Author: Jae, PANews
The $100 anchor point was once the cornerstone of Strategy's fundraising magic. This perpetual motion machine of fundraising, built by Michael Saylor to buy Bitcoin, is now stuck.
On April 14, Strategy's perpetual preferred stock, STRC, fell below its $100 par value on Nasdaq, hitting a low of $99.06. Trading volume plummeted to 47% of normal levels, and it has remained in the discount range ever since.
The efficiency of STRC's fundraising directly determines whether Strategy can continue to increase its holdings. Once STRC falls below par value, it means that Saylor's fundraising engine for buying Bitcoin will be temporarily shut down.
When this leading DAT (Digital Asset Treasury) holder, which holds the most Bitcoin globally, lost its most important source of incremental funding, the marginal buying support for the entire Bitcoin market became precarious.
STRC offers a high interest rate of 11.5% with a locked-in price; Strategy creates a perpetual motion machine for buying cryptocurrencies.
In July 2025, STRC was officially launched, which solved Saylor's pain point: to continuously draw funds from the traditional capital market to buy Bitcoin without diluting the voting rights of MSTR common stock.
The STRC was designed to keep the trading price around $100, ensuring that the company could continue to raise funds through an "at-the-market" (ATM) process.
If the price remains below $100, the board will increase the dividend to attract investors seeking stable cash flow to support the price.
If the price is significantly higher than $100, maintain or reduce the dividend to lower financing costs.
Starting with its initial 9% annualized dividend, STRC has raised its interest rate for seven consecutive months, reaching 11.5% so far. A steady stream of investors entered the market seeking stable high returns, keeping STRC above par value for an extended period. This allowed Saylor to use ATMs to convert money from the traditional market into buying power in the Bitcoin market.
In addition, Saylor abandoned the traditional capital market net profit valuation model and instead adopted the " Bitcoin gain " metric to define Strategy's value as a "Bitcoin-standard" company.
This metric measures the percentage increase in Bitcoin holdings per share of common stock.
In the first quarter of 2026, Strategy achieved a 6.2% Bitcoin gain, with a full-year target of 9.5%.
STRC is the leverage tool to achieve this goal: by issuing preferred stock with fixed financing costs, it buys Bitcoin, which has long-term appreciation potential.
According to Saylor's calculations, as long as Bitcoin's annualized growth rate exceeds 2.05% in the long term, ordinary shareholders will continue to benefit.
Over the past six months, this logic has been repeating itself: raising funds through SRC → buying Bitcoin → Bitcoin price increases → stock market value increases → SRC becomes more sought after → raising more money to buy more Bitcoin.
STRC is like a never-ending money-printing machine, supplying Saylor's Bitcoin empire with a constant stream of ammunition.
STRC falls below the $100 mark; Strategy unveils bi-weekly dividend payout as a surprise measure.
The $100 denomination is the lifeblood of STRC's entire funding flywheel. Once it falls below this level, ATM issuance will come to a standstill, and the printing press will stop running altogether.
This derailment was a double blow from macroeconomic headwinds and deteriorating expectations.
The Iran war became the first straw that broke the back of STRC.
Shipping disruptions in the Strait of Hormuz and soaring oil prices have fueled inflation concerns, pushing market expectations for a Federal Reserve rate cut from mid-2026 to 2027.
For preferred stocks like STRCs, which have strong bond-like characteristics, the persistently high benchmark interest rate means that the attractiveness of their 11.5% dividend is being diluted by the rise in the risk-free rate.
Meanwhile, the Fear & Greed Index in the crypto market once plummeted to 9, indicating a state of "extreme fear." Funds that were originally chasing stable returns began selling off non-core assets, with the relatively illiquid STRC bearing the brunt.
If the macroeconomic environment is an external trigger, then the dividend decision on April 1st was the needle that punctured the bubble.
On this day, Strategy announced that it would maintain its dividend of 11.5%, but ended its seven-month streak of monthly interest rate hikes.
PANews believes the company's intention was to convey confidence to the market: interest rates have reached a steady state and prices are close to parity. However, investors misinterpreted this move as a sign that the company's fundraising capabilities had peaked and it had lost confidence in the subsequent rise of Bitcoin.
Retail investors make up as much as 80% of STRC holders. Their driving force is the inertia of the expectation that "interest rates will rise every month and the price will remain above par value".
The initial halt in price increases shattered this belief, causing a large number of retail investors to leave the market, a sharp drop in trading volume, and the face value anchor point to collapse.
