Strategy (NASDAQ:MSTR) is in a “death spiral,” according to longtime Bitcoin (CRYPTO: BTC) bear Peter Schiff, who posted the call Thursday morning as the stock slid another 8% and Bitcoin tumbled below $59,000.

“As I warned, MSTR’s death spiral has pricked the Bitcoin bubble,” Schiff wrote on X, also flagging a 7% drop in Strategy’s preferred shares and Bitcoin’s 54% decline from its October 2025 high.

His tweet landed the same day Rosen Law Firm announced an investigation into Strategy and founder Michael Saylor over potentially misleading business claims.

The Preferred Stack Cracks

Strategy shares traded as low as $92.28 Thursday, near their lowest level in nearly two years.

The bigger story may be in the company’s preferred shares.

STRC (NASDAQ:STRC), the variable-rate perpetual preferred designed to trade near its $100 par value, has slid to roughly $77.

That discount matters because Strategy’s at-the-market issuance program only funds Bitcoin purchases efficiently when STRC trades at or above par.

With the ChatGPT-designed STRC now 23% below par, the funding channel that fed Saylor’s Bitcoin buying is effectively jammed.

The timing of the company’s most recent buy is awkward. Strategy added 1,550 BTC in early June for roughly $101.3 million, an average of $65,332 per coin. Three weeks later, those coins are down around 10%.

Rosen Law Targets The Capital Stack

Rosen Law Firm, a securities plaintiff shop, said it is investigating potential claims tied to allegedly misleading statements and is preparing a class action to recover investor losses.

The probe covers MSTR alongside its preferred suite: STRF, STRC, STRK and STRD, signaling that scrutiny extends across Strategy’s entire capital structure rather than just the common stock.

Strategy holds 847,363 BTC acquired at an average cost of $75,651 per coin, or $64.1 billion in total. At Thursday’s spot price, that treasury sits roughly $14 billion underwater.

Prediction Markets Lean Bearish

Polymarket traders are already positioned for further weakness. The headline “What price will Bitcoin hit in 2026?” market currently assigns an 66% probability to Bitcoin printing below $50,000 this year, with odds of 31% on a print below $40,000.

Saylor pitched STRC on X in May as delivering a higher Sharpe ratio than leading hedge fund strategies, with “no management fees, no carried interest, no lockups, and daily liquidity.” The security has fallen roughly 13% since.

Image: Shutterstock