Strategy Preferred STRC Falls Below Par, Deepening Concern Over Bitcoin Buying Strategy
Summary
- Concerns are growing over Strategy’s high-leverage BTC buying strategy as its perpetual preferred stock STRC trades below par.
- STRC’s depegging and heavy dividend obligations raised the possibility of BTC sales to meet debt payments, putting downward pressure on BTC prices.
- Strategy plans to use proceeds from the sale of 32 BTC to pay STRC dividends, though some say the transaction is too small relative to its total holdings to signal a change in its long-term BTC accumulation strategy.
Forecast Trend Report by Period
Strategy’s perpetual preferred stock, STRC, has fallen below par, adding to concerns about the company’s Bitcoin-buying strategy, Decrypt reported. Investors are focused on whether Strategy can sustain its leverage-driven BTC accumulation model.
Decrypt reported on June 3 that STRC recently dropped to as low as $94.84, or 5.2% below its $100 par value.
Ryan Yoon, a senior analyst at Tiger Research, said STRC’s depegging signals cracks in Strategy’s highly leveraged BTC acquisition structure.
Heavy dividend obligations had fueled hedge fund concerns that Michael Saylor could be forced to sell some BTC to meet debt-related payments, he added.
That would undermine the long-standing narrative that Strategy would never sell BTC and would immediately add downward pressure on Bitcoin prices, Yoon said.
Strategy said earlier that it sold 32 BTC in late May for about $2.5 million and plans to use the proceeds to pay STRC dividends. The transaction was described as the company’s first BTC sale since 2022.
Still, some argue the sale does not amount to a shift in Strategy’s long-term BTC accumulation strategy. The transaction represented only about 0.004% of its total holdings of 843,700 BTC.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
