The cryptocurrency market faced another wave of heavy selling on Thursday, with Bitcoin briefly falling to $58,188 before recovering slightly to around $59,300, marking another sharp decline after already hitting its lowest level in nearly two years the previous day.
The sell-off coincided with another steep drop in Strategy’s flagship preferred stock, Stretch (STRC), which plunged 8% shortly after U.S. markets opened.
The preferred shares now trade at approximately $74, representing a decline of more than 25% below their $100 par value-a level Strategy originally designed the security to maintain.
At the same time, the company's common shares (MSTR) also came under pressure, falling roughly 7% during Thursday's session.
Confidence in Strategy’s Bitcoin Model Weakens
The latest decline reflects growing investor concerns over Strategy’s digital credit strategy, which relies heavily on preferred shares like STRC to finance additional Bitcoin purchases.
Earlier this week, Executive Chairman Michael Saylor defended the company's approach.
Despite his confidence, analysts have increasingly focused on Strategy's shrinking USD Reserve, the company's primary source of liquidity used to fund dividend payments and service obligations.
At the beginning of the year, Strategy reportedly held enough cash reserves to cover approximately seven years of dividend payments. Today, those reserves are estimated to cover only around 14 months of routine payouts.
Analysts Call for Cash Preservation
Several research firms have warned that Strategy may need to prioritize rebuilding its cash position instead of continuing aggressive Bitcoin acquisitions.
Both JPMorgan and blockchain analytics firm CryptoQuant have argued that stronger reserves are necessary to restore investor confidence in STRC.
CryptoQuant went even further, suggesting earlier this week that Strategy should pause additional Bitcoin purchases altogether until its financial position improves.
The company has already taken steps to strengthen liquidity by issuing additional common shares and repurchasing portions of its outstanding debt at a discount.
However, those capital raises have diluted one of Strategy's key investor metrics-Bitcoin held per share.
Liquidations Accelerate Across Crypto Market
The renewed selling pressure sparked another major liquidation event across digital asset markets.
According to CoinGlass, more than $1.44 billion in leveraged positions were liquidated over the past 24 hours.
Long positions accounted for approximately $1.2 billion of those losses as traders betting on a market recovery were forced to close positions.
Bitcoin alone represented roughly $658 million in liquidations, making it the largest contributor to Thursday's market wipeout.
First Bitcoin Sale Since 2022 Still Weighs on Sentiment
Investor confidence has also been shaken by Strategy's recent decision to sell a portion of its Bitcoin holdings.
Earlier this month, the company disclosed that it had sold 32 BTC for approximately $2.5 million, marking its first Bitcoin sale since 2022.
Management described the transaction as a demonstration that the company is willing to liquidate a small portion of its holdings if necessary to support preferred shareholders and maintain dividend payments.
However, many analysts interpreted the move differently.
Some now fear the sale could signal the possibility of additional Bitcoin liquidations should market conditions continue to deteriorate.
Strategy's Massive Bitcoin Position Under Pressure
Despite the recent decline, Strategy remains the world's largest corporate Bitcoin holder. The company currently owns approximately 847,363 BTC.
At current market prices, those holdings are valued at roughly $50 billion, leaving the overall position estimated to be around $14 billion underwater relative to its acquisition costs.
With Bitcoin hovering near multi-month lows and investors closely monitoring Strategy's balance sheet, the company's financial health has become one of the market's biggest focal points.
Whether confidence returns may depend not only on Bitcoin's price recovery, but also on Strategy's ability to rebuild liquidity while maintaining investor trust in its long-term Bitcoin strategy.
