Strategy’s preferred stock STRC fell to a record low as Bitcoin slipped below $63,000, increasing market attention on one of the main financing tools used by Michael Saylor’s company to support its Bitcoin accumulation strategy.
STRC, officially known as Strategy’s Variable Rate Series A Perpetual Stretch Preferred Stock, traded near $85 after touching an intraday low of around $82 during Thursday’s session. The decline placed the preferred stock about 15% below its $100 stated amount and below its $90 initial public offering price.
Bitcoin also weakened during the same period, falling 3.77% over 24 hours to $62,603.95 after starting near the $66,000 area. The price later lost the $65,000 and $64,000 zones before dropping into the $62,000 to $63,000 range, adding pressure to crypto-linked equities and preferred securities.
STRC Discount Raises Financing Questions
STRC was designed to trade near its $100 stated amount while paying cash dividends to holders. Strategy’s website lists the preferred stock with an 11.5% annual dividend rate for June, with the rate adjusted monthly to help keep the security close to par value.
At prices near $85, STRC’s effective yield rises to about 13.5%, which has fueled debate over whether Strategy may need to raise the dividend rate to attract buyers and restore the stock closer to $100. A higher dividend rate would also increase Strategy’s recurring cash obligation.
Source: X
STRC has become one part of Strategy’s capital structure for raising funds. When it trades near or above par, the company can sell additional preferred shares through its at-the-market program and use proceeds for Bitcoin purchases or other corporate purposes. When STRC trades well below par, that channel becomes less efficient because each share sale raises less cash.
Strategy reported no STRC ATM sales in the week ended June 7 and had about $17.51 billion of remaining STRC issuance capacity. The decline, therefore, places attention on whether the company can continue using the preferred stock as intended if the market keeps pricing it at a discount.
Schiff Criticizes STRC as Analysts Point to Liquidations
Bitcoin critic Peter Schiff used the STRC decline to renew criticism of Strategy and Michael Saylor. Schiff said investors who bought STRC near $100 had already lost a large portion of principal, and he argued that Strategy may need to raise the yield to support the stock price.
Schiff also suggested that some buyers could pursue legal claims if they purchased STRC based on a yield-focused promotion without fully understanding the risks. His comments were directed at Saylor and Strategy, although no lawsuit was cited as having been filed.
Other market commentators gave a different explanation for the drop. Jesse Myers described the STRC selloff as a liquidation cascade, saying investors may have used leverage when STRC previously traded in a tight range near $99 to $100. In that view, falling prices may have triggered margin calls and additional forced selling.
David Bailey also pointed to the relationship between STRC and Strive’s SATA preferred stock, noting that both products are linked by Bitcoin-backed capital structures. SATA also traded below par on Thursday, near $96.93, although it remained much closer to its target range than STRC.
Strategy Says Bitcoin Reserve Covers Dividend Burden
Strategy has responded to concerns about its dividend obligations by pointing to its Bitcoin reserve and available liquidity. In its latest 8-K filed June 15, the company said its Bitcoin reserve was valued at nearly $55 billion and could cover about $1.7 billion in annual dividends and interest expenses for 32 years.
The company also said Bitcoin would need to appreciate by only about 3.1% per year for the reserve to break even against those obligations. Supporters of Strategy’s model argue that this gives the company a long runway, even if preferred stock pricing remains volatile.
Strategy recently disclosed that it sold 32 BTC between May 26 and May 31 at an average price of $77,135, raising about $2.5 million. The company said proceeds were expected to fund preferred dividends, making the sale notable because Strategy had been known mainly as a long-term Bitcoin accumulator.
The company also reported a USD reserve of about $1.1 billion as of June 14, including unsettled ATM proceeds. That reserve is intended to support preferred dividends and debt interest, although Strategy has warned that it may be required to sell Bitcoin if reserves are depleted and financing is unavailable.
