Strategy’s preferred stock STRC is continuing to trade away from its intended $100 target par value. U.S. market data show that since May 15, STRC has gradually moved below that anchor, with the discount widening sharply in recent trading. It touched an intraday low of $83.26 yesterday and closed at $88.59, more than 11% below its target par value. For an ordinary equity, an 11% decline would not be unusual. For STRC, however, the move is more significant because the instrument was designed as an income-oriented security that should trade around $100, rather than as a highly volatile speculative asset.
Why the $100 anchor matters
STRC was introduced by Strategy in 2025 as an innovative financial derivative. Unlike Strategy’s common stock, MSTR, STRC is structured as a perpetual preferred stock with a fixed target par value of $100 and a relatively stable dividend yield. Its characteristics are closer to a security with fixed-income features. As Strategy has continued to expand its Bitcoin reserves, STRC has become one of the company’s most important financing channels. In that sense, market pricing of STRC reflects not only investors’ view of a single preferred stock, but also confidence in Strategy’s broader capital operation model.
Before STRC was launched, Strategy mainly relied on convertible notes and direct common stock issuance to raise funds for Bitcoin purchases. Both approaches had constraints. Convertible notes are limited by maturity dates and debt leverage ceilings, while repeated common stock issuance dilutes existing shareholders. STRC was designed to address those constraints by forming a closed loop: issue STRC, raise fiat currency, buy BTC, increase corporate net assets, and strengthen confidence in STRC. The loop depends on STRC staying near its $100 par value. If the market price remains materially below $100, ATM issuance terms and market arbitrage logic make it difficult for Strategy to absorb capital effectively through discounted preferred shares, leaving the financing engine under pressure.
Dividend adjustments have not restored the peg
To keep STRC’s secondary-market price close to the $100 target, Strategy built in a monthly dynamic dividend-rate adjustment mechanism. When STRC trades below $100, the company can raise the dividend rate to make the product more attractive. When it trades above $100, the dividend rate can be reduced. In theory, repeated dividend adjustments should help STRC stay near par over the long term. In practice, the mechanism has not repaired the discount. Strategy has already raised the dividend rate to 11.5% and changed the payout frequency from monthly to semi-monthly, yet STRC remains below its target value.
The weakening effect of dividend adjustments indicates that the market is pricing risks beyond yield alone. One surface-level explanation is a technical selloff caused by leveraged arbitrage funds reducing exposure. Over the past year, STRC traded around $100 for an extended period, attracting yield-focused arbitrage capital. These participants often used leverage to amplify returns, collecting dividends while also seeking to profit from the price moving back toward par. Once STRC broke below $100 and continued to weaken, some leveraged accounts hit risk-control thresholds and were forced to sell. The resulting price decline triggered further liquidation among leveraged holders, creating a chain reaction in which selling pressure reinforced itself and pushed the decline beyond what ordinary supply and demand changes would explain.
Liquidity concerns and the Bitcoin reserve debate
Still, leverage-driven selling does not fully explain the market reaction. A deeper concern centers on Strategy’s liquidity reserves. Earlier this month, JPMorgan released a research report stating that Strategy has about $1.7 billion in annual dividend payment obligations. Based on its current cash reserves, the company’s cash on hand would cover only about 6.3 months of preferred-stock dividend payments. That raised concerns about the company’s future liquidity coverage. Strategy responded with a very different calculation, posting on X that if its large Bitcoin reserves are included, they would be sufficient to cover 32 years of dividend payments.
This difference in framing touches the most sensitive part of the discussion. Earlier this month, Strategy sold Bitcoin from its holdings for the first time. The sale involved only 32 BTC, and the company described it as an “active market desensitization test,” while also saying that it would “buy back more later.” Even so, the move had a strong impact on market perception. For years, Strategy and its founder Michael Saylor had communicated a core narrative: Bitcoin is a long-term strategic reserve asset, and the company would use capital-market financing to obtain operating funds instead of relying on Bitcoin sales. When investors saw Strategy actually sell Bitcoin for the first time, they had to reassess the risk profile of securities linked to that capital structure, especially in a tighter financing environment.
STRC becomes a gauge of Strategy’s financing pressure
From this perspective, STRC’s persistent discount is a sign that the market is reassessing the stability of Strategy’s entire capital structure. The most direct impact for Strategy is the weakening of STRC’s financing function. Over the past several years, the company’s ability to expand its Bitcoin reserves depended on issuing securities such as common stock, convertible notes and preferred shares, then using the proceeds to buy more Bitcoin. STRC has become one of the key financing tools within that model. When it trades well below its $100 target par value for an extended period, the market is demanding higher risk compensation, and Strategy’s ability to raise capital through this channel enters a constrained phase.
STRC’s ability to return toward its $100 anchor will therefore serve as an important indicator for assessing Strategy’s risk condition. If STRC remains discounted for a long period, financing capacity stays limited, and cash reserves continue to be consumed by dividend payments, concerns about Strategy selling more Bitcoin to meet dividend obligations will intensify. The effect would not be limited to STRC itself. Strategy has been one of the most important marginal buyers in the Bitcoin market in recent years, and its financing capacity and accumulation pace have influenced supply-and-demand expectations. If that buying pattern shifts toward selling pressure, Bitcoin would face a new test in market structure.