Fidelity says preferred stock has funded 135,979 Bitcoin in purchases

Fidelity Digital Assets says perpetual preferred stock has financed purchases of 135,979 Bitcoin, making the funding model used by treasury companies another source of demand for the cryptocurrency. Summary Preferred-stock issuance financed 135,979 BTC in purchases through Oct. 5, Fidelity said. The funding model depends on Bitcoin’s gains exceeding the cost of dividend payments. Preferred shareholders face issuer, liquidity and interest-rate risks alongside Bitcoin exposure. An Oct. 20 report by research analyst Zack Wainwright said the purchases represented more than 0.5% of Bitcoin’s maximum supply as of Oct. 5. The report names Strategy and draws on filings from Strive. Companies issue dividend-paying preferred shares and use the proceeds to buy Bitcoin. Fidelity links the approach to an investment thesis that Bitcoin’s limited supply could help preserve purchasing power as fiat currencies lose value. The report also makes the model’s central assumption explicit. “For issuers, the strategy only works if the appreciation of the underlying asset outpaces the cost of yield.” Preferred issuance financed more than 95,000 BTC in purchases between March and May, raising over $7 billio...