Michael Saylor's Strategy is facing a severe test.

The slow-motion crash in cryptocurrencies has placed the company, which aggressively purchased tens of billions of dollars worth of Bitcoin during the digital asset's surge to record highs, under significant strain. Bitcoin's subsequent decline has severely impacted the company's share price, leaving it with dwindling options to raise additional capital.

The pressure has become so intense that Strategy has abandoned Saylor's "never sell Bitcoin" creed in a recovery plan announced Monday. The company authorized plans to repurchase up to $1 billion each of its preferred stock and Class A common stock and is initiating a $1.25 billion "liquidity project" to raise funds by selling Bitcoin. Saylor argued that he never said his company would not sell Bitcoin.

"The long-term logic hasn't changed," said Jeff Dorman, Chief Investment Officer at crypto asset management firm Arca. "The various parts of the capital structure are still competing with each other, but they've essentially kicked the crisis down the road a bit."

Saylor's bold vision of transforming his software company into a Bitcoin reserve vehicle initially captured the imagination of crypto investors and spawned dozens of imitators. Initially, Strategy relied on cash on its balance sheet to accumulate Bitcoin. To scale this aggressive buying, the company began selling shares. It then escalated further, turning to other financing avenues: convertible bonds and high-yield preferred stock.

By early October 2025, when Bitcoin surpassed $126,000 to set a new record high, Saylor had amassed over 600,000 of the crypto tokens, fulfilling his promise to reshape Strategy as a proxy for Bitcoin. Now, with Bitcoin having lost more than half its value and recently falling below the key psychological level of $60,000, Strategy has been hit hard.

Strategy's mNAV metric—its enterprise value divided by the value of its Bitcoin holdings—fell below 1 last Friday, another "breach of a key threshold" that shook investor confidence in the firm. In other words, investors are valuing Strategy at less than the Bitcoin it has hoarded, effectively freezing its ability to issue new common stock to buy more Bitcoin.

Since peaking in November 2024, the company's common stock has plunged more than 80%, while its largest and most popular preferred stock, Stretch, currently trades at a 16% discount to its face value after hitting a record low last week.

The former is bad news; selling more common shares during such a freefall would dilute existing shareholders and likely push the price lower. But the latter is arguably worse. With preferred shares trading at a discount, Strategy will find it difficult to issue new preferred stock for financing. More critically, this decline forced the company to raise its already-high 11.5% annual dividend to 12% in an attempt to lure investors back.

Investors and analysts say Strategy cannot simultaneously protect its common and preferred shareholders while meeting the $1.8 billion annual dividend obligation for its preferred shares—a cash requirement far exceeding the revenue from its core software business. To continue paying dividends, they say, Strategy must sell more common stock, offload more Bitcoin, or cut the preferred dividend.

The company is already employing these tactics. On Monday, Strategy announced plans to repurchase up to $1 billion each of its preferred stock and Class A common stock. Buybacks can potentially boost the share price by reducing the supply of stock in the market and also reduce the total dividend payout.

Strategy also stated it may sell Bitcoin to raise up to $1.25 billion in cash to help pay preferred stock dividends and interest on outstanding debt, and to fund the stock buyback program and cash reserves. As of June 28, the company had also increased its cash reserves to $2.55 billion.

Saylor, the company's co-founder and Executive Chairman, began transforming this software intelligence firm into a Bitcoin accumulator in August 2020.

Initially, he used cash on hand to fund its first Bitcoin acquisitions. Soon, he began selling common stock through at-the-market offerings. By 2024, Strategy had become one of the world's largest issuers of convertible bonds, raising over $6.2 billion in a single year to fund its aggressive Bitcoin purchases.

In early 2025, Strategy expanded its financing toolkit again, launching a series of high-yield preferred stocks named Strike, Stretch, Strife, and Stride.

Miami-based crypto content creator Nick O'Neil said he holds about $21,000 worth of Stretch and plans to buy more on further dips if the preferred stock falls further.

"The real reason you buy this stock is that you believe the price of Bitcoin will go up again," O'Neil said. "And you believe they have enough Bitcoin on their books to pay the dividend for at least the next few years."

Earlier this month, Strategy sold a portion of its Bitcoin holdings to meet a preferred stock dividend payment. Though a small transaction involving just 32 Bitcoins, it damaged investor confidence and triggered a swift market pullback. Strategy still holds 847,363 Bitcoins, worth approximately $51 billion at current prices.

Some critics point out that Saylor marketed Stretch to investors as a product with "money market-like stability." They argue that packaging Stretch as a stable, high-yield "money market" alternative downplayed its inherent risks. Unlike traditional money market funds, Strategy is legally permitted to suspend payments of preferred stock yields or dividends. Yet, in a social media advertisement posted by Saylor, a woman is depicted lounging on a tropical beach, implying she could sustain that lifestyle solely through Stretch dividends.

"Strategy remains committed to holding Bitcoin as its primary treasury reserve asset," Saylor said in the company's Monday announcement.

Some retail traders foresaw the crash and built trading strategies to profit from it.

Philadelphia-based musician John Scargall said he purchased two long-dated put options on Stretch earlier this month after seeing investors on social media touting it as a safe money market fund equivalent. Put options give the holder the right, but not the obligation, to sell a security at a predetermined price before a set expiration date.

He spent a total of $240 to snap up two low-priced contracts and has already cashed out one for $320. He plans to hold the other until its December expiry but may sell it for a profit if Stretch falls into the $50-$60 range before then.

"If the stock market returns 10% to 11% a year with huge volatility, how can something yielding 11.5% not have volatility?" Scargall said. "I think it's only a matter of time before an investment yielding 11.5% starts to behave like a true high-yield instrument."

Analysts trace the root of Stretch's current troubles to May, when Strategy used cash reserves to repurchase $1.5 billion of zero-coupon convertible senior notes due in 2029. This buyback reduced the funds available for preferred stock dividend payments, sending Stretch shares into a downward spiral.

Market skepticism persists even after Strategy CEO Phong Le stated last Monday that he had purchased $1 million worth of Stretch shares and pledged to hold them until they returned to face value.

After all, insider buying cannot fix a macro-level collapse. With Bitcoin hovering around $60,000 and Strategy's Bitcoin hoard sitting on over $10 billion in unrealized losses, some analysts believe the company should pause Bitcoin purchases and rebuild its cash reserves.

"'Strategy always buys the top' has become a market meme. Buying whenever you have funds isn't a strategy; it's accumulating assets at the peak of the cycle," wrote Julio Moreno, Head of Research at crypto data firm CryptoQuant, in a recent report.