Written by: Liu Honglin

When mentioning Strategy, many friends' first reaction is still an old impression: Isn't this just an American listed company that loves to buy Bitcoin?

This understanding is not entirely wrong, but also not entirely correct.

Because if it merely views Bitcoin as an asset to hold, it could just buy it outright. After buying, it could just keep it in the account; if the price rises, it counts as asset appreciation, and if it falls, it counts as fluctuations on the balance sheet. In recent years, many listed companies have bought Bitcoin, largely following this idea: treating it as a highly volatile reserve asset or as an alternative financial allocation for the company.

But Strategy is different.

It does not just buy and hold; it does not treat Bitcoin merely as a "special reserve asset" in passing. What it is doing now is continuously raising capital from the market while exchanging that capital for more Bitcoin, then using this batch of Bitcoin to issue stocks, preferred stocks, and various yield-labeled instruments.

By April 2026, Strategy has already presented a whole range of products: MSTR is common stock, STRK, STRF, STRD, STRC, STRE are different series of preferred stocks with various terms. The company’s official website has even categorized these products.

It is hard for us to understand it merely as a "company that bought a lot of Bitcoin"; instead, the question is, what does it actually want to do with all this Bitcoin?

Not holding coins, but structuring capital around Bitcoin

When we talk about "doing capital business," it’s not that it is using Bitcoin for mining, nor is it saying it invests Bitcoin in on-chain wealth management. Quite the contrary, what it is doing is traditional and very Wall Street-like.

For Strategy, it is no longer satisfied with being "a company that has bought a lot of Bitcoin." It wants to use its Bitcoin as a base for credit expansion, to structure capital, creating a system that can sustain financing, continuously expand its balance sheet, and continuously sell.

Its original software business is still there, but that part of the business can no longer explain why it has such a strong presence in the market. What truly keeps getting repriced by the market is not the software, but the entire set of capital operations it has carried out around Bitcoin.

This logic isn't hard to understand. You can imagine it this way: first take a market-recognized underlying asset, one that people are willing to buy into, to enlarge the pool; then design instruments with different maturities, different yield expectations, and different risk tolerances around this asset, selling them to various types of investors. Some want high elasticity, so they buy common stock; some want a steadier yield expression, so they buy preferred stock; others want to participate in the Bitcoin narrative but do not want to hold coins themselves, manage custody, or deal with all the on-chain complexities, so they buy the packaged securitized offerings.

Therefore, to understand Strategy, we cannot just focus on "how much Bitcoin it has bought." What we should pay attention to is the type of capital game it has built around this Bitcoin.

What is Strategy selling?

Let’s start with the simplest. MSTR is common stock. It offers an "amplified exposure" to Bitcoin. People who buy it are essentially purchasing a stock entry that is highly volatile, has a strong narrative, and is highly sensitive to BTC. Its earnings logic is also straightforward: if the stock price rises, you can sell it in the secondary market; or you can hold on, betting that its volatility, market sentiment, and valuation premium will continue to exist.

However, the true complexity of Strategy lies not in MSTR, but in the subsequent preferred stocks.

STRK is a convertible perpetual preferred stock that offers an 8% annual dividend and can be converted into 0.1 shares of MSTR. This design clearly caters to those who want a bit of fixed income but do not want to completely give up the chance for appreciation. They receive dividends during regular periods, and if the common stock rises significantly, they can share in some of the upside through conversion.

STRF follows a different route. It is defined on the official website as the senior-most perpetual preferred stock, meaning it is further up within the existing preferred stock tier. It offers a 10% fixed dividend, quarterly cash payments, and there are penalties and governance constraints if payments are missed.

STRD is also a preferred stock, but it is different from STRF and STRK. Although it promotes itself with a high coupon of 10%, this dividend is not mandatory and not cumulative; whether it is declared depends on the board's discretion and the company having legally distributable funds; if a period is not declared, it simply passes without compensation in subsequent periods. Meanwhile, its positioning in the capital structure is not as "senior"—though it's above common stock, it is below STRK, STRF, and the company’s existing and future debts, and it does not have the design that allows it to convert to common stock to share in the upside. Therefore, STRD is more like a high-yield credit tool disguised as a preferred stock: buying it does not mean you are purchasing a "safe haven" product, but accepting weaker dividend guarantees, a lower position, and more direct structural risks in exchange for a higher coupon narrative.

