Author: Jae, PANews
The $100 denomination is the cornerstone of Strategy's funding magic.
In the past week, Strategy's perpetual preferred stock, STRC, fell below its $100 par value, hitting a low of $99.06. Trading volume plummeted to about 50% of the 30-day average, and it has continued to trade at a discount.
The efficiency of STRC's fundraising directly determines whether Strategy can continue to increase its holdings. If STRC falls below par value, it means Saylor's fundraising engine for buying Bitcoin will slow down.
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 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, MSTR shareholders will continue to benefit.
STRC is like a never-ending money-printing machine, supplying Saylor's Bitcoin empire with a constant stream of ammunition.
When STRC shares fell below par value, Strategy devised a surprising "bi-weekly dividend" strategy.
On March 23, Strategy announced a new ATM plan to sell up to $21 billion in common stock, $21 billion in STRC preferred stock, and $2.1 billion in STRK preferred stock, which boosted Bitcoin's price in April.
From early to mid-April, STRC trading volume continued to rise, reaching a peak last week (April 13-19). Strategy made a large purchase of 34,164 Bitcoins, worth approximately $2.54 billion, the largest purchase since November 2024 and the third largest in history.
However, STRC trading volume has been declining overall since last week, and the average daily trading volume this week has been almost halved compared to the 30-day average.
The $100 denomination is the central axis of STRC's entire financing flywheel. Only when the denomination reaches $100 will the conditions for issuing more ATMs be triggered, thus starting the printing press.
In early April, seeing "impressive sales," Startegy announced that it would maintain its dividend of 11.5%, ending its seven-month streak of 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 expressed doubt about the subsequent rise in Bitcoin's value.
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".
Furthermore, for preferred stocks like STRCs, which have strong bond-like characteristics, the persistently high benchmark interest rate means that the attractiveness of STRCs' high dividends is being diluted by the rise in risk-free interest rates.
When the price of STRC falls below face value, issuing more ATMs at market price becomes meaningless. Issuing at a discount will further depress prices, creating a vicious cycle.
With the final week of April approaching, if STRC fails to return to par value and fundraising remains stalled, this largest bullish force in the Bitcoin market may once again press the pause button. The Bitcoin market will then lose another $1-2 billion in weekly marginal buying support.
However, it is common for STRC to fall below par value. Historically, STRC has fallen by an average of 45 cents on the ex-dividend date (the trading day following the record date for dividend distribution) and it takes about 12 days to return to par value.
In response to this characteristic, Strategy acted swiftly and came up with another ingenious move.
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 bi-weekly cash flow returns can significantly reduce reinvestment lag for investors, making it more attractive to cash flow-sensitive retail investors and income-generating 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 ability to survive 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 the entry of new investors or by sacrificing the interests of MSTR 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 MSTR's shareholder 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 when participating in STRC transactions. While it nominally has a face value and fixed dividends, legally it is 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.
While the current high yield of 11.5% for STRC is tempting, it also carries the hidden risks of credit risk and liquidity traps. Liquidity is always the first principle of survival.
In the journey towards a "Bitcoin standard," the STRC falling below its par value will be a common occurrence. Ensuring the structural robustness of the financing machine while pursuing greater scale is the key to winning this long-distance race.
