Grayscale Warns Strategy Bitcoin Model Under First Stress Test as BTC Falls 21%

Grayscale warned that Strategy (MicroStrategy) is facing its first genuine stress test of its Bitcoin treasury model. Head of research Zach Pandl described the situation as pressure that "has increased the volatility for the BTC market as a whole." In the 10 days since Strategy made its first Bitcoin sale since 2022, BTC has fallen 21% and MSTR stock has lost 12.8%.

How does the Strategy model work?

Since 2020, Strategy has operated on a simple loop: raise capital through equity and convertible debt, buy Bitcoin, then raise more capital against the higher BTC portfolio value, and repeat. The company was the first publicly listed corporation to make Bitcoin its sole strategic reserve asset.

Strategy now holds 843,706 BTC, the largest corporate Bitcoin treasury in the world. In the first five months of 2026 it raised $7.5 billion through preferred stock issuances and bought another 126,016 BTC for $9.31 billion since March. As long as Bitcoin kept rising, the loop ran smoothly.

On June 1, Strategy sold Bitcoin for the first time since 2022. Only 32 BTC out of an 843,000-coin reserve, but the signal was enough to rattle markets: if a sale is needed, the financial picture has changed.

What changed and why is STRC below $100?

Last month, Strategy announced a buyback of its own convertible debt worth $1.38 billion. That move cut the cash reserve to roughly $900 million, which analysts calculate covers only six months of dividend payments on the preferred stock.

At the same time, STRC (Stretch Preferred Stock) slipped below its $100 par value and now trades around $95. STRC is designed to hold near $100 and pay holders an 11.5% annual cash dividend monthly. When the market prices it below par, investors are demanding a higher effective yield.

Where does the negative feedback loop start?

Around STRC, a potential doom loop is forming. Here is how the mechanism works:

• STRC falls below $100. New buyers demand higher yield because they are buying at a discount to par.
• Strategy must raise the dividend to bring STRC back to par, which increases monthly cash obligations.
• A higher dividend drains the $900 million cash reserve faster, potentially forcing BTC or MSTR stock sales.
• Selling BTC pushes Bitcoin's price lower, reducing the reserve value and weakening Strategy's balance sheet.
• Falling MSTR and BTC drag STRC lower still. The loop closes.

Peter Schiff wrote on X: if Strategy raises its dividend to return STRC to $100, the company "will run out of cash much sooner, pulling forward Bitcoin sales to fund payments."

Is Strategy heading toward a Terra Luna-style collapse?

Terra Luna and its UST stablecoin collapsed in 2022 through a similar feedback loop: UST lost its $1 peg, the protocol minted more LUNA to restore it, LUNA fell, and the peg broke further. A repeat with Strategy looks unlikely for several reasons.

First, Strategy's net leverage ratio is just 11%. Even if Bitcoin falls to $30,000, the BTC reserve value would still cover the company's debt. Second, the convertible bond contracts contain no contractual trigger that would force a Bitcoin liquidation. Third, Strategy can pause STRC dividend payments at any time, though the missed payments accumulate for later.

Pandl at Grayscale pointed to a different concern: at current MSTR and STRC prices, the company has limited ability to keep buying BTC. One of the market's largest known Bitcoin buyers has effectively stepped back from active accumulation mode.

What comes next?

SignalPlus partner Augustine Fan noted that markets are blaming Strategy's actions for the selloff, "but the reality is that even the most ardent supporters are running out of reason to be structurally bullish." CoinEx chief analyst Jeff Ko called Strategy's 32 BTC sale an "important psychological trigger" but added the move was constructive: it gives the company balance sheet flexibility rather than forcing one-way accumulation in all conditions.

As long as STRC holds below $100 and spot Bitcoin ETFs show net outflows, a BTC rally above $70,000 looks distant. Investors looking to exchange Bitcoin to USD or track exchange rates in real time can compare current quotes across exchangers on Kurslog.