Strategy situation ‘out of hand,’ says Arca CIO on $15B preferred stock burden

Strategy is facing renewed scrutiny over its preferred stock financing model as investors question whether dividend obligations could eventually pressure the company to sell some of its Bitcoin.

The Strategy situation has “gotten out of hand,” Arca chief investment officer Jeff Dorman said in an X post on Thursday, referring to its roughly $15 billion in preferred stocks carrying around $1.5 billion in annual dividend obligations.

Dorman warned that the structure may become increasingly difficult to manage if market conditions remain volatile, with Bitcoin ($BTC) trading about 16% lower year-to-date at roughly $73,737 at the time of writing.

The remarks add to a growing debate over whether Strategy’s Bitcoin-linked capital structure can withstand prolonged price swings without forcing asset sales.

$15 billion preferred stock under pressure

Dorman’s warning centers on Strategy’s financing model, which includes a large issuance of preferred stock that carries fixed dividend commitments.

Strategy has issued five preferred shares — STRK, STRF, STRD, STRC and STRE — each carrying different dividend terms, seniority and risk exposure within the capital structure.

Source: Yves-André Graf

Dorman argues the model was built on the assumption that Bitcoin would continue rising strongly enough to support it, describing it as a bet that $BTC was “about to moon” and could fund future obligations.

He said Strategy’s equity raises helped ease near-term default concerns, but questioned what followed, calling its decision to repurchase 2029 maturity bonds “baffling” given ongoing pressure from dividend obligations.

Source: Jeff Dorman

According to Dorman, the structure ultimately leaves only stark outcomes: either “sell $BTC to pay the prefs” or “stop paying the dividend,” each carrying direct and asymmetric consequences for Strategy, its investors and Bitcoin itself.

CEO confirms possible Bitcoin sales as Polymarket odds rise

Dorman’s remarks came amid Strategy CEO Phong Le confirming that the company might sell Bitcoin at some point in the future after Strategy executive chairman Michael Saylor raised such a possibility in mid-May.

“We’ll likely sell Bitcoin at some point in time, but we will be net increasing our Bitcoin and more importantly, increasing our Bitcoin per share,” the CEO said in a CNBC Fox Business exclusive on Thursday.

Amid rising expectations that Strategy might need to sell $BTC to manage its balance sheet and obligations, the prediction market platform Polymarket has shown increasing odds of a sale across 2026.

Source: Polymarket

The “MicroStrategy sells any Bitcoin by” market shows roughly a 90% chance by Dec. 31, 2026, 71% by June 30 and 18% by May 31.

So far this year, Strategy has purchased around 170,000 $BTC, bringing its total holdings to 843,738 $BTC purchased at an aggregate purchase price of $63.87 billion and an average purchase price of approximately $75,700 per Bitcoin.