Crypto Company K33 Warns About Strategy’s Aggressive Bitcoin Accumulation! Here Are the Details

While the structure of institutional purchases in the crypto market remains a subject of debate, research and brokerage firm K33 has warned that Strategy’s aggressive Bitcoin accumulation could create new risks. It was stated that the company’s purchases, particularly those financed through its perpetual preferred stock vehicle STRC, contain structural vulnerabilities dependent on market sentiment.

According to a report published by K33, Strategy financed approximately $1.18 billion of its $1.57 billion Bitcoin purchase last week with proceeds from the sale of STRC shares. During the same period, the funds raised from the sale of the company’s Class A shares amounted to $396 million.

STRC stands out as a financial instrument with a variable dividend structure, targeting a price level of around $100 and offering an annual return of approximately 11.5 percent. While this structure allows investors to direct their demand for returns towards Bitcoin purchases, maintaining the price at the target level and sustaining market confidence are critically important.

K33 Research Head Vetle Lunde emphasized that the risks are not limited to the Bitcoin price alone. According to Lunde, while STRC investors may have limited gains on the upside, they could face larger losses during market downturns. Indeed, it has been noted that this instrument has previously experienced value losses of between 5 and 10 percent.

The report also stated that the model’s sustainability depends on two critical conditions: the STRC price remaining near the target level and Strategy shares trading at a premium relative to net asset value. The fact that both of these conditions depend on market sentiment increases the risk of simultaneous deterioration in weak market conditions.

Nevertheless, Lunde noted that the company’s approximately $2.25 billion in cash reserves is sufficient to cover dividend payments in the short term. According to the analyst, this structure could continue to boost demand for Bitcoin under favorable market conditions, but due to its complex nature, it carries more risk compared to direct spot investments.

*This is not investment advice.