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Arca CIO Jeff Dorman believes Michael Saylor may have put both Strategy and #Bitcoin investors in a difficult position. Dorman notes that Strategy’s aggressive issuance of preferred shares created a structure that only functions smoothly if #Bitcoin continues to rise. The company currently has about $15 billion in preferred stock outstanding, which requires approximately $1.5 billion in annual dividend payments. Strategy raised additional funds through equity offerings, providing itself with a buffer for future payments. However, Dorman notes that the situation became more complicated when the company reportedly used some of that cash to buy back debt maturing in 2029 instead of maintaining liquidity. The main worry is straightforward: if #Bitcoin remains weak, Strategy might eventually have to sell BTC, refinance its debt, or seek alternative sources of capital. Dorman concludes that for the first time, the interests of all three parties seem to be at odds, and someone could face significant losses in the coming months. 💛
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bitcoin:native