Shares of MicroStrategy Inc (MSTR -10.28%) are falling on Monday. The company's stock lost 12.6% as of 10:50 a.m. ET and was down as much as 13.9% earlier in the day. The drop comes as the S&P 500 lost 2%, and the Nasdaq Composite lost 3.5%.

The company, now doing business under the name Strategy, just announced another massive capital raise to fund additional Bitcoin accumulation as the cryptocurrency continues to decline.

An ambitious capital raise

MicroStrategy revealed plans to raise up to $21 billion through the issuance of "perpetual strike preferred stock" with no expiration. The special shares offer investors an 8% dividend and the option to convert them into regular shares at any time.

The company already owns nearly 500,000 bitcoins worth approximately $40 billion and purchased much of them with significant leverage.

Broader crypto looks weak

The announcement came as Bitcoin and the crypto market, as a whole, are seeing significant weakness. President Donald Trump, in an executive order, established a "Strategic Bitcoin Reserve" last week.

Investors had anticipated this would lead to a renewed strength in the market, but the opposite seems to be taking place. That's because the reserve will be made up of already seized crypto assets and won't involve the government buying additional Bitcoin as many had hoped.

A high-risk strategy

MicroStrategy is already highly leveraged, and the latest move to double its already massive reserve of Bitcoin using preferred shares will lead to dilution for existing shareholders. It also means that the company must pay a significant dividend, even as it operates in the red and sales stagnate. I would caution investors to stay away from MicroStrategy.