Fidelity Digital Assets says perpetual preferred stock has financed purchases of 135,979 Bitcoin, making the funding model of treasury companies another source of demand. The model works only if Bitcoin's appreciation outpaces the cost of yield, and preferred shareholders carry issuer, liquidity and interest-rate risks.
Perpetual preferred stock has financed purchases of 135,979 Bitcoin, according to Fidelity Digital Assets. A report dated Oct. 20 puts that figure above 0.5% of Bitcoin's maximum supply as of Oct. 5.
Companies issue preferred shares that pay a dividend and use the proceeds to buy Bitcoin. The report names Strategy and draws on filings from Strive.
Preferred issuance raised over $7 billion from March to May
Preferred issuance financed more than 95,000 BTC in purchases between March and May, raising over $7 billion. Fidelity compared that with the 888,185 BTC accumulated by spot Bitcoin exchange-traded products in their first year.
Fidelity was careful not to oversell that comparison. According to Cryptobriefing, the firm's argument concerns who these products reach, and it estimates the broader fixed-income market at around $150 trillion.
Where the model can break
The report makes the central assumption explicit. According to the report, for issuers "strategy only works if the appreciation of the underlying asset outpaces the cost of yield".
Preferred shareholders also face different risks from investors who hold Bitcoin directly. Fidelity's investor guidance says preferred securities combine characteristics of stocks and debt, with terms that vary by offering. Perpetual securities have no scheduled maturity, and some offerings allow issuers to suspend or defer payments.
Higher market interest rates typically push existing preferred-security prices lower, and limited trading liquidity can force investors to sell below face value. The report therefore ties the model's success to Bitcoin's long-term performance and to the financial condition of the issuing companies.
Sources: Fidelity Digital Assets, crypto.news, Crypto Briefing
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