A combination of bond buybacks, reduced liquidity buffers, and a weakening bitcoin market triggered the sequence that pushed STRC away from its intended $100 par value and into broader market scrutiny.
STRC, the dividend-paying preferred equity issued by bitcoin treasury firm Strategy (MSTR), is structured to trade at par. In reality, that stability has proven difficult to sustain.
On Thursday, STRC fell below $83—around 17% under par and its lowest level since its July 2025 debut. The product is designed as a high-yield, low-volatility instrument, making the move particularly significant.
Holding close to par is critical for Strategy, as it underpins efficient capital raising through at-the-market (ATM) issuance used to fund its 11.5% annual dividend.
In recent weeks, however, falling bitcoin prices alongside a series of management decisions have driven STRC materially lower. The timeline unfolded as follows:
May 14: STRC closed at $100 ahead of its ex-dividend date while bitcoin traded above $80,000, suggesting stability on the surface. Beneath that, bitcoin was already well below its $126,000 peak, and STRC’s ability to hold par was limited to short pre-dividend windows.
On the same day, Strive Asset Management announced daily dividend payments for its competing product, SATA, which offers a higher 13% yield. This intensified pressure as Strategy sought approval to move STRC to semi-monthly payouts to reduce volatility.
May 15: Strategy disclosed the repurchase of $1.5 billion in 2029 convertible notes at an 8% discount. The transaction was partly funded by a cash reserve initially set aside for dividends and debt servicing, though that detail was not immediately disclosed. Bitcoin slipped to $78,000.
May 18: Strategy acquired 24,869 BTC as bitcoin trended toward $76,000.
May 26: The company confirmed the use of its reserve fund for the buyback, reducing it to $871 million—equivalent to roughly six months of dividend coverage, down from a prior target of 24 months. STRC traded just below par at $99.33.
June 1: Strategy sold 32 BTC, its first sale since 2022, signaling a willingness to liquidate holdings if required to support dividends. While the amount was negligible, the signal mattered—MSTR shares dropped 5.9%, and bitcoin fell to around $71,000. STRC closed at $98.07.
June 5: Bitcoin dropped below $60,000 for the first time since October 2024, closing near $61,000. STRC declined sharply, touching $90 before ending the day at $93.40.
June 8: Shareholders approved semi-monthly dividend payments. Strategy added 1,550 BTC and reported reserves had recovered to $1 billion.
June 15: Another 1,587 BTC purchase followed, with reserves rising to $1.1 billion.
June 18: STRC fell below $83 intraday before closing at $88.59 ahead of a U.S. holiday. Bitcoin also reversed gains, dropping to $62,880. Market participants, including Strive CEO Matt Coles, attributed the broader weakness to leverage-driven liquidations rather than deteriorating fundamentals.
Strategy now holds 846,842 BTC at an average cost of $75,656, leaving it with an unrealized loss of roughly $11.14 billion at current prices.
At the same time, recent capital raises have been viewed as dilutive, drawing criticism from investors. MSTR shares now trade near $112, down about 80% from their November 2024 highs.
Crucially, all of this has unfolded against the backdrop of a bitcoin bear market. As prices declined, confidence weakened not just in the asset itself but also in the financial structures built around it.
The central question now is whether STRC can stabilize and reclaim its $100 par level—or whether structural and market pressures will continue to weigh on the security.
