Arca CIO warns: Strategy (MicroStrategy) $15B preferred stock has "spiraled out of control," probability of selling coins this year surges past 90%

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Is the myth of buying Bitcoin through debt issuance about to shatter? Jeff Dorman, Chief Investment Officer of the renowned crypto investment firm Arca, opened fire today (29th), sharply criticizing that Strategy's (formerly MicroStrategy) preferred stock structure, worth up to $15 billion, has already "gotten out of hand." Facing the massive annual dividend pressure of $1.5 billion, with current Bitcoin holdings trapped in unrealized losses, Strategy's CEO has admitted that the company may sell Bitcoin in the future. Market bets that it will sell coins this year have soared to 90%, potentially bringing an unknown wave of selling pressure shock to the crypto market. (Recap: Strategy founder Michael Saylor shouts "HODL"! Bitcoin falls below $74K) (Background: Is Strategy selling Bitcoin not bearish? Breaking down MicroStrategy's 5 financial logics) As a publicly listed company formerly known as MicroStrategy, Strategy's strategy of using unlimited leverage to madly hoard Bitcoin is now facing severe scrutiny and criticism from Wall Street professional institutions. Jeff Dorman, Chief Investment Officer of the renowned cryptocurrency asset management firm Arca, publicly warned that Strategy's capital structure, which relies on massive issuance of preferred stock to maintain itself, is currently facing a "Gotten out of hand" crisis. $1.5 billion annual dividend burden, Arca criticizes "structure has gotten out of hand" Jeff Dorman posted on the social platform X, directly pointing out that Strategy's capital structure is entirely built on an extremely optimistic assumption — that "Bitcoin is about to Moon" — to support its future dividend payment obligations. Data shows that Strategy has currently issued five preferred stocks of different risk levels (with tickers STRK, STRF, STRD, STRC, STRE), with a total issuance scale of up to $15 billion. This means the company must generate approximately $1.5 billion in cash annually to pay the massive dividends. Dorman expressed "confusion" over Strategy's recent decision to repurchase bonds maturing in 2029, believing it fundamentally cannot solve the heavy dividend pressure brought by the preferred stocks. He sternly pointed out that if Bitcoin prices continue to fluctuate or decline, Strategy will ultimately be left with only two extreme and fatal choices: - Sell Bitcoin to pay preferred stock dividends. - Announce suspension of dividend payments. Dorman warned that no matter which path the company chooses, it will have an asymmetric, massive negative impact on its stock price, investor confidence, and even the entire Bitcoin market. i'm not in Saylor's inner circle, but this $MSTR story has gotten so out of hand, my only guess is this: – MSTR could have sat and done nothing before they started pumping out $billons of prefs… it would have made MSTR boring (little buys, no sells), but it would have been… — Jeff Dorman (@jdorman81) May 28, 2026 CEO admits possibility of selling coins, 840,000 BTC currently in unrealized loss Facing market skepticism, Strategy CEO Phong Le did not deny the possibility of selling in an interview with CNBC. He confirmed for the first time that the company "is very likely to sell Bitcoin at some point in the future," but he also emphasized that the company's overall strategy is still to "net increase" total Bitcoin holdings and continuously enhance the implied Bitcoin per share (BTC per share). This statement also echoes the room for compromise previously hinted at by Executive Chairman Michael Saylor. However, the market is clearly worried about its financial resilience. On the prediction market Polymarket, the betting odds regarding "whether Strategy will sell Bitcoin in 2026" have recently surged significantly: - Sell before May 31, 2026: about 18% - Sell before June 30, 2026: about 71% - Sell before December 31, 2026: as high as 90% What makes investors even more nervous is Strategy's current book profit and loss. As of the time of reporting, Strategy holds an astonishing total of 843,738 BTC (of which about 170,000 were purchased this year), with a total purchase cost of approximately $63.87 billion and an average purchase cost as high as $75,700. However, Bitcoin prices have recently performed weakly, currently quoted at approximately $73,737 (down about 16% year-to-date). This means that the world's largest corporate holder of Bitcoin is currently in an "overall unrealized loss" predicament. With massive interest pressure and book losses, whether Strategy's Bitcoin faith will be crushed by the reality of financial statements will be one of the biggest unexploded bombs in the crypto sphere in the second half of 2026.

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