Research and brokerage firm K33 has issued a warning that the aggressive Bitcoin accumulation strategy employed by Strategy, largely funded through its perpetual preferred stock STRC, is creating structural risks in the market that are heavily dependent on sentiment dynamics. The analysis, published by Vetle Lunde, K33's head of research, highlights the potential vulnerabilities in this model.
Strategy's recent buying spree saw it acquire approximately 40,331 Bitcoin over a two-week period, marking its fourth-largest purchase in such a timeframe on record. The total capital deployed was $1.57 billion, with a significant $1.18 billion (or 55%) sourced from STRC market sales. The remaining $396 million came from the company's Class A common stock.
STRC is a perpetual preferred stock designed to trade near $100 and offers a variable monthly dividend, currently annualized at around 11.5%. The mechanism effectively converts yield demand into Bitcoin purchases. However, K33 warns that the stability of this entire structure hinges on two sentiment-dependent conditions: STRC maintaining its target price near $100, and Strategy's stock trading at a premium to its net asset value (NAV).
The firm outlined specific risks for STRC holders, whose upside is limited to dividends while being exposed to downside during market corrections. STRC has already experienced multiple price drops of between 5% and 10%. If it trades below its $100 target for a prolonged period, confidence in its mean-reversion dynamic could erode, transforming its profile from a stable yield product into something closer to risk credit.
Lunde clarified that, despite these structural concerns, the situation does not pose an immediate systemic risk to Bitcoin. Strategy holds approximately $2.25 billion in cash, which is sufficient to cover around 25 months of dividend payments, providing a significant financial buffer.
Meanwhile, Bitcoin has demonstrated relative resilience in the broader market. Since February 27, Bitcoin has accumulated gains of approximately 13%, while the Nasdaq and S&P 500 retreated and gold deepened its losses amid geopolitical tensions. K33 attributes this performance partly to Bitcoin entering the period oversold, underrepresented in portfolios, and with elevated short positioning after months of underperformance.
