Grayscale Head of Research Zach Pandl has cautioned that Michael Saylor’s Strategy may be confronting a structural cash-flow deficit of about $1.5 billion per year, driven primarily by rising preferred-stock dividend obligations rather than any weakness in Bitcoin’s price.

The concern followed Strategy’s sale of 32 BTC between May 26–31, 2026, worth approximately $2.5 million, marking its first Bitcoin liquidation since 2022. According to SEC disclosures, the proceeds were directed toward funding preferred dividend payments.

Pandl stressed that the issue is separate from Bitcoin’s market performance. In a Grayscale research note, he argued that Strategy’s leveraged balance sheet is coming under pressure, adding to broader BTC volatility. The central challenge, he noted, is a fixed-dollar liability structure that Bitcoin itself does not generate cash flow to service.

The growing $1.5 billion funding gap

The mismatch is becoming increasingly clear. Strategy generated around $477 million in software revenue in 2025, less than one-third of its estimated $1.5 billion annual preferred dividend burden. At the same time, its preferred equity stack has expanded dramatically—from roughly $730 million in early 2025 to about $15.5 billion by mid-2026.

This growth has been driven by multiple issuances, including STRK with an ~8% coupon and STRC (“Stretch”), introduced in 2025 with a variable yield near 11.5%.

STRC was structured to trade close to its $100 par value but has recently hovered around $95–96. Pandl suggests this discount signals rising investor yield requirements, which could force Strategy to increase payouts and further strain its financial position.

With roughly $1 billion in cash, Strategy has less than a year of coverage for its obligations, leaving it with few choices: refinance at higher cost, issue equity under less favorable conditions, or sell Bitcoin.

The May 2026 sale of 32 BTC at an average price of $77,135—reducing holdings to around 843,706 BTC—illustrates the first instance of Bitcoin being tapped to meet that pressure.

Other analysts, including Arca’s Jeff Dorman, have echoed similar concerns, pointing to the scale of the preferred obligations and warning that the situation could deteriorate quickly if Bitcoin or MSTR equity weakens.

Strain on the Bitcoin accumulation narrative

Strategy’s valuation premium has long been built on the assumption that Michael Saylor would remain a relentless Bitcoin accumulator, with MSTR effectively serving as leveraged exposure to that strategy.

Pandl’s analysis challenges that premise. The recent BTC sale indicates that Bitcoin is now being used as a source of liquidity for obligations rather than a fully protected reserve asset. He also notes that at current equity levels, issuing shares to fund additional Bitcoin purchases is no longer economically efficient.

This represents a shift from consistent accumulation to conditional liquidity management. Even Saylor acknowledged during Strategy’s May 2026 earnings call that Bitcoin sales could be used to cover dividend obligations if required, provided they are disclosed in advance.

Grayscale’s broader warning is structural: if Strategy ceases to be a steady buyer of BTC, it removes an important marginal source of demand from the market.

The so-called “MSTR put”—the assumption that Saylor would reliably step in during downturns—becomes less certain. In its place is a more constrained dynamic, where financial pressure could occasionally turn Strategy from a buyer into a seller, reshaping long-held expectations around its role in the Bitcoin market.