Debt buyback coincides with 21% Bitcoin decline

On May 15 Strategy (MSTR) used $1.38 billion of cash raised from recent equity issuances to repurchase convertible debt. The company paused further Bitcoin purchases at the same time. Bitcoin fell about 21% over the following 10 days, testing roughly $61,000.

Since March, Strategy has acquired 126,016 BTC at an aggregate cost near $9.31 billion. The company raised about $7.5 billion through preferred stock issuances in the first five months of 2026 and applied part of those proceeds to the convertible-debt repurchase. Strategy’s reported cash balance fell to about $900 million after the transaction; the company estimates that amount would cover preferred dividends for about six months at current rates.

Strategy’s Series A Perpetual Stretch preferred shares, ticker STRC, carry a variable dividend currently set at 11.5% annually and paid monthly in cash. The preferred includes a feature that allows the company to issue new shares when STRC trades at or above $100. STRC has been trading below $100, and the repurchase coincided with weakening STRC prices.

The company reports net leverage around 11%, a ratio of debt to assets. Company commentary and some analysts state that Strategy’s Bitcoin holdings provide coverage for liabilities even under lower assumed Bitcoin prices.

There is no clause in the convertible debt that mandates an automatic liquidation of the company’s Bitcoin reserves at current prices. Options available to the company include pausing preferred dividends (which would accrue and remain payable later), issuing new equity to raise cash, or selling MSTR shares at a market discount to its net asset value rather than selling Bitcoin directly.

Market participants have flagged the risk that a large sale of Strategy’s Bitcoin could depress prices and create a feedback loop that deters buyers. A newsletter author using the handle zeroxkyle wrote that ‘an eventual Bitcoin sale from Strategy would only bring its price down faster,’ and described a potential ‘doom loop’ in which the prospect of a large seller keeps other buyers sidelined.

Analysts also point to flows from spot Bitcoin exchange-traded funds. While STRC remains below $100 and those ETFs are net sellers, analysts say the chances of Bitcoin returning above $70,000 are reduced.

Strategy’s leadership has not announced an imminent sale of its Bitcoin reserve. Market observers will monitor the company’s cash balance, STRC trading levels and ETF flows for signs of how the firm and markets respond in the coming weeks.