No other company has rattled crypto investors more in recent weeks than Strategy, the world’s largest corporate holder of bitcoin, with roughly $58.5 billion of it on its balance sheet.

Bitcoin’s June slide below $60,000 for the first time since October 2024 sent Strategy’s common shares from an all-time high close of $473.8 to as low as $82. The company’s market capitalization now stands at $28.5 billion. Its popular preferred stock, Stretch, which Strategy’s CEO, Phong Le, likened to a money market fund, fell to $74, $26 below its $100 par value. Traded under the ticker STRC, Stretch now pays a junk-bond-level 12% annual dividend. Together, Strategy’s preferred-stock dividends and interest on $6.7 billion of convertible debt have pushed its annual payments to approximately $1.76 billion.

The strain has forced Strategy to retreat from founder Michael Saylor’s long-standing “never sell” bitcoin mantra. It has authorized up to $1.25 billion in bitcoin sales to build its cash reserve and help cover those payments. Between late May and early July, Strategy sold approximately $218.5 million of the cryptocurrency and raised nearly $1.85 billion by issuing common shares. Its cash reserve now stands at $3.75 billion, enough to cover 2.1 years of current dividends. Saylor, who has seemed invincible to his devotees, saw his net worth decline from more than $9 billion at the beginning of 2025 to $3.3 billion recently.

But the fallout from Strategy’s troubles isn’t limited to the flurry of financial instruments the Virginia-based bitcoin corporation offered the public. Before it plunged, Stretch had become popular among decentralized-finance firms looking to transform its hefty dividend into blockchain-based yield products.

The two largest, Apyx and Saturn, currently hold nearly $490 million in combined value across their products: $307 million in gross reserves for Apyx and $183 million in total value locked for Saturn. As of July 21, about $267 million was directly exposed to Stretch—$196 million at Apyx and $72 million at Saturn—according to Zheng Jie Lim, an analyst at crypto data firm Artemis. The rest consists largely of cash, tokenized Treasury bills and assets that the protocols themselves own.

Apyx holds Stretch and cash in brokerage and custody accounts, then issues a synthetic dollar called apxUSD against those reserves. But unlike conventional stablecoins like Tether’s USDT and Circle’s USDC, backed by cash and Treasury bills, apxUSD is not guaranteed to remain worth $1. Its redemption value rises and falls with the portfolio behind it. Investors seeking yield can deposit apxUSD with Apyx and receive another token, apyUSD, which passes along income from Stretch’s semi-monthly dividends.

During the late-June selloff, apxUSD traded below 80 cents. By July 21, its secondary-market price, as shown on crypto exchanges like Kraken and Curve, had recovered to about 90 cents. After excluding tokens that had been minted but not sold and liquidity owned by Apyx itself, Artemis estimates that Apyx holds about $233 million in reserves against $257 million worth of tokens actually circulating—a coverage ratio of just........

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