Bitcoin Price Surge Masks Strategy Risk as Cash Flow Dries Up

The price of Bitcoin has surged over 20% in the past month, driven by geopolitical tensions and concerns about the US dollar's value. This rally has also lifted shares of Strategy (MSTR), which holds a significant portion of Bitcoin's total lifetime supply.

Strategy's holdings are worth $63.5 billion, compared to its enterprise value of $50 billion. Some investors believe that Strategy is undervalued relative to its Bitcoin holdings and expect the stock to trade at a premium to those assets in the future.

However, critics argue that Strategy needs to sell its Bitcoins to fund its preferred dividends, which could be a major risk for investors. The company issued four classes of preferred shares last year with different dividend structures, seniority, yields, and risk profiles.

In the first half of 2026, Strategy spent over $500 million on dividend payments despite Bitcoin's price decline. To cover its dividends without taking on more debt, the company sold 3,620 Bitcoins worth $272 million today.