STRC, a preferred stock issued by Strategy with a par value of $100, is now trading at a discount of $88.59 after a significant drop in Bitcoin price and shaken market confidence. The effective yield has surged to over 12.9%.
The mechanism of STRC relies heavily on Bitcoin appreciation and continuous capital raising (such as ATM issuance) to sustain dividend payments. However, the current situation shows that ATM issuance has been paused, BTC purchases have slowed, and there have been small-scale BTC sales to cover dividends. This has triggered questions about whether STRC is entering a "death spiral," with some even likening its structure to a Ponzi scheme. The key point of debate between bulls and bears is whether STRC can fulfill its dividend obligations without selling its core Bitcoin holdings. The focus will be on when capital raising resumes and whether Bitcoin price can stabilize and recover.