STRC goes in yet another direction. It is a floating dividend preferred stock, with monthly cash payments; the dividend will adjust, aiming to keep the price as close to the $100 face value as possible. The official site now shows that its floating annual dividend rate in April 2026 is 11.50%, but it also clearly states: this number will adjust monthly, and cash dividends are not guaranteed. In other words, what it wants to sell to the market is not "high volatility stock elasticity," but a product that feels more like a yield tool, with prices ideally not fluctuating too wildly.

What Strategy is really selling today is no longer Bitcoin itself, but an entire set of securities structured around Bitcoin.

Common stock sells elasticity, STRK sells "yield plus a bit of upward participation," STRF sells a more advanced position, STRD sells a more aggressive high-yield expression, STRC sells a tool for monthly cash flow that aims to stabilize prices, and STRE continues to replicate this logic out to other currencies and pools.

All of these revolve around Bitcoin, which makes it easy for people to mistakenly believe that they are "Bitcoin yield products" or some form of on-chain financial tool.

In fact, they are not.

Legally, these are still very traditional company securities. MSTR is common stock; STRK, STRF, STRD, and STRC are fundamentally just different classes of preferred stock at the company level, except with varying terms. They are not bonds, deposits, fund shares, nor are they shares of some legally segregated Bitcoin asset pool.

This point is very important.

Because this means that what investors are purchasing is not direct ownership of a pool of BTC, nor a priority claim on an independent SPV asset pool. What they ultimately correspond to is various levels of equity, allocation rights, and residual claims against Strategy the company.

Though these products are designed around Bitcoin, investors are not buying "Bitcoin itself," but "the legal relationships designed by Strategy around Bitcoin."

It makes the company's balance sheet and capital structure increasingly complex, translating different levels of risk appetites into different terms of company securities.

This is very Wall Street.

What kind of money do buyers earn?

No matter how complex the financial products are, they must ultimately answer one simple question: what kind of money do the buyers of these products earn?

Let’s start with the answer: it is not Bitcoin.

Because Bitcoin is not a bond, it does not generate interest.

Strategy is not taking this batch of BTC to earn interest on-chain and then sharing the interest with investors.

Those who buy MSTR earn from price volatility, from its elasticity relative to BTC, and from whether the market is willing to continue offering it a high premium.

Those who buy STRK earn an 8% dividend and also a bit of upside money through conversion when the common stock rises.

Those who buy tools like STRF and STRD earn more from the company's declaration and payment of dividends according to the terms, in addition to the changes in secondary market prices.

Those who buy STRC are more like purchasing a product that aims to keep the price as stable as possible around the face value while also providing monthly cash distributions, but these cash distributions are not "interest accrued from Bitcoin itself," but arranged by the company within the capital structure. The official website also states clearly that STRC’s cash dividends are not guaranteed, and interest rates will adjust.

Therefore, although these products are all related to "Bitcoin," the money investors earn is not money generated by Bitcoin itself but rather depends on whether Strategy the company can continuously finance, continuously pay, and keep this structure operational.

This is the key to understanding Strategy.

At its core is Bitcoin, but what truly drives it is not Bitcoin producing cash flow by itself, but the capital market's continued provision of liquidity, valuation, and trust that this structure can still function.

To some extent, this is more powerful—and more dangerous—than simply buying coins.

What is impressive is that it has re-packaged Bitcoin, an asset that is originally only suitable for "holding" and "waiting for appreciation," into a whole capital market machine for financing, structuring, and selling. Many traditional funds do not avoid Bitcoin; they just do not want to engage with it in the original way.

What Strategy is doing, is building a bridge for that capital.

The danger is equally clear: whether this bridge can continue to be viable does not depend on whether Bitcoin itself will generate cash flow, but whether there will be enough investors willing to walk across that bridge.

From the perspective of investors cashing out their returns, there are three main ways for preferred stock investors to cash out.

The first is for the company to declare and pay dividends according to the terms;

The second is selling the stock to the next buyer in the secondary market;

The third is only available for tools like STRK, which have conversion rights, allowing sharing in the appreciation of common stocks.

Whether Strategy can cash out earnings largely depends on whether market liquidity remains, whether the company is willing and able to continue declaring and paying dividends, as well as how different products are positioned in the capital structure.

This also explains why Strategy is constantly expanding its product line. Because the more products, the more money it can attract, and the more fine-tuned it can get in terms of maturity and risk appetite. If you are reluctant to buy the highly volatile common stock, it offers you preferred stock; if you think the fixed coupon is not enough, it provides a higher-yield version; if you find volatility too great, it provides a version aiming to stay around face value.

Is this a hot potato game?

