Strategy Inc. (NASDAQ:MSTR) is facing the “first real test” of its Bitcoin (CRYPTO: BTC) model and should not be seen as Bitcoin at a discount, according to a new The Block research paper.

Strategy’s $54.7 Billion Treasury Now Sits $9.4 Billion Underwater

Strategy holds 847,363 BTC bought for $64.10 billion at an average cost of $75,651 per coin. With Bitcoin near $64,600, that treasury is worth roughly $54.7 billion, leaving the company about 14.6% below its cost basis. 

The Block’s report argues that the company faces greater exposure than the blended loss implies because it bought most of its newer debt- and preferred-funded Bitcoin at significantly higher prices.

There is no immediate liquidation trigger.

Strategy relies mostly on unsecured convertible notes for its debt, does not pledge its Bitcoin as collateral, and pays only around $35 million in annual interest costs.

The real risk lies in liquidity: Strategy must pay roughly $1.7 billion in annual preferred dividends, faces noteholder cash put dates starting in 2027 and clustering in 2028, and holds a $1.4 billion reserve that covers only months rather than years and remains outside escrow.

The Preferred Stack Is Now The Center Of Risk

Strategy carries about $15.5 billion in preferred notional, led by the (NASDAQ:STRC) 11.5% dividend, which accounts for most of the annual cash drain. 

STRC recently traded far below par, forcing Strategy to pause its preferred at-the-market funding channel, a problem since the entire model depends on continuous issuance to stay funded.

The report argues that MSTR common trades at a premium to its actual residual claim after subtracting debt and preferred obligations, rather than at a discount to Bitcoin.

Because that claim is leveraged, MSTR falls faster than Bitcoin on the way down.

The old flywheel has also weakened: the headline ratio that determines whether new issuance is accretive now screens at 0.76x, well below the 1.22x breakeven needed, meaning new capital increasingly funds dividends rather than buying coins.

MSTR Sits Just Above Its 52-Week Low With The Death Cross Still Active

MSTR trades 44.1% below its 200-day SMA and 30.8% below its 50-day SMA, keeping any bounce in sell-the-rally territory until those trendlines are reclaimed. 

The death cross from October 2025 remains intact, and MACD sits below its signal line with a negative histogram, confirming fading momentum.

Key support sits at $104, just above the 52-week low, an area the report flags as sensitive to stop-driven moves given how thin the buffer has become.

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