Grayscale Head of Research Zach Pandl has warned that Michael Saylor’s Strategy may be facing a structural cash-flow gap of around $1.5 billion annually, driven by escalating preferred-stock dividend obligations rather than Bitcoin price weakness.
The warning came after Strategy sold 32 BTC between May 26–31, 2026, worth roughly $2.5 million, marking its first Bitcoin sale since 2022. SEC filings indicate the proceeds were used to help fund preferred dividend payments.
Pandl emphasized that the issue should not be confused with Bitcoin market performance. In a Grayscale research note, he argued that Strategy’s leveraged structure is coming under financial strain, which is also contributing to broader volatility in BTC. The core pressure point, he noted, is a fixed cash obligation that Bitcoin, as a non-yielding asset, does not naturally offset.
The widening $1.5 billion gap
The numbers highlight the imbalance. Strategy generated about $477 million in software revenue in 2025—well below one-third of its estimated $1.5 billion annual preferred dividend burden. Meanwhile, its preferred equity stack has surged from roughly $730 million in early 2025 to about $15.5 billion by mid-2026.
This expansion has been fueled by multiple issuances, including STRK with an ~8% coupon and STRC (“Stretch”), launched in 2025 with a variable yield near 11.5%.
STRC was designed to trade near par at $100 but has recently traded around $95–96. Pandl argues this discount reflects rising investor yield demands, which could force Strategy to raise payouts and further strain its cash flow position.
With only about $1 billion in cash reserves, Strategy has less than a year of coverage for its obligations, leaving it with limited options: refinance under tighter conditions, issue dilutive equity, or sell Bitcoin.
The May 2026 sale of 32 BTC at an average price of $77,135—bringing holdings down to approximately 843,706 BTC—shows the first visible step toward using Bitcoin as a liquidity source.
Other market voices, including Arca’s Jeff Dorman, have raised similar concerns, pointing to the size of the preferred stack and warning that outcomes could deteriorate quickly if Bitcoin or MSTR equity weakens further.
Pressure on the accumulation thesis
Strategy’s valuation premium has long depended on the belief that Michael Saylor would remain a persistent net buyer of Bitcoin, with MSTR functioning as leveraged exposure to that accumulation strategy.
Pandl’s analysis challenges that assumption. The recent BTC sale suggests Bitcoin is now being used as a funding source for obligations rather than a fully ring-fenced treasury asset. He also argues that at current equity prices, issuing shares to finance further Bitcoin accumulation is no longer economically viable.
This shift marks a move from steady accumulation toward conditional liquidity management. Even Saylor acknowledged during Strategy’s May 2026 earnings call that Bitcoin sales could be used to meet dividend obligations if necessary, with prior notice.
Grayscale’s broader concern is structural: if Strategy is no longer a consistent buyer of BTC, it removes a key marginal source of demand from the market.
The so-called “MSTR put”—the expectation that Saylor would always step in to buy during weakness—becomes less reliable. In its place is a more constrained reality where financial pressure could intermittently turn Strategy from a buyer into a seller, reshaping a long-held market assumption.
