Strategy: The Capital Stack Meets a Falling Bitcoin Price

Below is a summarized version of The Block Research's Strategy: The Capital Stack Meets a Falling Bitcoin Price report. The full PDF version of this report is accessible here.

Strategy holds roughly 847,363 Bitcoin, a position now about 15% below its blended cost basis, and this report asks a single question: after accounting for the senior capital stack, is the common stock cheap exposure to that treasury or an expensive claim on it?

The answer is the latter. The common is not discounted Bitcoin but, instead, levered residual claim that still trades at a premium to the net value attributable to common holders, even though the optical ratio of market value to gross Bitcoin has fallen to a discount. The two facts are not in tension; the gap between them is the capital stack, and reading the headline discount as cheap Bitcoin is the central error the report corrects.

The conclusion rests on several balance-sheet facts. The coins the financing structure actually bought sit well below cost. Ranking ahead of the common are roughly $6.7 billion of unsecured convertible debt and about $15.5 billion of perpetual preferred, the latter carrying close to $1.7 billion a year of senior cash dividends. A management reserve covers less than a year of that carry, while roughly $6 billion of potential cash puts fall across 2027 and 2028. The software business did not generate positive operating cash flow in 2025, so the carry and the put wall depend on continued access to capital markets.

Because the claim is levered, it decays faster than Bitcoin as the price falls, and the direction of the premium offers no rescue: if it compresses the common drops faster than its net value; if it widens, the buyer pays more for the same deteriorating claim. The flywheel that built the position now runs in reverse. There is no near-term default trigger; the risk is a self-reinforcing grind.

The thesis is conditional. What would soften it is a meaningful Bitcoin recovery back toward cost, paired with a reopening of accretive financing. Absent that, the common is a levered, recovery-dependent bet priced above what it actually owns.