STRC, the preferred stock tied to Strategy’s Bitcoin-focused capital structure, fell to a new intraday low of $85.32 on June 19. In the previous trading session, it briefly touched $82.53, putting the discount to its $100 par value at more than 17%. The technical picture also deteriorated: RSI dropped to 24, entering an extremely oversold zone, while trading volume surged to nearly 8 million shares, far above the daily average of 3.6 million shares.
The move matters because STRC was designed to trade close to its $100 face value. When Michael Saylor marketed the instrument to Wall Street last July, he described it as a "digital credit engine". Investors would buy the preferred stock and receive an annual dividend of 11.5%; Strategy would use the proceeds to buy Bitcoin; if Bitcoin rose and STRC remained near par, the company could issue more shares and keep buying more Bitcoin. The structure was presented as a closed loop in which capital would keep circulating through Strategy’s balance sheet.
A preferred-stock machine built to fund Bitcoin purchases
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. The dividend rate is adjusted monthly and currently stands at 11.5%. The stated design was straightforward: use a floating-rate mechanism to keep STRC trading close to its $100 par value.
When STRC traded above $100, Strategy could issue additional shares through an ATM, or at-the-market, program. The premium would be converted into cash and then directed into Bitcoin purchases. In this structure, MSTR common stock absorbed the volatility of Bitcoin, while STRC supplied the financing ammunition. In an April proxy statement, Strategy highlighted the scale and stability of the product: STRC had a market capitalization of $6.4 billion, 30-day average trading value of $339 million, and volatility of just 1.7%. Saylor called it a "non-cyclical financing tool", meaning that the machine was intended to function regardless of Bitcoin’s short-term direction.
Bitcoin’s decline, dividend coverage and rival products
The first pressure point was Bitcoin itself. BTC has fallen from its record high last October to around $63,000, a decline of more than 50%. On June 17, the first FOMC meeting chaired by new Federal Reserve Chair Kevin Warsh delivered a hawkish signal. The dot plot showed that 9 officials expected rate hikes in 2026, the PCE inflation forecast was raised to 3.6%, and forward guidance on rates was fully removed. On that 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 fell against the direction of stocks.
The second pressure point was dividend coverage. In May, Strategy used $1.5 billion in cash to repay convertible debt maturing in 2029. That move reduced the dividend coverage window for STRC from 24 months to about 7 months. With 28 million STRC shares outstanding, an annual dividend rate of 11.5%, and a $100 par value, Strategy needs to pay more than $320 million in cash dividends each year. After the cash reserve declined, the market focused on a simple question: where would the dividend cash come from?
The answer arrived on June 1. Strategy disclosed 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. It was Saylor’s first Bitcoin sale since 2022. The sale was small relative to Strategy’s total holdings of 840,000 BTC, representing less than 0.004% of the position, and the proceeds amounted to only $2.5 million. Saylor described the transaction as a "vaccination", a voluntary sale intended to acclimate the market and remove panic expectations. The market response was not supportive: MSTR fell more than 4% after hours. For investors, the issue was not the size of the sale, but the fact that a figure associated with a "never sell Bitcoin" narrative had begun selling Bitcoin to fund dividends.
The third pressure point was competition from Strive’s SATA. SATA is also a Bitcoin-backed preferred stock. It currently trades close to its $100 par value and offers an annualized yield of about 13%, higher than STRC’s 11.5%. It also changed its dividend schedule on June 16 to pay dividends every business day, a much higher frequency than STRC’s semi-monthly payments. Strive has no outstanding debt, and SATA sits in the most senior position in the capital structure, without needing to compete with convertible bondholders for cash flow. The spread between STRC and SATA has widened to about $15, a record level. Two Bitcoin-backed high-yield preferred stocks are now being priced very differently: one remains close to par, while the other trades at a 17% discount.
The reverse version of Saylor’s flywheel
The chain reaction created by STRC’s move below par is the mirror image of the structure Saylor originally promoted. The positive cycle was: STRC trades above $100; Strategy issues shares through the ATM program; cash flows in; Bitcoin is purchased; Bitcoin rises; STRC stays stable; Strategy issues more shares. The reverse flywheel is: Bitcoin falls; STRC drops below par; the ATM program pauses; the financing channel closes; Bitcoin is sold to pay dividends; confidence weakens; STRC falls further.
Strategy has already paused its premium issuance plan for STRC. That means the company has lost an important tool for acquiring more Bitcoin. At the same time, bearish activity in STRC options has increased. Saylor has pushed back with a mathematical argument: in his recent public comments, he said that for every 1 BTC sold to pay dividends, Strategy can buy back 10 to 20 BTC through other capital operations. He also argued that the model only needs Bitcoin to rise 2.3% per year to continue operating. Strategy currently holds more than 840,000 BTC at an average cost of about $75,540. With Bitcoin around $63,000, the unrealized loss exceeds $10 billion, and the company already reported a Q1 net loss of $12.54 billion.
The math may be internally consistent, but the market is responding to more than arithmetic. As STRC’s price signal continues to worsen, the narrative shifts from "never sell Bitcoin" to "sell Bitcoin to pay dividends". Under that narrative, even a carefully structured model faces capital outflow pressure if investors no longer accept the assumptions behind the financing loop.
A test of the Bitcoin treasury company model
STRC at $85 does not mean Strategy’s survival line has been breached. Preferred stock ranks above common equity but below debt in the capital structure, so bondholders are not directly affected by the preferred-stock decline. Saylor’s 840,000 BTC position is also not facing forced liquidation. The deeper test is whether the Bitcoin treasury company model can keep its financing machine running during a bear market.
Last year, STRC was one of Saylor’s most important financial inventions, a product intended to bring traditional fixed-income investors into the Bitcoin narrative. Now it has become a mirror for the fragility of leveraged strategies during a down cycle. A 2.3% annual rise in Bitcoin would be enough, according to Saylor’s framework, to help the machine keep operating. But with the Federal Reserve sending hawkish signals, rate-hike expectations returning, and the Fear and Greed Index falling to 22, or "extreme fear", that small number carries much more weight than it did when the engine was still running smoothly.