STRC moves away from its $100 anchor
Strategy’s preferred stock STRC is in a prolonged state of de-anchoring. U.S. market data show that since May 15, STRC has gradually moved away from its $100 target par value. The discount widened sharply in recent trading: the security touched an intraday low of $83.26 yesterday and closed at $88.59, more than 11% below the target par value.
For an ordinary stock, an 11% decline may not be a defining event. For STRC, however, the issue is different because the product was not designed to behave like a highly volatile speculative asset. Strategy originally structured STRC as an income-oriented security intended to trade around the $100 par value. The widening gap between market price and target par value has pushed investors to revisit the logic behind the product itself.
The matter is also important because STRC has become one of Strategy’s most important financing channels as the company continues expanding its Bitcoin reserves. In that sense, the market price of STRC is not only a reflection of investor attitudes toward one preferred stock. It also reflects how investors are judging the broader capital operation model that Strategy has built around securities issuance and Bitcoin accumulation.
How Strategy designed the STRC flywheel
STRC is an innovative financial derivative launched by Strategy in 2025. Unlike Strategy’s common stock MSTR, STRC is positioned as a perpetual preferred stock. It has a fixed target par value of $100 and a relatively stable dividend yield, making its nature closer to a security with fixed-income characteristics.
Within Strategy’s balance-sheet expansion loop, STRC is not merely another financing instrument. It is described as a key engine of the company’s capital flywheel. Before STRC was introduced, Strategy mainly relied on issuing convertible notes and directly issuing common shares to raise funds for Bitcoin purchases. Both methods came with constraints: convertible notes are limited by maturity dates and debt leverage ceilings, while repeated common-share issuance dilutes existing shareholders.
STRC addressed this pain point by creating a loop: issue additional STRC, raise fiat currency, buy BTC, increase the company’s net assets, and strengthen trust in STRC. This structure allowed Strategy to present a capital flywheel that appeared capable of repeating itself. But the entire loop depends on a critical condition: STRC must remain near the $100 par value. Once the market price falls well below $100, ATM fundraising terms and market arbitrage logic make it difficult for Strategy to raise capital efficiently through discounted preferred shares. At that point, the company’s capital mechanism effectively stalls.
Higher dividends have not restored the peg
To keep STRC’s secondary-market price close to the $100 target par value, Strategy built in a monthly dynamic dividend-rate adjustment mechanism. In simple terms, when STRC trades below $100, Strategy can raise the dividend rate to improve the product’s appeal. When STRC trades above $100, Strategy can lower the dividend rate. In theory, repeated dividend adjustments should keep STRC trading around the $100 level over the long run.
That mechanism has not worked as intended in the current episode. Strategy has already raised the dividend rate to 11.5%, a high level, and has also changed the payment frequency from monthly to semi-monthly. Even so, STRC’s de-anchored state has not been effectively repaired. This suggests that the risk being priced by the market has moved beyond the yield level of STRC itself.
Current market discussions point first to a surface-level technical factor: a concentrated deleveraging event among arbitrage capital. Over the past year, STRC often traded near $100, attracting yield-focused arbitrage funds. Such investors often used leverage to magnify returns, collecting dividend income while also seeking profit from the price moving back toward par. As STRC broke below $100 and continued to weaken, some leveraged accounts hit risk-control thresholds and were forced to sell. Falling prices then triggered more liquidations, forming a chain reaction in which selling pressure reinforced itself and pushed the decline beyond normal supply-and-demand changes.
Liquidity concerns and the first Bitcoin sale
Leverage-driven selling alone does not fully explain the current market performance. For many investors, the deeper concern lies in Strategy’s liquidity reserves. Earlier this month, JPMorgan published a research report stating that Strategy has about $1.7 billion in annual dividend payment obligations. Based on the company’s current cash reserve level, its book cash would cover only about 6.3 months of preferred-stock dividend payments. This raised concern over Strategy’s promised future liquidity coverage.
Strategy offered a different explanation. The company said in an official post on X that if its large Bitcoin reserves are included in the calculation, those reserves would be enough to cover 32 years of dividend payments. That response touches the most sensitive part of the debate. At the start of this month, Strategy sold part of its Bitcoin holdings for the first time. The sale involved only 32 BTC, and the company framed it as an “active market desensitization test,” while also saying it would “buy back more in the future.”
The sale still caused a strong reaction because, over the past several years, Strategy and its founder Michael Saylor have consistently presented a central narrative: Bitcoin is a long-term strategic reserve asset, and the company obtains operating funds through capital-market financing rather than by selling Bitcoin. Once the market saw Strategy actually sell Bitcoin for the first time, investors had to ask whether the company would need to rely further on Bitcoin sales to meet dividend obligations if financing conditions tightened. If the answer is not an absolute no, investors have to reassess the risk level of the related securities.
Why STRC’s discount matters beyond one security
Seen from this perspective, STRC’s sustained de-anchoring reflects a broader reassessment of the stability of Strategy’s capital structure. The biggest direct impact on Strategy is the weakening of STRC’s financing function. In recent years, Strategy has continued expanding its Bitcoin reserves by issuing stocks, convertible notes, preferred shares and other securities, raising funds from the capital market and using those funds to buy more Bitcoin. STRC is one of its most important financing tools. When it trades for a long period below the $100 target par value, the market is demanding higher risk compensation, and Strategy’s financing capacity is temporarily impaired.
The extent to which STRC returns to par will become an important indicator for observing Strategy’s risk profile. If STRC remains discounted for a long period, financing capacity stays constrained, and Strategy’s cash reserves continue to be consumed, concern will rise over whether the company needs to sell more Bitcoin to meet dividend payment needs.
Once that expectation strengthens, the impact will no longer be limited to STRC. Strategy has been one of the most important marginal buyers in the Bitcoin market over the past several years. Its financing capacity and pace of accumulation have had a deep influence on market supply-and-demand expectations. If Strategy’s buying power turns into selling pressure, Bitcoin would face a heavier downside burden.