Written by Xiaobing for TechFlow. When Michael Saylor presented STRC to Wall Street in July 2025, he described it as a “digital credit engine.” The structure was meant to be simple in its internal logic: investors would buy the preferred stock and receive an annual dividend of 11.5%; Strategy would use the capital raised to buy Bitcoin; as Bitcoin rose, STRC would trade near its $100 par value; the company could then issue more shares and buy more Bitcoin. In that closed loop, capital kept moving and every participant appeared to benefit.
Less than a year later, that engine has lost momentum. On June 19, STRC fell intraday to $85.32, setting a new record low. On the previous trading day, it briefly touched $82.53, a discount of more than 17% to par value. Its RSI dropped to 24, putting it in an extremely oversold range, while trading volume surged to nearly 8 million shares, far above the daily average of 3.6 million. For a preferred stock designed to remain close to $100, a move toward $85 indicates that the underlying financing logic is being tested.
How STRC Was Supposed to Work
STRC stands for “Variable Rate Series A Perpetual Stretch Preferred Stock.” It was listed in July 2025 at an issue price of $90. Strategy issued about 28 million shares and raised $2.5 billion. Its dividend rate is adjusted once a month and currently stands at 11.5%. The stated purpose of the floating-rate design was to keep STRC trading close to its $100 par value.
When STRC traded above $100, Strategy could use an ATM, or at-the-market, issuance program to sell additional shares, convert the premium into cash, and put that cash into Bitcoin. In the structure described by the source article, this was the central gear in Saylor’s capital machine: MSTR common stock absorbed Bitcoin’s volatility, while STRC supplied a steady stream of capital for new purchases.
In its proxy statement this April, Strategy was still highlighting the strength of that mechanism. The company reported that STRC had a market value of $6.4 billion, a 30-day average trading value of $339 million, and volatility of only 1.7%. Saylor called it a “non-cyclical financing instrument,” meaning a funding tool intended to operate regardless of short-term moves in Bitcoin. The current price action has put that claim under pressure.
Three Pressures Behind the Decline
The source article identifies three reinforcing forces behind STRC’s fall. The first is the sharp decline in Bitcoin itself. BTC has fallen from last October’s all-time high to around $63,000, a drop of more than 50%. On June 17, Federal Reserve Chair Kevin Warsh held his first FOMC meeting and delivered a hawkish signal. The dot plot showed that nine officials expected rate hikes in 2026, PCE inflation expectations were raised to 3.6%, and forward guidance on rates was removed entirely.
That same day, Bitcoin decoupled from U.S. equities. The S&P 500 and Nasdaq rose on news of a U.S.-Iran peace agreement, while BTC moved lower. For a structure backed by the market’s willingness to finance Bitcoin accumulation, that divergence added pressure at the exact point where STRC needed confidence in the broader Bitcoin narrative.
The second pressure came from dividend coverage. In May, Strategy used $1.5 billion in cash to repay convertible debt due in 2029. That move directly reduced STRC’s dividend coverage period from 24 months to roughly 7 months. With 28 million STRC shares outstanding, an annualized dividend rate of 11.5%, and a $100 par value, annual cash dividend payments exceed $320 million. After the reduction in cash reserves, investors focused on a direct question: where would the dividend money come from?
The answer was disclosed on June 1. Strategy said that between May 26 and May 31, it sold 32 Bitcoin at an average price of $77,135, raising about $2.5 million to pay STRC dividends. This was Saylor’s first Bitcoin sale since 2022. The amount was small compared with Strategy’s total holdings of 840,000 Bitcoin, representing less than 0.004% of the position, and the cash raised was only about $2.5 million. Saylor described the sale as an “inoculation,” a deliberate one-time action intended to condition the market and reduce panic expectations.
The market did not accept that framing. MSTR fell more than 4% after hours. The investor logic described in the source was straightforward: when someone who had committed to “never sell Bitcoin” starts selling, the absolute size of the sale matters less than the break in the narrative. The label “selling Bitcoin to pay dividends” began to compete directly with the earlier belief that the Bitcoin position would remain untouched.
The third pressure came from Strive’s SATA, another Bitcoin-backed preferred stock. SATA currently trades near its $100 par value and offers an annualized yield of about 13%, higher than STRC’s 11.5%. Its payment schedule also changed on June 16 to dividends paid every business day, much more frequent than STRC’s semi-monthly payments. Strive has no outstanding debt, and SATA sits at the most senior position in its capital structure, without needing to compete with convertible bondholders for cash flow. The price gap between STRC and SATA has widened to about $15, a record spread.
The Financing Flywheel in Reverse
The chain reaction caused by STRC trading below par value is the mirror image of Saylor’s original design. The forward loop was: STRC trades above $100, Strategy issues through the ATM program, cash flows in, the company buys Bitcoin, Bitcoin rises, STRC stabilizes, and issuance continues. The reverse flywheel now described by the source is: Bitcoin falls, STRC trades below par, the ATM program pauses, a financing channel closes, Bitcoin is sold to pay dividends, confidence weakens, and STRC declines further.
Strategy has already paused the premium issuance program for STRC. That means the company has lost an important tool for acquiring additional Bitcoin. At the same time, bearish activity in STRC options has increased. Saylor’s counterargument is still numerical: in a recent public appearance, he said that for every 1 BTC sold to pay dividends, Strategy could buy back 10 to 20 BTC through other capital operations. He also argued that the entire model only needs Bitcoin to rise 2.3% annually to run indefinitely.
As presented in the source article, Strategy currently holds more than 840,000 Bitcoin at an average cost of about $75,540. With Bitcoin near $63,000, the company has an unrealized loss of more than $10 billion, and it already recorded a net loss of $12.54 billion in Q1. The mathematical argument may describe how the model is intended to function, but the market is not responding only to arithmetic. When STRC’s price signal deteriorates and the story shifts from “never sell Bitcoin” to “sell Bitcoin to pay dividends,” capital flows can move away from the model’s assumptions.
A Test of the Bitcoin Treasury Company Model
STRC at $85 does not directly threaten Strategy’s survival. Preferred stock ranks above common equity but below debt in the capital structure, so bondholders are not affected in the same way. Saylor’s 840,000 Bitcoin are also not exposed to forced liquidation in the framework described by the article.
The deeper test is whether the Bitcoin treasury company model can keep its financing machine operating during a bear market. In 2025, STRC was one of Saylor’s most important inventions: a financial product that allowed traditional fixed-income investors to participate in the Bitcoin story. By June 2026, it had become a mirror showing the fragility of a leveraged accumulation strategy under adverse conditions.
The source article ends with the central tension: Bitcoin only needs to rise 2.3% annually for the machine to turn again. But with the Federal Reserve sending a hawkish signal, rate-hike expectations returning, and the Fear and Greed Index falling to 22, a level described as “extreme fear,” that small percentage carries much heavier weight than it appears to on paper.