#StrategyToIssueMorePerpetualPreferreds

Strategy (Ticker: MSTR) is not just issuing more perpetual preferred shares — it is actively redesigning its capital engine to sustain long-term Bitcoin accumulation at institutional scale.

1️⃣ Capital Structure Shift — Why It Matters Right Now
Strategy is increasingly funding BTC purchases through preferred securities instead of common equity issuance.
Key outcomes:
• Lower dilution pressure on MSTR common
• More predictable capital inflows
• Expansion of yield-based investor base
• Higher embedded leverage
Preferred series like STRC are trading around par (~$100), which is crucial.
When preferred shares trade near or above par:
→ The company can issue more efficiently via ATM programs
→ Liquidity remains healthy
→ Yield resets remain competitive
This unlocks scalable capital.

2️⃣ Bitcoin Position & Market Context
As of mid-February 2026:
• BTC trading roughly in the mid-$60K range
• Consolidating after prior highs
• Volatility compressed compared to previous cycle peaks
• Market structure: choppy, range-bound
Strategy’s holdings exceed 714,000 BTC.
At current pricing:
• Total BTC value ≈ high tens of billions
• Average cost basis in mid-$70Ks
• Unrealized drawdown during pullbacks exists
• Long-term thesis unchanged
This creates a leveraged exposure effect:
If BTC moves +10%
→ Net asset value shifts massively
If BTC drops −10%
→ Equity volatility amplifies disproportionately

3️⃣ Volume & Liquidity Dynamics
A. Preferred Share Liquidity
STRC and other series:
• Trade near par
• Moderate daily liquidity compared to MSTR common
• Lower volatility than common equity
• Attract yield-focused funds
When volume expands in preferreds:
→ Signals institutional appetite
→ Expands issuance capacity
→ Supports future BTC buying
B. MSTR Common Volume
MSTR common stock:
• Experiences significantly higher volatility
• Frequently trades at premium or discount to NAV
• Volume spikes during BTC volatility
• Highly sentiment-driven
Preferred expansion reduces pressure on common ATM issuance — potentially stabilizing equity liquidity dynamics.

4️⃣ Percentage Sensitivity Model (Simple Breakdown)
Because Strategy is effectively a leveraged BTC vehicle:
If BTC moves +15%: • BTC holdings appreciate massively
• NAV expands
• Equity often reacts with amplified percentage gain
If BTC moves −15%: • Unrealized losses increase
• Market reprices leverage risk
• MSTR equity typically drops more than BTC percentage move
Preferred holders, however:
• Receive yield
• Experience far less volatility
• Prioritized over common equity
This creates a layered capital exposure model.

5️⃣ Liquidity Risk Assessment
Important considerations:
• Preferred dividend obligations must be serviced
• Cash flow outside BTC appreciation is limited
• Dividend deferral mechanisms exist in some structures, but cumulative accrual builds pressure
Liquidity sustainability depends on:
• Access to capital markets
• BTC price stability or appreciation
• Investor appetite for yield instruments
If preferred demand remains strong → capital flywheel continues.
If preferred demand weakens → issuance slows.

6️⃣ Supply Shock Dynamics
Strategy already controls a meaningful percentage of total BTC supply.
Continued accumulation leads to:
• Reduced liquid float
• Stronger long-term holding concentration
• Structural demand base
• Narrative reinforcement around corporate adoption
Over time, persistent accumulation tightens tradable supply — especially during bull cycles.

7️⃣ Risk Amplification Factors
The structure increases:
• Effective leverage
• Sensitivity to BTC volatility
• Dependency on capital markets access
• Perception risk during drawdowns
However, perpetual nature removes:
• Refinancing cliffs
• Bond maturity walls
• Forced asset liquidation pressure
This is a time-based risk model — not a short-term one.

8️⃣ Short-Term Market Impact
Expect:
• Volatility spikes during BTC breakouts
• Rapid MSTR repricing
• Preferred issuance acceleration during strength
• Momentum traders driving amplified percentage moves
In consolidation phases:
• NAV discount/premium fluctuations widen
• Preferred yield becomes more attractive relative to risk assets

9️⃣ Long-Term Structural Implications
If Bitcoin appreciates over multi-year horizons:
• Strategy’s leverage becomes performance amplifier
• Preferred yield looks inexpensive relative to asset growth
• Corporate treasury model spreads
• Institutional adoption deepens
If Bitcoin stagnates for years:
• Dividend burden compounds
• Market may compress valuation multiples
• Equity volatility increases
Everything comes back to BTC trajectory.

🔟 Final Strategic View
Strategy is evolving into:
A hybrid Bitcoin holding company
+
A digital capital markets innovator
It is creating:
• Yield-based BTC exposure products
• Long-duration financing
• Reduced dilution pressure
• A scalable treasury accumulation engine
This is not speculative gambling.
It is structured conviction.
But it magnifies both upside and downside.
The Core Question
Does Bitcoin continue long-term appreciation at a rate exceeding perpetual financing costs?
If yes → this model compounds powerfully.
If no → leverage and dividend obligations tighten pressure over time.