Pandl warned this could have a greater impact on Stretch (STRC), the firm’s variable rate preferred equity instrument.
Stretch is designed to trade at a share price of around $100 and pay a dividend of 11.5%, but it is currently trading below that at around $95, meaning investors require a higher rate of return
If Strategy raises its dividend to compensate investors, it increases cash obligations, potentially forcing more BTC sales and further price pressure in a negative feedback loop. “Strategy’s levered business model is under pressure, and this has increased the volatility for the BTC market as a whole,” said Pandl. He added that Grayscale thinks that Strategy will have a “limited ability to accumulate more tokens at current share prices for both STRC and MSTR.” Related: Saylor downplays Bitcoin slide as Strategy faces $11B paper loss Goldbug Peter Schiff said something similar on X on Thursday. If Strategy is forced to increase the dividend to return STRC to $100, the company “will run out of cash much sooner, pulling forward Bitcoin sales to fund payments.” Pandl concluded, stating that less Bitcoin in leveraged corporate holdings would be healthier for the broader market and ecosystem. “For the health of the Bitcoin ecosystem over the long run, less BTC on levered DAT [digital asset treasury] balance sheets and more on diversified corporate balance sheets will be a positive, in our view.” Augustine Fan, partner at crypto software firm SignalPlus, told Cointelegraph on Friday that markets are blaming Strategy’s recent sales and STRC’s discount to par for driving the latest sell-off, “but the reality is that even the most ardent supporters are running out of reason to be structurally bullish.” “All focus will be on the MSTR situation to see how Saylor manages to handle his liquidity strains by balancing dividend payments against STRC and the DAT holdings.” Jeff Ko, chief analyst at CoinEx, told Cointelegraph that Strategy’s first Bitcoin sale was an…