Strategy's 761k Bitcoin Treasury Sinks Underwater as Fed Kills Rate Cut Hopes

The Catalyst

The Fed held its benchmark rate at 3.50%–3.75% on Wednesday, as expected. But the statement and press conference were notably hawkish. Chair Powell flagged rising oil prices from the Iran conflict as a new inflation risk, and policymakers raised their 2026 inflation forecast to 2.7%, up from 2.4% in December. The dot plot now signals just one rate cut for the entire year.

Risk assets sold off hard. The Nasdaq closed at session lows, down 1.5%. Bitcoin dropped nearly 5% in 24 hours to $70,900, and Ethereum fell 6.5%. MSTR, as the most liquid leveraged Bitcoin proxy in equities, took a 6.5% hit on the session and continued lower into Thursday trading on Hyperliquid.

The Cost Basis Problem

Strategy now holds 761,068 BTC acquired at an aggregate cost of $57.61 billion — an average of roughly $75,696 per coin. With Bitcoin trading around $70,900, the entire treasury is underwater by approximately $3.6 billion on a mark-to-market basis.

This matters more than it used to. Strategy adopted fair-value accounting for its Bitcoin holdings, meaning price swings flow directly through reported net income. A 5% drop in BTC doesn't just hurt the balance sheet narrative — it shows up as billions in unrealized losses on the income statement. For a stock that trades as a leveraged Bitcoin bet, that amplification cuts both ways, and right now it's cutting down.

The timing is particularly awkward. Just days earlier, on March 17, Strategy announced its largest 2026 purchase: 22,337 BTC for $1.57 billion. The company bought aggressively into what turned out to be the top of a short-term range.

The Preferred Equity Machine

The 22,337 BTC buy revealed a significant shift in how Strategy funds its accumulation. Of the $1.57 billion deployed, $1.18 billion came from STRC preferred share issuance and just $396 million from common equity sales. It was the first time preferred stock served as the primary vehicle for a Bitcoin purchase.

The economics of STRC are getting expensive. Strategy raised the monthly dividend to 11.5% for March, the seventh consecutive increase since the preferred launched in July 2025. With outstanding preferred stock now exceeding $10 billion, annual dividend obligations top $1 billion. The company has earmarked $2.25 billion in USD reserves to cover near-term obligations, but the burn rate is real.

STRC itself has been trading below its $100 par value for three consecutive days post-ex-dividend — a signal that even yield-hungry preferred buyers are demanding more compensation. With common equity down over 70% from its peak, Strategy is running out of cheap capital. Each incremental BTC bought carries a higher embedded financing cost, and Wednesday's Bitcoin drop made the math worse across the board.

Trading on Hyperliquid

Trade MSTR on Hyperliquid with up to 10x leverage.