Strategy’s Bitcoin Treasury Strategy and Saylor’s Leveraged Notes

Strategy Inc. holds 850,364 Bitcoin, a position worth roughly $62.7 billion at current prices. This massive accumulation represents about 4% of the total fixed supply, secured through an average cost of $75,446 per coin. The company’s market capitalization stands at approximately $51.66 billion, creating a significant valuation gap relative to its underlying assets. Investors must understand that this is not a simple proxy for Bitcoin; it is a leveraged instrument with distinct financial risks. The premium over net asset value has eroded sharply, falling from a high of 3.89x in November 2024 to 1.04x recently. This compression signals a fundamental shift in how the market values corporate treasury strategies compared to direct spot exposure.

The Funding Machine Under Pressure

The core mechanism involves issuing convertible notes and preferred stock to buy more Bitcoin. Strategy raised $42 billion in capital plans, split evenly between equity and fixed-income securities. However, tepid demand for new preferred stock recently resulted in only $47 million raised, forcing a return to common-share issuance. This dilution pressure is critical because the company sold 1,990,911 shares for $312.2 million just to fund recent purchases. A fall below the $100 par value of STRC exposed a structural crack in the flywheel, cutting off a funding route used to maintain liquidity. TD Securities analysts noted that the $748 million reserve boost improved the ability to operate through a prolonged crypto downturn by enhancing financial flexibility. The firm maintains a buy rating with a $500 price target, arguing that liquidity protects against forced liquidations. Yet, the reliance on at-the-market sales means the company issues equity into a potentially falling multiple, creating a negative feedback loop if investor confidence weakens further.

Shifting Metrics and Strategic Flexibility

In July 2026, Strategy overhauled its investor metrics to reflect a shift from convertible debt toward preferred equity. The new "net Bitcoin per share" metric subtracts preferred stock obligations and out-of-the-money convertible debt before calculating the multiple. This redefinition allowed the stock to trade at roughly parity despite the discount on the old measure. The company also abandoned its "never sell Bitcoin" stance, selling 6,948 BTC for $432.5 million between May and August 2026. This sale funded preferred dividends and buybacks, demonstrating a willingness to monetize holdings when advantageous. As of October 2026, the USD Reserve held $4.83 billion, while the unrestricted USD Cash account held $447.3 million. These reserves cover interest obligations and dividend payments, providing a buffer against volatility. MSCI will decide by January 15 whether to exclude companies with crypto holdings above 50% of total assets from global equity benchmarks. If excluded, JPMorgan estimates this could trigger roughly $2.8 billion in forced selling. Will index inclusion or exclusion determine the next phase of Strategy’s valuation? The answer remains pending as the board navigates these complex regulatory and financial landscapes.