Analyst points to preferred shares of BTC-buying firms as cause of market downturn

The preferred shares of Bitcoin-accumulating companies like MicroStrategy (MSTR) and Strive (ASST) are a structural cause of the recent cryptocurrency market downturn, according to an analysis by Chinese-language crypto influencer FLS_OTC. In a post on X, the influencer explained that MicroStrategy's STRC shares fell to an intraday low of $82, while Strive's SATA shares dropped to around $90. "Although Strive claims this decline is due to leverage liquidations rather than credit deterioration, the market interprets it as a sign of pressure on MicroStrategy's so-called 'flywheel' model for acquiring BTC," FLS_OTC noted. The analyst added that while MicroStrategy has continuously raised funds to buy BTC and grow its market capitalization for years, the recent de-pegging of its preferred shares from their face value indicates that the market is reassessing the model's stability. "The greatest perceived risk is not MicroStrategy's unrealized losses on its BTC, but the potential for it to sell its holdings," FLS_OTC wrote. "A scenario where funding pressure prevents further BTC purchases is entirely possible. While this situation is closer to a liquidity crisis than a credit crisis, a prolonged de-pegging of these preferred shares would cast doubt on a core market narrative, which would be negative for the entire market."