MicroStrategy's massive Bitcoin holdings, totaling 712,647 BTC, briefly fell below the company's average purchase price of approximately $76,037 per coin over the weekend as Bitcoin's price dropped below $75,500. This marked the first time in a while that Michael Saylor's firm was technically "underwater" on its Bitcoin position. However, this event created no immediate financial stress for the company, as none of its Bitcoin is pledged as collateral, eliminating any risk of forced selling.
The real impact is on MicroStrategy's fundraising and Bitcoin acquisition strategy. The company has historically funded Bitcoin purchases by selling new shares through at-the-market (ATM) offerings. This strategy only works effectively when the company's stock trades at a premium to its net asset value (NAV), which is largely determined by the real-time value of its Bitcoin holdings. Last Friday, with Bitcoin around $89,000-$90,000, MSTR traded at about 1.15 times its Bitcoin value. After the weekend dip, that premium flipped to a discount, making new equity raises less attractive as issuing shares would dilute existing shareholders without capturing premium value.
This dynamic was evident in 2022 when MSTR shares traded below Bitcoin holding value for most of the year; during that period, the company added only about 10,000 Bitcoin to its stack. The company's common stock fell 6% over the past week, closing below $150 per share, likely constraining its ability to raise capital via ATM sales and limiting the amount of BTC it could acquire.
MicroStrategy holds all its Bitcoin unencumbered and maintains $2.25 billion in cash reserves, earmarked for dividend payments on its preferred stock offerings. The company also has $8.2 billion in convertible debt on its books, with the first put date not until Q3 2027, providing flexibility to manage obligations through maturity extensions, conversions, or other tools.
In a related development, MicroStrategy announced a 25 basis point increase in the dividend on its Stretch (STRC) perpetual preferred stock to 11.25% for February. This marks the sixth increase since STRC began trading in July 2025. The dividend rate adjusts monthly to keep the stock trading near its $100 par value. STRC closed Friday at $98.99, slightly below par, and traded below its par value for the entire past week, preventing the company from issuing stock through the ATM program tied to that instrument. The company has raised $2.25 billion in reserves to cover the approximately $887 million in annual dividend obligations for its perpetual preferred offerings.
Executive Chairman Michael Saylor signaled further Bitcoin accumulation, posting "More Orange" on social media on Sunday morning, a typical preview of the company's Bitcoin purchases. Since the start of the year, MicroStrategy has acquired roughly 40,000 BTC. Bitcoin has since rebounded, trading around $78,000 at press time.
