Strive's Bitcoin Treasury Model Under Pressure as Underwater Holdings Amplify Dilution Risks

What happened

Strive Asset Management has completed its transformation into a Bitcoin treasury company, making its financial performance highly sensitive to spot Bitcoin price movements. The company issued SATA preferred shares with a variable 12% dividend, now yielding around 14%, but the coupon can be adjusted at management's discretion, indicating potential funding stress. Seeking Alpha reports that ASST's average Bitcoin purchase price is $105,569, leaving the company underwater and exposed to significant unrealized losses if Bitcoin declines further. DeepValue analysis underscores severe dilution from over 1.4 billion potential shares via warrants and common issuance, which threatens the core BTC-per-share accretion thesis. Persistent Nasdaq delisting risks and negative cash flows compound these challenges, reinforcing a bearish outlook for common equity.

Implication

The high yield on SATA preferred shares reflects elevated funding costs that could worsen if Bitcoin underperforms, pressuring margins and financial stability. Underwater Bitcoin holdings at an average cost of $105,569 mean immediate unrealized losses and vulnerability to further price drops, eroding asset value. Dilution from warrants and common stock issuance is likely to offset any Bitcoin appreciation, undermining the BTC-per-share growth narrative. Nasdaq listing compliance remains precarious, with potential delisting reducing liquidity and forcing punitive capital actions. Overall, the combination of funding stress, asset impairment, and structural overhangs makes ASST common equity a speculative and unattractive investment.

Thesis delta

The new article confirms that ASST's Bitcoin holdings are underwater, intensifying the risk of unrealized losses highlighted in the DeepValue report. This reinforces the thesis that dilution and high funding costs outweigh potential Bitcoin upside, making the sell or avoid recommendation more urgent and critical.