According to Ilan Solot, senior global markets strategist at Marex Solutions, a division of the global financial services firm Marex, the capital dilemma for Bitcoin (BTC) holder Strategy (MSTR) is becoming increasingly complex. The company has amassed a significant bitcoin reserve through aggressive purchasing and stock dilution. Common shareholders have embraced Saylor’s vision, transforming the company into a leveraged position on BTC. However, this optimistic narrative is now facing harsh realities.

«Strategy is currently engaged in a struggle over the capital distribution; each decision favors one stakeholder at the expense of another,» he remarked in an email to Decryptnews.

Indeed, various factions, including BTC holders, are vying for capital, existing in a hierarchy. During a crisis, debt obligations are prioritized. Next come preferred shareholders, followed by common shareholders. Finally, whatever remains typically goes to BTC holders. At present, Strategy is in urgent need of capital. Yet, every potential solution adversely impacts someone.

Should they sell bitcoin? That undermines the foundational narrative and affects common shareholders who invested based on it. Issuing more stock? That dilutes the value for existing equity holders. Skipping the preferred dividend? That would harm yield-seeking investors. Issuing more debt? This pushes everyone below that debt further away from security.

«The entire situation revolves around determining who will bear the loss,» Solot explained.

The company could continue to issue debt, but there are limits to this approach. Eventually, lenders will cease lending. At that point, a difficult decision must be made: either disadvantage common shareholders, harm preferred shareholders, or liquidate the bitcoin. There is no avenue that avoids harming someone.

«If more debt is issued, everyone below gets pushed further down the capital structure,» he added.