Strategies Unveiling Bitcoin-Backed “Stretch” Preferred Stocks Targeting Income Investors

MicroStrategy’s successor entity Strategy announced the successful upsizing of its “Stretch” Preferred Stock (ticker STRC) from $500 million to $2 billion after investor demand quadrupled the book. The non-voting perpetual shares carry a dividend that resets monthly at the higher of 9 % or the one-month SOFR plus 650 basis points, subject to a 25 bp collar mechanism that stabilises price around the $100 par target. NYDIG’s research note characterised STRC as a bitcoin-backed, money-market-style instrument because the company intends to service dividends from operating cash and the historical appreciation of its 171,000-BTC treasury rather than from the sale of core software assets. Strategy’s latest 10-Q listed $71.7 billion in bitcoin against $11 billion in liabilities, implying an asset-coverage ratio above 6.5×. Proceeds will be used to acquire more bitcoin, retire legacy convertible notes and fund general corporate purposes. Under the prospectus, Strategy may issue additional STRC blocks when the share price exceeds $101 or initiate partial redemptions when it falls below $99, creating an automatic liquidity band. Morgan Stanley, Goldman Sachs and NYDIG Securities acted as joint book-runners; the deal is expected to settle August 1 on the NYSE. Institutional response has been notable. Fidelity’s Income Opportunities Fund indicated interest for $250 million, citing comparable yield to junk-rated corporates with materially higher asset backing. BlackRock’s iShares Bitcoin Trust filed a passive-investment notice for up to $120 million, pending internal risk-committee approval. Analysts framed the deal as a template for bitcoin-linked income securities that circumvent spot-price volatility while monetising long-term appreciation. JPMorgan’s Ken Worthington projected that if BTC gains 30 % annually, Strategy could raise dividends above 11 % without eroding principal. Critics flagged potential concentration risk: over 83 % of Strategy’s balance sheet will consist of a single volatile asset. Moody’s assigned a provisional Ba3 rating, three notches into junk, citing opaque dividend-sustainability modelling. Nevertheless, the offering underscores the growing interplay between digital-asset treasuries and traditional capital-markets structures, extending Bitcoin’s reach to fixed-income allocators seeking yield enhancement without direct crypto custody.