is forced to sell BTC outright, we'd treat that as a major buying opportunity. A lot of the fear surrounding MSTR right now comes down to a simple lack of understanding of the company's actual health and capital structure. As we laid out above, the only real path to MSTR imploding is BTC trading at or near zero, and we don't think that's happening anytime soon.