Arca Chief Investment Officer Jeff Dorman warns that Strategy STRC preferred stock faces a critical liquidity junction, suggesting that Michael Saylor’s firm may need to sell between $3 billion and $4 billion worth of Bitcoin to stabilize its capital structure.
The proposal follows a June 18, 2026, session where Strategy’s (NASDAQ: MSTR) STRC preferred stock plunged to a record low of $82.53, representing a sharp 17% discount to its $100 par value. With annual dividend obligations now estimated between $1.5 billion and $1.
7 billion, Dorman argues that a liquidating event is the most pragmatic fix for the mounting “STRC crisis.”
Capital structure pressure and the Strategy STRC dividend coverage collapse
The financial pressure on Strategy has intensified as the total face value of its preferred stock ballooned from $2.8 billion in November 2025 to $10.5 billion by mid-June 2026.
This aggressive expansion of the company’s capital stack coincided with a retreat in the underlying asset; Bitcoin drifted toward $63,000 this month, down from highs near $90,000 late last year. While Bitcoin holds steady compared to more volatile altcoins, the sheer scale of Strategy’s leverage has left it vulnerable to shrinking cash reserves.
Dorman’s critique centers on what he describes as a mismanagement of liquidity that has “gotten out of hand” over the last few weeks. He specifically targeted the company’s decision to repurchase $1.5 billion in 0% convertible notes due in 2029 for approximately $1.38 billion in cash.
According to the Arca CIO, this move depleted vital cash reserves that should have been earmarked for preferred dividend payments, leaving the company with a tighter runway than investors expected.
The speed at which Strategy’s fiscal position has shifted is startling for institutional observers. In November 2025, the company reported a projected dividend coverage of approximately 71 years. By June 2026, that figure had collapsed to just 31 or 32 years.
Market maker QCP estimates that Strategy’s current cash liquidity could support preferred dividend payments for only about seven and a half months without further intervention or a massive rally in the Bitcoin price.
Strategy co-founder Michael Saylor has long maintained a “never sell” philosophy regarding the company’s Bitcoin treasury, which currently sits at approximately 846,842 BTC. However, the market’s reaction to STRC suggests that bond and preferred equity holders are becoming skeptical of this rigid stance. As the com/bitcoin-volatility-warning-institutional-pullback-2026/”>correction risk for Bitcoin remains a factor in broader market sentiment, the discount on STRC preferred stock reflects a growing demand for a cash-flow insurance policy.
A multibillion-dollar Bitcoin sale as the ultimate stabilizer
Jeff Dorman assigns a 25% probability to his proposed solution: a sale of $3 billion to $4 billion in Bitcoin. While such a move would represent less than 10% of Strategy’s total holdings, it would provide the firm with enough cash to retire high-cost debt or comfortably fund dividends for years.
Dorman contends that this would not materially alter the company’s long-term identity as a Bitcoin proxy but would significantly de-risk the financing structure that currently weighs on the stock price.
And while a sale of this magnitude would likely cause short-term price pressure across the crypto market, it could serve as a “clearing event” for Strategy. By addressing the preferred stock concerns, the company could potentially regain the ability to issue new shares at par, a mechanism that has been the primary engine for its Bitcoin accumulation strategy over the last five years.
Expert reactions to Michael Saylor’s treasury management strategy
The Arca CIO is not the only voice raising alarms about Strategy’s current path. Euro Pacific economist Peter Schiff, a frequent critic of the company’s model, has pointed to the STRC price decline as evidence of structural flaws in using debt to buy a volatile asset.
Meanwhile, 10x Research CEO Markus Thielen and LVRG Research Director Nick Ruck have both noted the thinning margins Strategy faces as its interest-bearing obligations grow.
Strategy has already begun small-scale liquidations to stay afloat. In late May 2026, the firm sold 32 BTC for roughly $2.5 million specifically to fund distributions for the STRC series. Critics argue that these “drip” sales are insufficient and merely delay an inevitable larger transaction. As markets enter a period where com/crypto-market-forecast-2026-narrowing-window-analysis/”>utility shifts dictate the winners of 2026, the focus on Strategy’s balance sheet health has superseded simple price appreciation of its holdings.
The math facing Michael Saylor’s team is becoming increasingly binary. They must either wait for a significant Bitcoin rally to push the value of their holdings high enough to refinance their way out of trouble or follow Jeff Dorman’s advice and liquidate a portion of the treasury.
For now, Strategy appears committed to its current path, holding $1.1 billion in dedicated U.S. dollar reserves as of last week, though the market’s valuation of STRC at $88.59 suggests investors believe more capital is required to solve the looming crisis.