STRC-Bitcoin Correlation Hits Record High
According to a report by CoinDesk, the 90-day rolling correlation coefficient between Strategy's (formerly MicroStrategy) perpetual preferred stock STRC and Bitcoin has climbed to nearly 0.70, marking the highest level since the instrument's launch in July 2025. A correlation of 0.70 implies that roughly half of STRC's price movements can be explained by Bitcoin's swings, a far cry from the initial market positioning of STRC as a relatively low-volatility, income-oriented product. Perpetual preferred stocks are typically marketed as hybrid securities offering stable dividends with less equity risk, but STRC's growing linkage to Bitcoin makes it behave more like a high-beta crypto play than a fixed-income substitute.
Price Performance and Dividend Appeal Erode
This month, STRC has tumbled 23% to $76, far below its $100 par value, while Bitcoin lost nearly 20% to trade below $60,000. The current annual dividend yield stands at 11.5%, based on par; however, the deep discount to par means the effective yield for new buyers is around 15.1%. Yet the price decline itself reflects a reassessment of credit and liquidity risks. Crucially, STRC's sub-par trading price prevents Strategy from issuing new shares at par to raise fresh capital—since no investor would subscribe at $100 when the market price is $76. This directly hampers Strategy's ability to fund additional Bitcoin purchases through this preferred equity channel.
Implications for Strategy's Funding Strategy
Strategy has historically relied on a cycle of issuing equity and preferred stock to raise funds for Bitcoin accumulation, creating a leveraged exposure. With STRC trading below par and its correlation to Bitcoin remaining elevated, the instrument's fundraising function is now severely impaired. The company may need to turn to alternative sources such as convertible bonds, common equity sales, or even asset sales to maintain its Bitcoin buying capacity. If Bitcoin prices continue to weaken, further depreciation of STRC could erode dividend coverage ratios and trigger additional selling pressure. Market participants are watching for any capital structure adjustments, such as share buybacks of the discounted preferred or the introduction of new preferred terms.