By early January 2026, Strategy disclosed that its USD Reserve had increased to $2.25 billion. At that time, the company stated that this cash reserve was used to support distributions and interest payments for preferred stock. This action itself indicates that it knows it cannot solely rely on the slogan "Bitcoin will rise" to support all credit expressions; it needs to prepare a cash buffer to make the market believe "at least for now, I can still pay."

But the truly critical point is that this buffer is not primarily accumulated from operational cash flow, but from financing.

This detail is very important.

Because it indicates one thing: the flywheel of Strategy has not formed a closed loop of "underlying assets generating cash flow that naturally covers upper-level distributions." It relies more on the capital market to continuously provide it with money, valuation, and credit.

So its sustainability ultimately depends on three variables.

First, the Bitcoin price cannot be too unattractive in the long term.

Second, the market premium of MSTR common stock cannot disappear too quickly.

Third, it must maintain the capability to issue new securities and attract new funds.

As long as these three conditions remain, the flywheel can continue spinning. Common stock provides elasticity, preferred stock provides yield expectations, management continues to expand the BTC base, and then supports new financing in return.

However, if any of these three conditions begins to loosen, the situation could quickly enter a death spiral.

What it fears most is not a crash, but stagnation at low prices for too long.

As of March 29, 2026, Strategy holds about 762,099 Bitcoins with a total cost of approximately $57.69 billion, averaging a purchase cost of about $75,694 per coin.

If BTC remains significantly below its average holding for a long time, stagnating at low prices for several quarters, or even a year or two; if the market premium for MSTR continues to narrow, it will become increasingly difficult for it to issue common and preferred stock.

That is its most vulnerable aspect.

Bitcoin Shadow Banking

Many people might think here: isn't this just a hot potato game?

This suspicion is normal. Because today's model of Strategy is not a traditional company story that grows naturally from operational cash flow, but a financial structure that heavily relies on continued support from the capital market to keep expanding its balance sheet and rolling over.

If you claim it is not a hot potato game at all, I find it hard to persuade people. Rather than a hot potato game, I feel that describing it as a "Bitcoin shadow bank" may be more fitting.

It is certainly not a bank in the legal sense; it does not have a license, nor is it a deposit institution. Yet it is doing something that closely resembles the logic of shadow banking: first enlarging the underlying asset pool, then issuing tools with different levels and risk appetites around that asset pool to allow different types of money to come in. Finally, it rolls the newly incoming funds back into the underlying asset pool, making the structure larger.

What banks excel at is never just collecting deposits and lending. The real strength lies in their ability to package the same underlying asset into many different layered financial relationships. Some seek security, some seek yield, some seek elasticity, and some seek liquidity; thus, the same underlying asset can be organized into many different product structures.

And what Strategy is doing now is exactly that.

Only the underlying asset it holds is not loans, bonds, or real estate, but Bitcoin.

It is demonstrating to the American capital market a new way to play: Bitcoin can not only be bought and held but can also be organized, packaged, and layered to ultimately become a capital business capable of sustained financing, continuous expansion, and ongoing sales.

This change is much greater than merely buying coins.

Because once the market accepts this logic, what comes next will not just be one Strategy, but potentially a whole batch of companies structuring capital layers, yield tiers, and security layers around crypto assets.

At that time, the market's focus of discussion may no longer be "who bought how much Bitcoin," but rather "who is best at structuring capital around Bitcoin, who can most effectively translate this highly volatile asset into a language of securities that the capital market is willing to accept."

This is the truly interesting aspect of Strategy today.

And it is also its truly dangerous aspect.

Because once this model is established, it may appear extremely attractive during favorable winds. The underlying asset has imagination, the financing tools have layers, and market sentiment cooperates; the whole story seems almost flawless. But once the cycle reverses, this structure, which relies heavily on liquidity and valuation support, may expose its weaknesses even more quickly than traditional companies.

So let's return to that initial statement.

Strategy buys Bitcoin not to hoard coins, but to conduct a capital business.

The brilliance of this business lies in elevating the notion of "bullish on an asset" to "organizing capital around an asset." What truly matters about this business is not how much Bitcoin it holds but whether it can continuously turn this Bitcoin into financial relationships that the market is willing to pursue.

Of course, the risks of this business are inherent. Because once the market is no longer willing to continue giving high valuations based on this organizing ability, what was once its most alluring aspect may also become its most vulnerable aspect.

Users see it buying Bitcoin.

What is truly worth observing is the business it is conducting by leveraging Bitcoin.