Strategy’s preferred stock STRC is in a prolonged state of de-anchoring. U.S. market data shows that since May 15, STRC has gradually moved away from its $100 target par value. The discount has widened sharply in recent trading, with the security touching an intraday low of $83.26 yesterday before closing at $88.59. That closing price leaves STRC more than 11% below its target par value. For an ordinary equity, an 11% price move would not necessarily be exceptional. For STRC, however, the deviation has a different meaning because the product was designed as an income-oriented security expected to trade near $100, not as a highly volatile speculative stock.
An income product that became a core financing channel
STRC was introduced by Strategy in 2025 as an innovative financial derivative. Unlike Strategy’s common stock MSTR, STRC is positioned as a perpetual preferred stock. It has a fixed target par value of $100 and relatively stable dividend income, giving it characteristics closer to a fixed-income security. As Strategy has continued to expand its Bitcoin reserves, STRC has become one of the company’s most important financing channels. In that sense, the market’s pricing of STRC is not only a judgment on a preferred stock; it is also a measure of confidence in Strategy’s broader capital structure and financing model.
Before launching STRC, Strategy mainly relied on issuing convertible notes and directly selling additional common shares to raise funds for Bitcoin purchases. Both channels had limitations. Convertible notes are constrained by maturity dates and debt leverage limits, while frequent common stock issuance dilutes existing shareholders. STRC was intended to address this problem by forming a loop: issue STRC, raise fiat currency, buy BTC, increase the company’s net assets and strengthen confidence in STRC. This loop turned STRC into a powerful engine inside Strategy’s capital flywheel.
The dividend adjustment mechanism is not restoring the anchor
The condition for this flywheel to operate smoothly is that STRC must remain close to its $100 par value. Once the market price falls materially below $100, Strategy’s ability to raise funds through discounted preferred stock becomes impaired under ATM offering terms and market arbitrage logic. In practical terms, the company can no longer absorb capital from the market efficiently through a preferred security that trades at a discount, and the capital cycle is interrupted.
To keep STRC’s secondary-market price close to the $100 target, Strategy built in a monthly dynamic dividend adjustment mechanism. When STRC trades below $100, Strategy can raise the dividend rate to make the product more attractive. When it trades above $100, the company can lower the dividend rate. In theory, repeated adjustments should help STRC trade around the $100 level over time. The current market behavior has challenged that premise. Strategy has already lifted the dividend rate to a high level of 11.5% and changed the payment frequency from monthly to semi-monthly, yet STRC remains de-anchored.
The failure of higher dividends to repair the discount indicates that investors are pricing risks beyond the yield itself. One explanation discussed in the market is technical deleveraging among arbitrage capital. Over the past year, STRC traded for a long period around $100, attracting income-oriented arbitrage funds. These participants often used leverage to amplify returns, collecting dividend income while also seeking gains from a return toward par value. After STRC broke below $100 and continued weakening, some leveraged accounts hit risk-control thresholds and were forced to sell. The decline then led to further liquidations, creating a chain reaction in which selling pressure reinforced itself.
Cash reserves, dividend obligations and the Bitcoin reserve debate
Leverage-driven selling alone does not fully explain the pressure on STRC. A deeper concern lies in 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 report said the company’s book cash would cover only about 6.3 months of preferred-stock dividend payments. That figure pushed investors to re-examine Strategy’s promised ability to cover future liquidity needs.
Strategy offered a sharply different framing. In an official post on X, the company emphasized that if its large Bitcoin reserves are included in the calculation, they would be sufficient to cover 32 years of dividend payments. This answer touched the most sensitive point in the market discussion. Earlier this month, Strategy sold Bitcoin from its holdings for the first time. The sale involved only 32 BTC, and the company described the transaction as an “active market desensitization test,” also saying it would “buy back more in the future.” Even so, the fact of the sale had a strong impact because Strategy and its founder Michael Saylor have for years promoted a central narrative: Bitcoin is a long-term strategic reserve asset, and the company obtains operating funds through capital-market financing rather than by relying on Bitcoin sales.
Once investors saw Strategy actually sell Bitcoin, the question changed. If financing conditions tighten, will the company need to rely further on Bitcoin sales to meet dividend obligations? If the answer is not an absolute no, investors have to reassess the risk level of related securities. From this perspective, STRC’s persistent de-anchoring is not merely a pricing issue for one preferred stock. It reflects a broader reassessment of the stability of Strategy’s capital structure.
STRC’s return to par becomes a gauge of Strategy’s financing capacity
For Strategy, the most direct impact of STRC’s continued de-anchoring is the weakening of its financing function. In recent years, the company has been able to keep expanding its Bitcoin reserves by issuing securities such as common stock, convertible notes and preferred stock, then using the proceeds to buy more Bitcoin. STRC is one of the most important instruments in that structure. When it trades for an extended period below the $100 target par value, the market is demanding higher risk compensation, and Strategy’s ability to raise funds through the product is temporarily constrained.
Going forward, STRC’s ability to re-anchor will serve as an important indicator for assessing Strategy’s risk profile. If STRC remains at a discount for a long period, financing capacity stays restricted and cash reserves continue to be consumed, concerns over additional Bitcoin sales to satisfy dividend payments will intensify. If that expectation strengthens, the consequences will extend beyond STRC itself. Strategy has been one of the most important marginal buyers in the Bitcoin market over the past several years, and its financing capacity and accumulation pace have shaped supply-demand expectations. If Strategy’s buying flow turns into selling flow, Bitcoin would face pressure from a change in the company’s role in the market.