Author | Azuma, Odaily Planet Daily

Strategy's preferred stock STRC is undergoing a persistent "de-pegging."

US stock market data shows that since May 15, STRC has gradually deviated from its target par value of $100, and the discount has significantly widened in recent days. During Thursday's session, it briefly touched a low of $83.26, closing at $88.59, representing a "de-pegging" of over 11% from the target par value.

For an ordinary stock, an 11% drop might not be a big deal, but for STRC, a sustained deviation from the $100 target par value means the product's core design objective is facing a severe challenge.

Because in Strategy's original design, STRC was crafted as an income-oriented security operating around a $100 par value, not a highly volatile speculative asset. The growing divergence between the market price and the target par value is now causing more and more investors to re-examine the logic behind this product.

More importantly, as Strategy continuously expands its Bitcoin reserve scale, STRC has gradually grown into the company's most important financing channel.In a sense, the market's pricing of STRC reflects not only investors' attitude toward a preferred stock but also the market's confidence in Strategy's entire capital operation model.

STRC: The Engine of Strategy's Capital Flywheel

To understand the severity of this de-pegging, one must first clarify STRC's product structure and its unique anchoring mechanism.

STRC is an innovative financial derivative instrument launched by Strategy in 2025.Unlike Strategy's common stock MSTR, STRC is positioned as a perpetual preferred stock with a fixed target par value ($100) and relatively stable dividend income, making its nature closer to a security with fixed-income attributes.

• Odaily Note: Strategy founder Michael Saylor recently revealed that STRC was designed with the assistance of AI.

Within Strategy's balance sheet expansion loop, STRC is not just an ordinary financing tool but the strongest engine of Strategy's current capital flywheel.

Before launching STRC, Strategy primarily relied on issuing convertible notes and directly issuing additional common stock to raise funds for purchasing Bitcoin. However, both models had their limitations — convertible notes were constrained by maturity dates and debt leverage ratio caps, while frequent common stock issuance diluted existing shareholders' equity.

The emergence of STRC perfectly solved this pain point, with its core utility in Strategy's approach mainly reflected in two dimensions:

• Unlimited "At-the-Market" (ATM) Offering Plan: As long as STRC's market price remains stable at $100 or above, Strategy can continuously issue new STRC shares in the secondary market through the ATM (At-the-Market) mechanism and raise fiat currency.
• Zero Equity Dilution Purchasing Power: As a perpetual preferred stock, STRC has no statutory maturity repayment pressure and does not carry the voting rights or residual asset distribution rights of common stock. This means Strategy can create tens of billions of dollars in fiat purchasing power out of thin air without diluting MSTR shareholder equity or increasing rigid debt interest, and invest it all into increasing Bitcoin holdings.

Through the closed loop of "Issuing STRC ➡️ Raising Fiat ➡️ Buying BTC ➡️ Increasing Company Net Assets ➡️ Boosting Trust in STRC," Strategy has successfully constructed a capital flywheel that seems capable of infinite circulation.

However, the key prerequisite for this flywheel to operate smoothly is that STRC must be maintained near the $100 par value.Once the market price falls significantly below $100, according to the ATM offering terms and market arbitrage logic, Strategy will no longer be able to effectively absorb funds from the market through discounted preferred stock, and its entire capital magic will effectively come to a standstill.

At the design stage, to ensure that STRC's secondary market price could consistently adhere to the $100 target par value, Strategy introduced a "monthly dynamic dividend rate adjustment" mechanism. Simply put, when STRC's market price is below $100, Strategy can increase the dividend rate to enhance the product's attractiveness; when the price is above $100, it can lower the dividend rate — theoretically, by continuously adjusting the dividend rate, STRC should be able to operate around $100 in the long term.

But now, even though Strategy has raised the dividend to a high of 11.5% and changed the payout frequency from monthly to semi-monthly, STRC's "de-pegging" state has not been effectively repaired... Why is this?

