BlockBeats reported on June 18 that STRC continued to fall after today’s market open and was trading at $85.9, down 3.44% on the day. The price remains well below the product’s roughly $100 par value, bringing renewed scrutiny to its product positioning, its role in Strategy’s Bitcoin financing structure, and the company’s ability to keep using the instrument to fund additional Bitcoin purchases.
KOLs question the earlier “safe investment” narrative
As STRC remains significantly de-pegged from par, overseas KOLs have raised sharp questions about how the product had been presented to investors. One criticism focused on claims that STRC had previously been heavily promoted as a safe investment suitable for families, better than a high-yield savings account and with almost no volatility. In light of the continuing price decline, that description was described as “insane.”
The criticism centers on the gap between STRC’s current trading behavior and the earlier narrative around safety and low volatility. With the instrument trading far below its approximate $100 par value, the debate has shifted from simple price performance to whether investors still accept the credit and dividend stability assumptions behind the product.
McKenna links STRC’s recovery to Saylor’s Bitcoin sales
Arete Capital partner McKenna offered a further analysis, saying that the market is waiting for the typical choppy trading environment seen toward the end of summer as well as Bitcoin sales by Michael Saylor. He predicted that Saylor will eventually sell part of his Bitcoin holdings in order to push STRC back toward par value, and that natural buying in the market will resume after that process takes place.
STRC is a preferred stock used by Strategy to raise capital from the market for Bitcoin purchases. Its par value is roughly anchored at $100, and it pays a relatively high dividend. The dividend yield adjusts according to price conditions, with the aim of keeping STRC trading as close to par value as possible. The current large de-pegging indicates that the market is demanding a higher yield, while also showing weaker investor confidence in the stability of the product’s credit profile and dividends.
Strategy previously relied heavily on issuing STRC to finance Bitcoin purchases. If STRC trades below par value, issuing new STRC becomes less attractive for the company, because it is equivalent to borrowing money at a higher cost. Under that structure, the continuing de-peg weakens Strategy’s ability to keep buying Bitcoin through this financing channel, which is why the discussion has turned to whether Saylor will sell part of his Bitcoin holdings to help bring STRC back toward par.