Author: Will Canny (CoinDesk)
Compiled by: Deep潮 TechFlow
DeepChain Summary: Since MicroStrategy (now renamed Strategy) and institutions like Strive adopted cryptocurrency assets as the core of their treasury reserve strategies, perpetual preferred stock has rapidly emerged as the most potent capital lever following convertible bonds and common stock offerings. Occupying a middle ground between debt and common equity, it carries no fixed maturity date or principal repayment pressure, successfully extending its reach to traditional fixed-income investors who are sensitive to volatility but seek stable, fixed returns. Within less than two years, it has enabled the accumulation of over 136,000 BTC. However, this capital flywheel is not without risks: perpetual preferred stock carries strong reflexivity—when market sentiment cools and share prices fall below par, new issuances stall, forcing companies to spend heavily on buybacks to support par value. Meanwhile, annual fixed-dollar dividend payments, often in double digits, continue to compound, pushing some companies to sell Bitcoin just to fulfill dividend commitments. Caught in the tug-of-war between discounted buybacks, dividend payouts, and continuous Bitcoin purchases, the balance sheets of Bitcoin treasury companies are now facing their true cyclical stress test.
Fidelity Digital Assets and several analysts interviewed by CoinDesk say that Bitcoin treasury companies like Strategy (MSTR) and Strive (ASST), which support demand for the largest cryptocurrency through continuous purchases, are currently facing difficult balancing challenges.
On one hand, they require sufficient cash to fund their coin purchases; on the other hand, they must maintain investor interest in subscribing to new issuances of their core financing instrument, perpetual preferred stock. As the number of outstanding shares continues to rise, the scale of dividends they must pay also expands accordingly.
These securities sit between debt and common stock in the capital structure, offering regular dividends without voting rights. In a report on Tuesday, Fidelity Research analyst Zack Wainwright wrote that since their launch, these instruments have funded the purchase of approximately 136,000 bitcoins, accounting for more than 0.5% of the cryptocurrency’s maximum supply.
As the publicly traded company with the largest Bitcoin holdings globally, Strategy is an absolute powerhouse in this market. Its preferred shares (currently consisting of five different classes) have become a barometer for the sustainability of this capital model. Its first preferred share product, STRK, debuted in February 2025.
Fidelity estimates that the market size for preferred shares centered on Bitcoin is approximately $12 billion. In comparison, the global fixed-income market totals $150 trillion, indicating significant growth potential in this sector.
Reach income-focused investors
By selling preferred shares that provide regular dividends and have no fixed maturity date, these companies have not only alleviated refinancing pressure but also successfully attracted investors who are unwilling to hold bitcoin directly.
Mark Palmer, Senior Equity Research Analyst at StoneX, said: "Perpetual preferred shares have brought Bitcoin to the cohort of investors seeking fixed income—a group that ETFs have never reached."
Bitwise research head Ryan Rasmussen also believes these products attract buyers who might avoid Bitcoin spot exchange-traded funds (ETFs), though he expects ETFs to remain the larger primary source of demand.
Rasmussen said: "In the long term, I expect ETFs to remain the primary source of demand for Bitcoin, with the issuance of perpetual preferred shares serving as a secondary tailwind, targeting a different class of investors—namely, income-oriented investors."
James Butterfill, Head of Research at CoinShares, noted that, for example, the preferred shares STRC pay a floating dividend currently around 12%, and have raised $7.5 billion through the end of July 2026. This massive fundraising comes with ongoing periodic dividend payment costs.
Alex Blume, founder and CEO of Two Prime, an institutional-grade Bitcoin asset management firm, notes that products like STRC and Strive’s SATA offer far more than just exposure to Bitcoin’s price movements. Their price trajectories are also sensitive to the management team’s operational capabilities, the issuer’s debt obligations, and the broader capital markets environment.
He cited STRC’s brief dip into the $70 range in late June as an example of its potential volatility. He noted that the growing issuance scale creates internal tension between increasing the cryptocurrency content per common share, fulfilling dollar-denominated dividend payment commitments, and avoiding Bitcoin sales. Currently, Strategy’s preferred shares are trading at approximately $99.40.
Stock buybacks compete with crypto purchases for funding
Palmer analyzed: "The core issue is that demand for perpetual preferred shares is highly reflexive." He added that the premise of using preferred share proceeds to continuously buy Bitcoin depends on the security trading at or above par value. Butterfill further noted that once the price falls below par, new issuances would lose their appeal, and companies might turn to stock buybacks instead.
According to Butterfill, the latest weekly report from Strategy shows that the company spent $193 million on repurchasing STRC, while purchasing only 267 bitcoins during the same period. He added that the institution has also significantly increased its preferred stock repurchase authorization to $3 billion.
Butterfill emphasized: "While share repurchases can reduce future dividend costs, at this stage they are directly competing with Bitcoin purchases for scarce capital."
He added that although cash reserves can provide some buffer, Strategy had previously been forced to sell a portion of its Bitcoin to pay preferred dividends.
ETF remains the larger demand channel.
Butterfill stated that the cumulative net inflow into U.S. spot Bitcoin ETFs has reached approximately $57 billion, with total assets held amounting to around $106 billion.
Net subscriptions to the ETF will directly increase the fund's Bitcoin holdings, while the issuance of preferred shares gives management discretion over how to use the funds. He noted that while a wave of redemptions could reverse the buying demand for the ETF, it would not leave behind the persistent, mandatory dividend obligations like preferred shares do.
In Butterfill’s view, preferred shares essentially amplify market cycles: when external financing conditions are favorable, they strongly support buying and expanding holdings; but once market sentiment deteriorates, this financial support quickly weakens.