Bitcoin News Today: MicroStrategy's Preferred Play: Can Bitcoin's Yield Hype Outlast the Fading Premium?

MicroStrategy Inc. (MSTR) is increasingly relying on perpetual preferred stock to fund its Bitcoin treasury amid a shrinking premium on its shares. CEO Michael Saylor has relaxed self-imposed restrictions on common stock sales, allowing the company more flexibility to raise capital through preferred equity offerings. The company's "mNAV premium"—the premium over its net asset value—has historically enabled MicroStrategy to issue shares at a high valuation and use the proceeds to buy Bitcoin at a discount. However, this premium has been narrowing, prompting a shift toward perpetual preferred stock, which allows the firm to avoid issuing more common shares and maintain financial flexibility [5].

As of July 29, MicroStrategy holds 628,791 bitcoins, representing 3% of all Bitcoin in circulation. This makes it the largest corporate Bitcoin treasury holder in the world. The company has issued $10.7 billion in equities and $7.6 billion in fixed-income securities year to date, with a significant portion allocated to preferred stock. Among these offerings, STRK, STRF, STRD, and STRC have played a key role in capital raising. STRK, for example, offers an 8% dividend coupon and has an effective yield of 7.5%, while STRF offers a 10% cash dividend with enhanced payment protection features and an 8.7% yield [1].

Despite the strategic shift, investor sentiment appears mixed. MSTR shares have declined 14.7% over the past month, underperforming both the Zacks Computer - Software industry and the Zacks Computer and Technology sector, which posted returns of 0.3% and 3%, respectively. This trend is not unique to MicroStrategy; companies like Riot Platforms (RIOT) and MARA Holdings (MARA) have also seen declines in their stock prices, although Tesla (TSLA) has managed a modest gain of 2.1% during the same period. The underperformance raises questions about whether the Bitcoin treasury strategy is still driving value for investors [1].

MicroStrategy remains optimistic about its future prospects. The company expects to achieve a 30% Bitcoin yield and $20 billion in gains if the price of Bitcoin reaches $150,000 by year-end. Based on this price assumption, the company projects operating income of $34 billion and net income of $24 billion for 2025, significantly outperforming both Riot Platforms and MARA Holdings, which posted net losses of $0.5 billion and $0.8 billion, respectively. Analysts and investors, however, are watching closely whether these projections will hold in light of recent market volatility [1].

The broader crypto market has also shown signs of consolidation. Bitcoin, which reached a high of $123,500 in late July, has since fallen to around $115,000. The pullback has led to the liquidation of over $1.7 billion in long positions on crypto futures, according to CoinGlass data. Some analysts suggest that the market is in the process of deleveraging following recent highs. Meanwhile, Ethereum (ETH) has shown relative strength, with the ETH/BTC ratio reaching its highest level since the start of 2025. Ethereum's derivatives market also reflects strong speculative positioning, with perpetual futures open interest reaching a 14-month high [2].

In response to these market dynamics, MicroStrategy has taken steps to strengthen its balance sheet without relying on dilutive common stock sales. The company has introduced a $21 billion at-the-market (ATM) program and expanded its use of perpetual preferred stock. These measures aim to preserve liquidity and continue Bitcoin accumulation while reducing the dilutive impact on ordinary shareholders. However, the cost of capital remains a concern, as preferred stock instruments carry fixed dividend obligations that can become burdensome in a rising interest rate environment [6].

Despite the challenges, Saylor's approach has received cautious optimism from some analysts. The ability to raise capital through non-dilutive means could allow MicroStrategy to maintain its Bitcoin-focused strategy while adapting to changing market conditions. Yet, as the premium on MSTR shares continues to contract, the effectiveness of this model will depend on both Bitcoin’s price trajectory and investor demand for its preferred securities. The company now faces the challenge of balancing capital structure optimization with maintaining investor confidence in the long-term viability of its Bitcoin treasury model [5].

Source:

[1] Strategy Falls 15% in a Month: Hold or Fold the MSTR Stock? (https://finance.yahoo.com/news/strategy-falls-15-month-hold-162300910.html)

[2] Bitcoin, Ethereum Slip as Crypto Markets Pull Back After Hitting 2025 Highs (https://finance.yahoo.com/news/bitcoin-ethereum-slip-as-crypto-markets-pull-back-after-hitting-2025-highs-155818704.html)

[3] Ethereum vs. Bitcoin: ETH/BTC Ratio Climbs to Yearly Highs (https://www.mitrade.com/insights/news/live-news/article-3-1053086-20250820)

[4] Bitcoin, Ether Set for Squeeze as Traders Go Record Short (https://cointelegraph.com/news/bitcoin-ether-eye-short-squeeze-as-traders-build-largest-ever-eth-short)

[5] Michael Saylor Eases Stock-Sale Limits as Bitcoin Premium Falls (https://www.bloomberg.com/news/articles/2025-08-18/michael-saylor-eases-stock-sale-limits-as-bitcoin-premium-falls)

[6] MicroStrategy Pushes on Perpetual Bonds as the “Bitcoin Proxy” Model Evolves (https://en.cryptonomist.ch/2025/08/19/microstrategy-pushes-on-perpetual-securities-limits-on-stock-sales-eased-while-the-bitcoin-premium-decreases/)