Key Takeaways
- • Fidelity Digital Assets analyst Zack Wainwright, in an analysis published Oct. 20, argued that preferred-stock financing could draw income-seeking capital from the roughly $150 trillion global fixed-income market into bitcoin.
- • Fidelity estimates the bitcoin-focused preferred-stock segment at about $12 billion, a small fraction of the broader income-investment market.
- • Preferred-stock financing supported purchases of 135,979 bitcoin by Oct. 5, including more than 95,000 from March through May, according to Fidelity.
- • Strive Inc. (Nasdaq: ASST) closed a $630 million offering of 15% Series A Perpetual SATS Preferred Stock on Oct. 20, selling 7 million shares at $90 each.
- • Fidelity estimates nearly 96% of bitcoin's maximum supply has already been issued, with the next halving expected in less than two years.
Summary
Fidelity Digital Assets research analyst Zack Wainwright, in an analysis published Oct. 20, examined how preferred-stock financing for bitcoin purchases could attract capital from income-oriented investors in the approximately $150 trillion global fixed-income market. According to the analysis, these securities are preferred equity with no maturity date, appealing to investors seeking dividend income. Fidelity estimates the bitcoin-focused preferred-stock segment at roughly $12 billion, which illustrates how small it remains relative to the broader income-investment market. Fidelity stated that "even modest adoption within the vast fixed income market could materially reshape bitcoin's supply-demand dynamics."
Preferred-stock financing supported purchases of 135,979 bitcoin by Oct. 5, including more than 95,000 from March through May. Fidelity noted that this demand operates against bitcoin's limited issuance, with nearly 96% of the maximum supply already mined and the next halving expected in less than two years.
Strive Inc. (Nasdaq: ASST) provided a current example when it closed an offering of its 15% Series A Perpetual SATS Preferred Stock on Oct. 20. The company sold 7 million shares at $90 each, generating $630 million in gross proceeds. The SATS shares carry a 15% annual dividend rate calculated on their $100 stated amount, with regular dividend dates beginning Nov. 9. Proceeds can support bitcoin purchases, income-producing assets, working capital, and share repurchases. Strategy Inc. (Nasdaq: MSTR), meanwhile, reported holdings of 848,517 bitcoin in an Oct. 19 disclosure, after buying 267 bitcoin for $22.1 million in the preceding week using common-stock proceeds and cash.
Fidelity cautioned that long-term economics depend on bitcoin appreciation exceeding the cost of income paid to preferred shareholders, and that these instruments carry risks beyond those of money market funds, since performance depends on both the cryptocurrency and the issuing companies. Capital activity also shows issuance and repurchases can alternate: Strategy disclosed $192.4 million in STRC repurchases on Oct. 12 and another $193.1 million in its Oct. 19 update. As of Oct. 18, approximately $17.51 billion remained available for STRC issuance, with no STRC shares sold during the reporting week. Strategy also held a $4.83 billion reserve for dividends and interest, plus $447.3 million in cash for broader corporate uses.
Preferred-stock financing supported purchases of 135,979 bitcoin by Oct. 5, including more than 95,000 from March through May. Fidelity noted that this demand operates against bitcoin's limited issuance, with nearly 96% of the maximum supply already mined and the next halving expected in less than two years.
Strive Inc. (Nasdaq: ASST) provided a current example when it closed an offering of its 15% Series A Perpetual SATS Preferred Stock on Oct. 20. The company sold 7 million shares at $90 each, generating $630 million in gross proceeds. The SATS shares carry a 15% annual dividend rate calculated on their $100 stated amount, with regular dividend dates beginning Nov. 9. Proceeds can support bitcoin purchases, income-producing assets, working capital, and share repurchases. Strategy Inc. (Nasdaq: MSTR), meanwhile, reported holdings of 848,517 bitcoin in an Oct. 19 disclosure, after buying 267 bitcoin for $22.1 million in the preceding week using common-stock proceeds and cash.
Fidelity cautioned that long-term economics depend on bitcoin appreciation exceeding the cost of income paid to preferred shareholders, and that these instruments carry risks beyond those of money market funds, since performance depends on both the cryptocurrency and the issuing companies. Capital activity also shows issuance and repurchases can alternate: Strategy disclosed $192.4 million in STRC repurchases on Oct. 12 and another $193.1 million in its Oct. 19 update. As of Oct. 18, approximately $17.51 billion remained available for STRC issuance, with no STRC shares sold during the reporting week. Strategy also held a $4.83 billion reserve for dividends and interest, plus $447.3 million in cash for broader corporate uses.
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