Strategy’s STRC Drop Sparks Terra Comparisons, But Analysts Call Them Misleading

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Benchmark analyst Mark Palmer says comparisons between STRC and Terra’s UST misinterpret the structure of Strategy’s preferred stock, which is a dividend-paying equity instrument backed indirectly by bitcoin rather than a fixed peg that can fail.

Strategy’s STRC preferred shares have fallen to record lows in recent days, reviving comparisons to Terra’s UST stablecoin, whose collapse in 2022 erased roughly $40 billion in value.

While the analogy has gained traction on social media, Benchmark Research argues it misunderstands the nature of STRC.

The comparison is driven by two surface similarities. STRC is intended to trade near $100, yet it dropped to an intraday low of about $82.53 last week before recovering to roughly $88.65 on Monday—around 11% below its target level.

Critics have described the move as a “depeg,” borrowing terminology from stablecoins that lose their $1 anchor. STRC also offers an 11.5% dividend yield, echoing the high returns once promoted by Terra’s Anchor protocol before its collapse.

However, Benchmark-StoneX analyst Mark Palmer rejected that framing, stressing that STRC is not a stablecoin.

Unlike stablecoins, which are designed to maintain a fixed $1 value, STRC is a preferred equity instrument designed to trade near $100 but without a guaranteed peg, meaning it cannot technically “depeg.”

Palmer said Strategy’s goal is to support trading near $100 rather than guarantee it, adding that the recent move should be viewed as a “market-driven reset in required yield” rather than a structural breakdown.

He contrasted this with Terra’s UST, which relied on an algorithmic mint-and-burn mechanism tied to its sister token LUNA and lacked real asset backing. When confidence collapsed, both tokens spiraled toward zero.

STRC, by contrast, has no such reflexive mechanism and is instead supported indirectly by Strategy’s bitcoin holdings, which the company says total 847,363 BTC worth about $54.5 billion.

However, the decline has affected Strategy’s capital-raising mechanism. When STRC trades at or above $100, the company issues new shares to fund additional bitcoin purchases. Below that level, issuance slows or halts, explaining the recent pause in activity.

Palmer noted that while the funding channel has become less efficient, this is far from indicating a broken business model.

Benchmark also reiterated its $570 price target on Strategy’s common stock (MSTR), well above its recent peak of about $457 in October, even as shares fell 2.8% to $109 on Monday for a fifth consecutive decline.