A mix of bond buybacks, shrinking cash reserves, and a weakening bitcoin market set off a chain reaction that turned STRC’s par-value challenge into a broader market concern.
STRC, the dividend-paying preferred equity issued by bitcoin treasury firm Strategy (MSTR), is structured to trade at its $100 par value—but in practice, that stability has proven difficult to maintain.
On Thursday, the stock dropped below $83, roughly 17% under its target and its lowest level since launching in July 2025. The instrument is designed to deliver high yield with low volatility, making the decline particularly notable.
Maintaining a price near par is essential for Strategy, as it enables efficient capital raising through at-the-market (ATM) offerings used to fund its 11.5% annualized dividend.
In recent weeks, however, falling bitcoin prices—combined with a series of corporate actions—have pushed STRC well below its intended range. The sequence unfolded as follows:
May 14: STRC closed at $100 ahead of its monthly ex-dividend date, while bitcoin traded above $80,000, suggesting normal conditions on the surface. However, bitcoin had already fallen sharply from its $126,000 peak in October, and STRC’s ability to hold par was largely confined to the run-up to dividend dates rather than sustained trading.
On the same day, Strive Asset Management announced that its competing product, SATA, would begin offering daily dividend payments. With a higher yield of 13%, SATA increased competitive pressure as Strategy sought approval to shift STRC from monthly to semi-monthly payouts—a move aimed at smoothing volatility around ex-dividend periods.
May 15: Strategy revealed it had repurchased $1.5 billion of its 2029 convertible notes at an 8% discount. While the firm had over $8 billion in convertible debt outstanding, Strive had none. Part of the buyback was funded using a dollar reserve established in late 2025 to support dividends and debt obligations, though this was not disclosed at the time. Bitcoin slipped to $78,000.
May 18: Strategy added 24,869 BTC to its holdings as bitcoin declined toward $76,000.
May 26: The company confirmed it had tapped its cash reserve for the bond repurchase, reducing the fund to $871 million—equivalent to roughly six months of STRC dividend coverage, down from a prior target of 24 months. STRC traded at $99.33 while bitcoin hovered near $77,000.
June 1: Strategy sold 32 BTC, its first bitcoin sale since 2022, signaling a willingness to liquidate assets if needed to meet dividend obligations. Although the sale represented just 0.0038% of holdings, the market reaction was sharp: MSTR shares fell 5.9%, and bitcoin dropped to $70,500 before closing at $71,286. STRC ended the day at $98.07.
June 5: Bitcoin fell below $60,000 for the first time since October 2024, closing near $61,000. STRC dropped as low as $90 before finishing at $93.40.
June 8: Shareholders approved the shift to twice-monthly STRC dividends. Strategy also purchased 1,550 BTC and reported its dollar reserve had recovered to $1 billion.
June 15: Another 1,587 BTC purchase followed, with reserves increasing to $1.1 billion.
June 18: STRC fell below $83 intraday before closing at $88.59 ahead of a U.S. holiday. Bitcoin reversed a brief rebound, declining 2.4% to $62,880. Strive CEO Matt Coles attributed the broader selloff—including declines in SATA—to leverage-driven liquidations rather than deteriorating credit fundamentals.
Strategy now holds 846,842 BTC at an average cost of $75,656. With bitcoin around $62,500, the company faces an unrealized loss of approximately $11.14 billion.
At the same time, its two most recent capital raises have been viewed as dilutive, drawing criticism from investors. MSTR shares now trade near $112, down roughly 80% from their November 2024 peak.
The broader challenge is timing: these developments have unfolded during a bitcoin bear market. As prices declined, investor confidence weakened not only in bitcoin itself but also in the financial structures built around it.
The key question now is whether STRC can stabilize and return to its $100 par value—or whether structural pressures will continue to weigh on the security.
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