The Price of Bitcoin May Be Soaring, But a New Risk Has Emerged for Strategy. Here's What MSTR Investors Need to Know.

Bitcoin's (CRYPTO: BTC) price has risen more than 20% over the past month. The geopolitical conflicts and fears of the debt-driven devaluation of the U.S. dollar fueled that rally.

Shares of Strategy (NASDAQ: MSTR), which holds 4.02% of Bitcoin's total lifetime supply, have also rallied 35% over the past month. Those gains aren't surprising, since Strategy's 845,050 Bitcoins are worth $63.5 billion -- compared to its enterprise value of $50 billion.

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Investors who are bullish on Strategy believe it's undervalued relative to its Bitcoin holdings, and that its stock will eventually trade at a premium to those assets. However, the bears argue that it deserves that discount because it needs to sell its Bitcoins to fund its preferred dividends. Let's see why that's a major risk Strategy's investors can't afford to overlook.

What are Strategy's preferred shares?

Last year, Strategy issued four classes of preferred shares: "Strife" (NASDAQ: STRF), "Stretch" (NASDAQ: STRC), "Strike" (NASDAQ: STRK), and "Stride" (NASDAQ: STRD). All four stocks have different dividend structures, seniority, yields, and risk profiles.