Strategy’s preferred equity overtakes convertible debt for first time

Strategy announced its preferred equity had surpassed the convertible debt. This equity structure may buy more time for Strategy to continue tracking BTC cycles. 

Strategy announced its preferred equity had greater weight in its portfolio, surpassing the levels of convertible debt. 

Preferred equity expanded to $8.36B, while outstanding convertible debt was at $8.214B. Strategy presented its latest report on outstanding credit, noting the improved balance. 

Our Perpetual Preferred Equity is now larger than our Convertible Debt. $BTC pic.twitter.com/XLtwzECr6u

— Strategy (@Strategy) January 21, 2026

The announcement arrived just after a $2B purchase of BTC, the biggest for the past seven months. In the past weeks, Strategy also resorted to selling common stock to boost its reserves or used the funds for weekly purchases. 

Preferred shares have also increased their trading volumes in the past weeks, mostly relying on STRC for the bulk of activity. The switch from debt to preferred shares gives more leeway to Strategy to shift buyer funds into BTC, without the constraints of debt maturity and with the option to convert the debt. 

In January, STRC preferred shares returned to the $99-$101 range and have held at that price for weeks. STRC is the most traded preferred share of Strategy, and has recently returned to trading above par. STRC is still actively promoted and traded, as it is considered a relatively low-risk, high-dividend exposure to Strategy and BTC. 

Strategy buys more time with preferred equity

Strategy has a series of debt maturity periods starting from 2028. Strategy has secured its interest and dividend payments, but the debt is the factor that has created the biggest worries about the company’s model. If BTC falls by a larger amount, creditors may demand repayment and trigger some BTC selling. 

Preferred equity has the advantage of no maturity date, requiring no repayment of principal. Instead, the preferred shares have to pay generous ongoing dividends. For Strategy, a higher share of preferred equity means a lower refinancing risk. 

Strategy also posted its BTC holdings against its debt. At current prices, the holdings cover the obligations many times over. Even a smaller BTC appreciation can make the debt structure viable and keep Strategy solvent. 

Strategy also stopped issuing new convertible debt, instead relying on a portfolio of preferred stocks with dividends and varying seniority and risk profiles. 

Strategy’s common stockholders absorb losses

While Strategy’s debt is not a problem at the moment, MSTR common stock is down to $160. The shares trade at a six-month low, following months of dilution. 

MSTR is just above its 12-month bottom, and may be amplifying the recent BTC dip to the $88,000 range. 

Previously, MSTR traded at around $400 while BTC traded at $95,000. Due to dilution and worsened sentiment, the same ratio is not preserved. Strategy still preserves a 1.06 points mNAV ratio, though each week, access to financing is closely watched for signs of problems.

Playbook strategy treasuries in total hold 867,258 BTC, of which 709,715 BTC are in Strategy’s treasury. For almost all other companies, new purchases have slowed down significantly.

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