Strategy’s preferred stock STRC is continuing to trade below its intended anchor. According to U.S. equity market data cited in the source report, STRC has gradually moved away from its $100 target par value since May 15. The discount has deepened in recent sessions: during yesterday’s trading, the instrument touched an intraday low of $83.26 and closed at $88.59, more than 11% below the target par value. For an ordinary equity, an 11% move may not be extraordinary. For STRC, however, the issue is more structural, because the product was designed as an income-oriented security meant to remain close to $100, rather than as a high-volatility speculative asset.
Why STRC matters to Strategy’s financing loop
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 profile. Its characteristics are closer to a security with fixed-income features. As Strategy has expanded its Bitcoin reserves, STRC has become one of the company’s most important financing channels. In that sense, the market price of STRC reflects not only investors’ attitude toward a preferred stock, but also their confidence in Strategy’s broader capital-market 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 limitations. Convertible notes are constrained by maturity dates and limits on debt leverage, while frequent common stock issuance dilutes existing shareholders. STRC was designed to address that pressure point. Through a loop of issuing STRC, raising fiat capital, buying BTC, increasing corporate net assets and reinforcing trust in STRC, Strategy attempted to build a capital flywheel that could keep rotating as long as market confidence remained intact.
The 11.5% dividend has not restored the anchor
The key condition for that flywheel is that STRC must remain near its $100 par value. If the market price falls significantly below $100, the ATM issuance terms and market arbitrage logic make it difficult for Strategy to efficiently raise capital through discounted preferred shares. In that case, the capital structure that supports the company’s Bitcoin accumulation strategy begins to stall in practice. To prevent this, Strategy built a monthly dynamic dividend-adjustment mechanism into STRC. When the market price falls below $100, Strategy can raise the dividend rate to improve the product’s appeal; when the price rises above $100, it can lower the rate. In theory, this mechanism should help keep STRC trading near par over the long term.
The current problem is that the mechanism has not repaired the discount. Strategy has already lifted the dividend rate to 11.5% and changed the payment frequency from monthly to semi-monthly, yet STRC remains detached from its target value. The failure of the dividend adjustment suggests that the market is pricing risks beyond yield alone. One surface-level explanation discussed by market participants is a concentrated deleveraging event among arbitrage funds. Over the past year, STRC’s tendency to trade around $100 attracted income-focused arbitrage capital. Such investors often used leverage to amplify returns, collecting dividends while also seeking gains from the price moving back toward par. Once STRC broke below $100 and continued weakening, some leveraged accounts hit risk-control lines and were forced to sell; those sales then pressured the price further and triggered additional forced unwinds.
Cash coverage, Bitcoin reserves and the first BTC sale
Still, forced deleveraging alone does not fully explain the market’s reaction. The deeper concern is Strategy’s liquidity reserve position. Earlier this month, JPMorgan released a research report stating that Strategy has approximately $1.7 billion in annual dividend payment obligations. Based on the company’s current cash reserves, the report said book cash would cover only about 6.3 months of preferred-stock dividend payments. That raised concerns over Strategy’s future ability to meet liquidity coverage commitments.
Strategy offered a sharply different interpretation. In an official post on X, the company stressed that if its large Bitcoin reserves are included, it has enough coverage for 32 years of dividend payments. This answer goes directly to the most sensitive part of the debate. 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, also saying that it would buy back more in the future. Even so, the action had a strong impact because Strategy and its founder Michael Saylor had spent years emphasizing a central narrative: Bitcoin is a long-term strategic reserve asset, and the company would obtain operating funds through capital-market financing rather than through Bitcoin sales.
Once the market saw Strategy actually sell Bitcoin, the question became harder to ignore within the framework of the source report: if financing conditions tighten, will Strategy need to rely further on Bitcoin sales to meet dividend obligations? If investors cannot treat the answer as an absolute no, then they must reassess the risk level of related securities. Viewed from this angle, STRC’s persistent discount is not only a pricing issue for one preferred stock; it is also a reassessment of the resilience of Strategy’s entire capital structure.
Weaker financing capacity could reshape the pressure on Strategy
For Strategy, the largest direct consequence of STRC’s prolonged detachment from par is the weakening of its financing function. In recent years, the company’s ability to keep expanding its Bitcoin reserves has depended on raising funds through common shares, convertible notes and preferred shares, then using that capital to buy more Bitcoin. STRC is one of the most important instruments in that process. When it trades below the $100 target par value for an extended period, the market is demanding higher risk compensation, and Strategy’s fundraising capacity through this channel enters a temporary breakdown.
The path of STRC back toward, or away from, par will therefore serve as an important measure of market confidence in Strategy’s risk profile. If STRC remains discounted for a long period, financing remains constrained and cash reserves continue to be consumed by dividend payments, concerns over additional Bitcoin sales to meet those obligations will increase. The issue would then 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 expectations around supply and demand. If that role shifts from buyer to seller, the pressure identified in the source report would no longer be limited to a preferred-stock product, but would also reach Bitcoin.