Strategy's Capital Market Dependence Trumps Bitcoin Price Volatility Risk

Strategy's risk profile is not as heavily influenced by Bitcoin price volatility as previously thought. The company's capital structure and annual obligations pose a significant threat to its solvency, particularly in the event of a prolonged closure of capital markets.

With approximately $22 billion in senior liabilities and preferred claims against its Bitcoin reserve, Strategy must settle around $1.76 billion in annualized cash obligations regardless of Bitcoin's price movement. The company's perpetual preferred shares generate dividends at an effective rate of up to 13.6%, while its convertible notes require regular interest payments.

Strategy's original business, enterprise analytics software, generates minimal operating cash flow compared to its financial obligations. Since its first Bitcoin purchase in August 2020, the company has relied on continuous capital raising to meet its needs, with an estimated total of $40 to $50 billion raised through common and preferred shares.

The modified net asset value (mNAV) metric, which measures the ratio between Strategy's enterprise value and its Bitcoin holdings, fell below 1.0 in June 2026. This implies that the market values Strategy at a price lower than the value of its underlying assets, making new share issuances dilutive operations.