According to Woofun AI, Perpetual Preferred Stock (Perpetual Preferred Stock) has evolved into the most lethal capital leverage tool in the Bitcoin field, leveraging the purchasing power of over 136,000 BTC for institutions such as Strategy (MSTR.US) (formerly MicroStrategy) and Strive (ASST.US) in less than two years.
This financial innovation, which lies between debt and common stock, has successfully extended its reach to the traditional fixed income market with no fixed maturity date and no pressure to repay the principal, establishing its unique position in the crypto capital structure. However, this seemingly perfect closed loop of financing is facing serious countervailing challenges: when market sentiment cooled and stock prices fell below face value, the company was forced to use huge repurchases to support credit, and rigid dollar dividend expenses snowballing year by year have even forced individual companies to sell BTC to fulfill dividend promises. The balance sheet is facing a real cyclical test under the triple pull of discount repurchases, dividend payments, and continuous coin purchases.
Judging from the market mechanism and scale, perpetual preferred stocks have effectively attracted traditional fixed income investors who are unwilling to directly hold BTC but desire stable returns through a security structure that provides regular dividends and no voting rights. Fidelity Digital Assets (Fidelity Digital Assets) research analyst Zack Wainwright pointed out in a research report released on Tuesday that in the 20 months since the launch of the tool, it has provided financial support for the purchase of about 136,000 BTC, which accounts for more than 0.5% of the cryptocurrency's maximum supply.
According to data compiled by Woofun AI, Fidelity estimates that the preferred stock market with Bitcoin at its core is about $12 billion. In contrast, the total size of the global fixed income market is as high as $150 trillion, which indicates that there is still huge room for growth in this field. Mark Palmer, a senior stock research analyst at StoneX (SNEX.US), emphasized that perpetual preferred stocks introduced BTC to a group of investors seeking fixed income, a group that ETFs have never reached. Ryan Rasmussen, head of research at Bitwise, also believes that these products attract buyers who may avoid Bitcoin spot traded open index funds (ETFs), so-called yield investors, but he expects ETFs to remain the main channel for larger demand, and the issuance of sustainable preferred stocks will play the role of second-hand stocks.
At the case level, Strategy's preferred stock performance as the listed company with the most BTC holdings in the world has become a weather vane testing the durability of this model. The company currently has five different tiers of preferred shares, of which STRK, which first launched, was unveiled in February 2025. James Butterfill, head of research at CoinShares, notes that using STRC's preferred stock as an example, currently pays a floating dividend of about 12% and has raised $7.5 billion between 2026 and late July. Behind this huge amount of financing is the ongoing cost of regular dividends.
Alex Blume, founder and CEO of Two Prime, pointed out that products such as STRC and Strive's SATA provide far more risk exposure than the BTC price, and that price trends will also be sensitive to management's ability to operate, issuers' debt performance obligations, and the overall capital market environment. He cited STRC's brief fall into the $70 range in late June as an example of its potential volatility, and pointed out that the continued expansion of the issuance scale created internal tension between increasing the currency content of each common share, fulfilling dividend payment promises in dollars, and avoiding the sell-off of BTC.
Currently, Strategy's preferred stock is trading at around $99.40, indicating market expectations for a return in value, but operating tension is still significant.
Financial conflicts and countervailing risks are particularly prominent when stock prices fluctuate. Mark Palmer analyzed that the core problem is that demand for perpetual preferred stocks is highly counterproductive. The prerequisite for continuing to buy BTC with preferred stock capital is that the transaction price of the security remains close to or above face value. James Butterfill further added that once it falls below face value, the issuance of new shares will lose its appeal, and the company may switch to share buybacks at that time. According to Butterfill Strategy, the latest weekly report shows that the company spent $193 million to buy back STRC while buying only 267 BTC over the same period. The agency also drastically raised the preferred share repurchase authorization to $30 billion, he added. Butterfill emphasized that while share buybacks may reduce future dividend costs, they are directly competing with BTC purchases for valuable capital at this stage.
Although cash reserves can provide some buffer, Strategy has previously had to sell part of BTC to pay dividends on preferred shares. This dividend payment pressure may evolve into a source of mandatory sell-off in a bear market, further increasing market volatility.
Macroscopic comparisons show that there is an essential difference in capital metallicity between ETFs and preferred stocks. James Butterfill said that the cumulative net inflow of US Bitcoin spot ETFs has reached about 57 billion US dollars, and the total assets held are about 106 billion US dollars. Net purchases of ETFs directly increase the fund's BTC holdings, while the issuance of preferred shares gives management autonomy over the use of funds. He said that while the redemption wave may reverse ETF buying demand, it won't leave a continuous rigid dividend obligation like preferred stocks. According to Butterfill, preferred stocks essentially amplify the market cycle: when the external financing environment is favorable, they can strongly support the expansion of buying coins; once market sentiment worsens, this financial support quickly weakens, and even turns into net sales force due to repurchase and dividend pressure.
This dual effect makes preferred stocks a double-edged sword. While the bull market accelerates the accumulation of leverage, the bear market also intensifies the liquidity crisis. Investors need to be wary of the structural risks behind it.