The STRC falling below par value not only affects Strategy itself, but also the supply and demand pattern of the entire Bitcoin market.
When the price of STRC falls below face value, issuing new ATMs at market price becomes meaningless. Issuing at a discount will further depress prices, creating a vicious cycle that will force Strategy to stop issuing new ATMs.
Real-world data confirms this: the latest funding tracker shows that STRC has raised zero new funds. Strategy's large purchase of 34,164 bitcoins last week used the remaining funds from the previous funding round.
With STRC's funding halted, this largest bullish force in the Bitcoin market has temporarily stopped. The Bitcoin market has also lost the marginal buying support of $1-2 billion per week.
Faced with the crisis of tool failure, Strategy acted quickly, attempting to regain pricing power through financial means.
Strategy announced that it will hold a shareholder vote on April 28 to propose increasing the frequency of STRC's dividend payments from once a month to once every two weeks.
This is a precise psychological tactic against retail investors. By shortening the dividend payment cycle, it reduces the price gap caused by the ex-dividend date (the trading day following the record date for dividend distribution). Historically, STRC has fallen by an average of 45 cents on the ex-dividend date and taken about 12 days to return to par value.
The bi-weekly cash flow returns can significantly reduce reinvestment lag for investors, making it more attractive to cash flow-sensitive retail investors and income funds.
If the proposal is approved, STRC will become one of the very few listed equity instruments in the world to offer bi-weekly dividends.
In response to market accusations of Ponzi scheme tactics, Strategy also emphasized the depth of its non-Bitcoin assets. The company disclosed that it currently holds approximately $2.25 billion in cash reserves, sufficient to cover approximately 30 months of dividend obligations for all preferred shares without issuing new shares or selling Bitcoin.
In addition, its traditional business intelligence software business generates $320 million in gross profit annually, ensuring the company's survival in extreme market conditions.
The 4.3x BTC reserve ratio remains controversial, and STRC carries the hidden risk of chronic blood loss.
Despite the fact that the STRC is backed by Bitcoin reserves, the controversy surrounding this instrument has never ceased.
Traditional financial experts such as Peter Schiff believe that Bitcoin itself does not generate any returns, and that the high dividends of STRC are actually achieved by attracting new investors or by sacrificing the interests of ordinary shareholders.
Their logic is: Bitcoin price falls → STRC price decreases → financing function is lost → unable to continue buying Bitcoin to support the price → forced to sell Bitcoin to pay dividends → Bitcoin price falls further.
While Strategy can prevent a "death spiral" through proactive intervention, it will then face a dilemma: either significantly dilute common shareholders' equity to raise funds, or continue to improve yields to maintain attractiveness and pay higher financing costs.
Therefore, STRC is unlikely to exhibit a death spiral like UST, but it does have a "self-reinforcing" downward risk, and its characteristics are more similar to "chronic blood loss".
Strategy counters that the STRC model is based on Bitcoin's appreciation potential as a long-term deflationary asset. As long as Bitcoin's appreciation rate exceeds the financing cost, preferred stock financing will generate a positive asset accretion effect, rather than a Ponzi scheme of transferring funds from one source to another.
According to its disclosure, the current Bitcoin reserves cover more than 4.3 times the principal of preferred stock, meaning that STRC would only face substantial insolvency if Bitcoin fell below approximately $18,000.
However, the capital market always reacts before the fundamentals. Before reaching this threshold, the secondary market price of STRC may collapse due to panic in the Bitcoin market.
It is worth noting that investors often overlook the underlying legal definition of STRCs when participating in trading. While nominally possessing a face value and fixed dividends, it is legally classified as an equity security, lacking the mandatory principal repayment obligation of bonds and having no fixed maturity date.
In the order of capital repayment, STRC ranks after debt categories such as convertible bonds and secured bonds.
The STRC falling below its $100 face value represents a significant hurdle that Bitcoin, as a DAT asset, must navigate as it matures.
For ordinary investors, the de-anchoring of STRC serves as a wake-up call. In the crypto market, no form of "anchoring" is absolute; liquidity is always the primary principle for survival.
While the current high yield of 11.5% for STRC is tempting, it also carries hidden credit risks and liquidity traps.
In the journey towards a "Bitcoin standard," the fact that STRC fell below its face value is merely a brief interlude. Ensuring the structural stability of the financing machine while pursuing greater scale is the key to winning this long-term race.
