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STRC’s plunge puts Saylor’s Bitcoin dividend machine under pressure – Crypto News

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STRC, Strategy’s perpetual preferred stock, traded as low as $82.61 on June 18 before recovering to $88.59, putting the security nearly 17% below its $100 stated amount at the intraday low.

MSTR fell 3.4% to $112.53 during the same session, while Bitcoin traded near $62,730, down about 2.5%.

Strategy designed STRC to hover around $100 through monthly dividend-rate adjustments, currently set at 11.50% annualized, payable semi-monthly in cash.

At $88.59, that 11.5% coupon implies an effective yield of roughly 13.0%, and the disconnect between the stated rate and market demand shows how far confidence has slipped.

With approximately $10.5 billion of STRC notional outstanding, an 11.5% annual rate implies roughly $1.21 billion in STRC-only dividend costs.

If the market keeps pricing below par and Strategy responds by raising the rate to 14%, the cost would rise to about $1.47 billion annually, which is a dynamic that critics have been warning about for months.

A chart showing STRC’s June 18 drop to an $82.61 intraday low, pushing the market-implied yield from 11.5% at par to approximately 13.9%.

What the criticism got right

The Ponzi-like characterization of STRC has circulated widely, with Peter Schiff calling it “the most obvious Ponzi” and arguing that new capital fund payments go to existing holders.

Strategy’s filings describe STRC as perpetual preferred equity with disclosed risks and discretionary dividend mechanics. The company has no legal obligation to maintain STRC near $100, and its own prospectus warns that raising the dividend when STRC trades below par may fail to restore the price.

Tyler Wellener, CSO at Tyr Capital, commented on the structural problem in a note:

“The capital structure has become more complex over the last year, and the market is nervous about their ability to keep everyone happy and fulfill the obligations.”

He added that STRC is a confidence game in management, as it is not really backed or collateralized by Bitcoin. A 2.5% Bitcoin drawdown produced a 17% intraday swing in STRC because the instrument’s stability depends on continuous confidence in Saylor’s capital allocation.

Ryan Haczynski, head of protocol partnerships at GlobalStake, identifies a second accelerant. On-chain STRC derivatives and tokenized share products had been purchasing and tokenizing shares, while larger participants had built large short positions.

As STRC spent months trading close to par, investors treated it as a low-volatility carry and added leverage to enhance yield.

When the price slipped below key levels, margin calls triggered a cascade of liquidations, amplifying the move.

Haczynski also notes that Saylor recently acknowledged ChatGPT played a role in developing the STRC structure, a detail that compounded selling pressure as the clip circulated alongside the price decline.

Why selling Bitcoin does not fix this

Strategy disclosed that it sold 32 BTC between May 26 and May 31 for $2.5 million, with the proceeds expected to fund preferred stock distributions.

The company subsequently bought 1,550 BTC for $101.3 million, bringing total holdings to 845,256 BTC as of June 7 and raising its US dollar reserve to $1 billion.

The 32 BTC sale was financially negligible, roughly 482 times smaller than one year of STRC-only dividends at the current rate, but it cracked the narrative that Saylor would never sell.

Wellener addressed the BTC sale question:

“Selling BTC will weaken their balance sheet and spook the market as large BTC holders may look to sell their BTC to de-risk, and common equity holders may realize they’re better off holding BTC directly or buying one of the ETFs.”

MSTR shareholders bought the stock to accumulate Bitcoin per share, while STRC holders bought it for yield. Selling Bitcoin to fund dividends appeases one constituency while alarming the other, and does nothing to address whether Strategy can generate yield without continuously refinancing through new capital.

Haczynski said that Strategy’s likely next move involves some combination of a higher dividend rate, opportunistic buybacks of discounted STRC shares, or additional capital raises using MSTR or traditional debt.

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