Strategy (NASDAQ:MSTR) holds 761,068 Bitcoin (CRYPTO: BTC), just 23,000 coins behind BlackRock’s (NYSE:BLK) 784,062 BTC, after purchasing 22,337 BTC last week for $1.57 billion.

The Race To Become Largest Holder

BlackRock’s iShares Bitcoin Trust (NASDAQ:IBIT) has seen cumulative net inflows of $63.21 billion since launching in January 2024. 

The fund holds 784,062 Bitcoin, representing 3.7% of the total 21 million coin supply. BlackRock doesn’t buy Bitcoin for itself—investors buy IBIT shares through Nasdaq, and BlackRock holds Bitcoin on behalf of IBIT shareholders.

Strategy purchased 22,337 BTC last week for $1.57 billion, the fifth-largest acquisition on record. 

Total holdings now stand at 761,068 BTC, putting the company within striking distance of surpassing BlackRock within a week at current purchase rates.

The Preferred Stock Shift

Last week marked the first time Strategy used perpetual preferred stock as the primary vehicle to accumulate Bitcoin. 

STRC issuance reached $1.18 billion, equivalent to roughly 16,800 BTC at the average price of $70,000, far exceeding the $396 million raised via common stock.

The shift makes sense given MSTR shares are down more than 70% from highs. 

The company appears incentivized to support a higher share price without further dilution through common stock issuance.

STRC’s current 11.5% dividend rate means the $1.18 billion issuance implies roughly $135 million in annual dividend obligations. 

This pushed the company’s total annual dividend burden above $1 billion. Strategy has set aside approximately $2.25 billion in USD reserves to fund these obligations.

The Dividend Pressure

STRC is showing early signs of pricing pressure. The preferred has now spent three consecutive days trading below its $100 par value following its March 15 ex-dividend date.

With the one-month volume-weighted average price below par, the company may increase the dividend by a further 25 basis points to support the price. 

The 11.5% yield would rise to 11.75% under this scenario.

Common equity may be used more selectively going forward, primarily when multiple to net asset value (mNAV) is meaningfully above 1 or when the company needs to build USD reserves. 

This suggests reduced reliance on common stock sales while leaning more heavily on STRC.

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