Strategy closed last week at roughly $82 per share, down 47% year-to-date. The decline has compressed the company's enterprise mNAV—the ratio of its equity value, debt, preferred stock, and cash against the spot value of its bitcoin holdings—below 1.0x for the first time since the company began its systematic Bitcoin accumulation six years ago.
When that ratio sits above 1, Strategy can issue new shares and redeploy the proceeds to buy Bitcoin without diluting existing shareholders' per-share Bitcoin count. It's the machinery that made the entire model work. Below 1.0x, the math flips: issuing equity to buy Bitcoin destroys value for current holders.
The immediate problem is STRC, Strategy's perpetual preferred stock and the company's preferred funding lever. STRC closed below $75 last week, nearly 26% underwater from its $100 par value, which means the company can no longer issue new STRC shares to raise cash for Bitcoin purchases. The channel is closed.
Glenn Cameron, institutional chief at Onramp Bitcoin, described the shift plainly to Unchained: "What's breaking is the funding model, not the balance sheet." With STRC off the table, Strategy must now fund its ballooning preferred dividend obligations—which have nearly sextupled from about $300 million at the start of the year to an estimated $1.7 billion across five preferred share classes—through three deteriorating options: diluting common stock at a discount, draining its $1.4 billion cash reserve, or selling Bitcoin. "They've started doing all three," Cameron said. "None of those is the promised flywheel. They're the flywheel in reverse."
What's breaking is the funding model, not the balance sheet.
Beyond the immediate funding squeeze sits a larger structural risk. Strategy issued convertible notes with a lowest conversion price around $150 per share. With MSTR trading at $85, none of those notes are in the money. Instead they become pure cash obligations. Roughly $4.5 billion in convertible puts come due by mid-2028, rising to close to $6 billion by September of that year. Cameron flagged the convergence: "The danger isn't any single event. It's that the convertible wall, the rising preferred dividend, and a shut STRC channel all pull on the same string at the same time, and the only option left is sell the bitcoin."
Some observers have proposed a different path. Zach Pandl, Grayscale's head of research, suggested Strategy sell over $3 billion in Bitcoin to rebuild its cash position and cover dividends for roughly two years. But Strategy Chair Michael Saylor appeared to signal the opposite direction on Sunday, hinting at a new Bitcoin purchase announcement on social media.
Strategy currently holds 847,363 BTC, including over 3,000 purchased this month. Whether the company continues accumulating, trimming, or treading water depends almost entirely on Bitcoin's price action. Cameron's verdict: "The only way out for Strategy is for Bitcoin to go up."