The securities have financed purchases of nearly 136,000 bitcoin, opening a funding channel that analysts expect to complement the larger ETF market.

• Since 2025, preferred stocks funded purchases of 135,979 BTC through Oct. 5, Fidelity said.
• Bitwise expects ETFs to remain the larger demand source, with preferreds attracting yield investors.
• Dividend obligations and buybacks could constrain further bitcoin purchases.

On the one hand, they need cash to fund their purchases. On the other, they need to maintain investor appetite for new sales of the perpetual preferred stock that is their favored fundraising vehicle. As the number of shares in circulation grows, so do the dividend payments.

The securities, which sit between debt and common equity in the capital structure with regular payouts and no voting rights, have financed purchases of some 136,000 bitcoin in the 20 months since their introduction, Fidelity research analyst Zack Wainwright wrote in a Tuesday report. That’s more than 0.5% of the cryptocurrency’s maximum supply.

Strategy, the largest corporate bitcoin holder, is the dominant company in the market. Its preferred shares — it has five different classes — make it a bellwether for the model’s durability. Its first offering, STRK, debuted in February 2025.

Fidelity puts the bitcoin-focused preferred market at roughly $12 billion. The global fixed-income market is $150 trillion, suggesting there’s room for growth.

Reaching yield investors

By selling preferred shares that offer dividends without a fixed maturity, the companies reduce refinancing pressure while attracting investors reluctant to own bitcoin directly.

“Perpetual preferreds have brought bitcoin to income investors, a group that ETFs never reached,” said Mark Palmer, a senior equity research analyst at StoneX.

Ryan Rasmussen, the head of research at Bitwise, also sees the products attracting buyers who might avoid bitcoin exchange-traded funds, though he expects the ETFs to remain the bigger demand channel.

“Over the long run, I expect ETFs to be a larger source of demand for bitcoin, with perpetual preferred offerings acting as a second tailwind addressing a different type of investor (yield investors),” Rasmussen said.

James Butterfill, CoinShares’ head of research, said STRC alone, which pays a variable dividend currently around 12%, raised $7.5 billion during 2026 through late July. That funding carries a recurring dividend cost.

Alex Blume, the founder and CEO of institutional bitcoin asset manager Two Prime, pointed out that products such as STRC and Strive’s SATA don’t offer just exposure to bitcoin prices. Their price also reacts to management competence, issuers’ obligations and capital-market conditions.

He cited STRC briefly falling into the $70 range in late June as evidence of potential volatility. Growing issuance creates a tension between increasing bitcoin per common share, meeting dollar-denominated dividend-payout commitments and avoiding bitcoin sales, he said. The Strategy preferred stock currently trades around $99.40.

Buybacks compete with purchases

“The catch is that the demand for perpetual preferreds is reflexive,” Palmer said. Continued preferred-funded buying depends on the securities trading at or near par, he added. Below par, fresh issuance becomes less attractive, and companies may favor repurchases, Butterfill said.

Strategy’s latest weekly update reported $193 million spent repurchasing STRC alongside purchases of just 267 bitcoin, according to Butterfill. The firm also increased its preferred-stock repurchase authorization to $3 billion, he said.

“Buybacks can reduce future dividend costs, but they compete with bitcoin purchases for capital today,” Butterfill said.

Cash reserves provide a buffer, although Strategy has already sold some bitcoin to fund preferred dividends, he added.

ETFs remain the larger channel

U.S. spot bitcoin ETFs have attracted approximately $57 billion in cumulative net inflows and hold around $106 billion in assets, Butterfill said.

Net ETF creations increase funds’ bitcoin holdings, while issuance of preferred stock gives management discretion over spending. Redemptions can reverse ETF demand but leave no continuing dividend commitment, he said.

Butterfill sees preferreds amplifying the cycle: supporting purchases when financing conditions are favorable, with that support weakening as sentiment deteriorates.

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