Reasons for De-pegging: Confidence, Confidence, and Confidence

The failure of the dividend correction effect means the risk being priced by the market has exceeded STRC's yield itself.Based on current market discussions, risk concerns are mainly reflected on two levels.

First are the superficial technical factors.Some market participants believe the recent decline largely stems from a concentrated stampede as arbitrage funds deleverage.

Over the past year, STRC has long traded around $100, thus attracting a large amount of yield-oriented arbitrage capital. This type of capital often amplifies returns through leverage, earning dividend income while profiting from the arbitrage space of price returning to par value. However, as STRC continued to weaken after falling below $100, some leveraged accounts began triggering risk control lines and were forced to sell their positions; the price decline further triggered more leveraged fund liquidations, ultimately forming a chain reaction.In this process, selling pressure continuously self-reinforced, causing STRC's decline to far exceed normal supply and demand changes.

But if we only use leveraged stampede to explain the current market performance, it still seems insufficient.For many investors, the deeper concern lies in Strategy's liquidity reserve situation.

Earlier this month, JPMorgan published a research report pointing out that Strategy has approximately $1.7 billion in annual dividend payment obligations. Based on current cash reserve levels, the cash on hand is only sufficient to cover about 6.3 months of preferred stock dividend payments. This has also raised market concerns about Strategy's ability to cover future liquidity commitments.

In response, Strategy offered a completely different explanation, with the company officially emphasizing in a post on X that if its massive Bitcoin reserves are taken into account, it is sufficient to cover 32 years of dividend payments.

The problem, however, is that these two statements are actually based on different premises. JPMorgan focuses on Strategy's cash position, while Strategy's calculation implies an important assumption — if necessary, the company can obtain funds by selling Bitcoin.

This precisely touches the most sensitive part of the market. Earlier this month, Strategy sold its Bitcoin holdings for the first time. Although the sale size was only 32 BTC and the official narrative packaged it as "proactively conducting a market desensitization test," mentioning that "more will be bought back later," the move still caused a violent shock to the market. The reason is that over the past few years, Strategy and its founder Michael Saylor have consistently conveyed a core narrative to the market — Bitcoin is a long-term strategic reserve asset, and the company will obtain operating funds through capital market financing, rather than relying on selling Bitcoin.

Therefore, when the market saw Strategy actually sell Bitcoin for the first time, it inevitably triggered greater concerns — if the financing environment tightens in the future, will Strategy need to further rely on selling Bitcoin to fulfill its dividend obligations? If the answer is not an absolute no, then investors must reassess the risk level of the related securities.

From this perspective, behind the persistently "de-pegging" STRC is actually the market reassessing the robustness of Strategy's entire capital structure.

Strategy's Buying Pressure Could Turn into Selling Pressure

For Strategy, the biggest impact of STRC's sustained de-pegging lies in the weakening of its financing function.

Over the past few years, the core logic enabling Strategy to continuously expand its Bitcoin reserves has been to obtain funds from the capital market by issuing stocks, convertible notes, preferred stocks, and other securities, and then use the funds to increase Bitcoin holdings. STRC is precisely Strategy's most important financing tool. When it trades below the $100 target par value for a long time, it means the market is demanding higher risk compensation, and Strategy's financing capability will consequently enter a temporary shutdown.

Going forward, STRC's re-pegging status may become an important indicator for the market to observe Strategy's risk situation.If STRC remains at a discount for a long time, leading to persistently constrained financing capacity, while Strategy's cash reserves continue to deplete, then market concerns that Strategy may need to sell more Bitcoin in the future to meet dividend payment demands will inevitably intensify further.

Once this expectation strengthens, its impact will no longer be limited to STRC itself. As one of the most important marginal buyers in the Bitcoin market over the past few years, Strategy's financing capacity and accumulation pace have always profoundly influenced market supply and demand expectations. If Strategy's buying pressure turns into selling pressure, it could create unimaginable downward pressure on Bitcoin.