The "Money Printer" of Strategy: Is STRC Bitcoin's Savior or Destroyer?

Bitcoin has been volatile for over two months, finally showing signs of a breakout.

Leading the charge for Bitcoin is still the old friend Michael Saylor, who has now deployed a new weapon: STRC.

Flip through Saylor’s recent tweets, and you’ll find he almost daily posts content about STRC. AI-generated low-quality promotional videos featuring tropical pools and women holding cocktails send a clear signal: the man who pushed MSTR onto the NASDAQ altar is now applying the same marketing firepower to STRC.

Why is he doing this? Because STRC is currently the Strategy’s almost唯一 tool that can convert market funds into BTC buying pressure. Over the past three months, every large-scale BTC accumulation announced by Strategy has been funded by money flowing into STRC.

What is STRC?

STRC stands for Variable Rate Series A Perpetual Stretch Preferred Stock, a type of perpetual preferred stock issued by Strategy, which went public on NASDAQ last November.

Its operating mechanism roughly works as follows:

You spend about $100 to buy one share of STRC. Strategy pays monthly cash dividends, with an annualized rate of 11.5%, which is about 96 cents per share per month. It never matures, and Strategy does not need to repay principal.

The share price is anchored near the $100 face value through monthly adjustments of the dividend rate: if it falls below $100, the dividend rate increases to attract buyers; if it rises above $100, the dividend rate decreases, allowing the price to revert to face value. The maximum adjustment range for the monthly dividend rate is 25 basis points.

Only when STRC’s share price is above $100 can Strategy issue new shares at face value to raise funds—this is the premise of the entire flywheel. The proceeds from the issuance, after deducting dividend reserves, are mostly used to buy BTC.

Saylor calls this product “short-term high-yield credit,” or “Bitcoin-backed money market fund.” In the current environment with US Treasury yields around 3.5%, STRC offers a yield roughly three times that of Treasuries.

The Flywheel

A common misconception about Saylor is that he is printing money infinitely to buy BTC.

He cannot. Saylor cannot print money out of thin air; he must wait for the market to deliver funds into his hands. Every additional share of STRC issued presupposes genuine marginal buyers willing to purchase at $100.

Buyers of STRC are essentially engaging in a credit “transaction.” The 8% yield above government bonds offered by STRC is compensation for the “Strategy credit risk.”

However, many STRC buyers are unaware that their purchase funds are indirectly tripled and flowing into BTC.

Strategy has a publicly stated financial goal: a 33% leverage ratio.

In the company’s funding structure, perpetual preferred stocks like STRC, STRF, and STRK account for about one-third, with the remaining two-thirds coming from MSTR common stock. Saylor calls this principle “intelligent leverage.” This means that whenever Strategy raises $1 through STRC, to maintain the 33% leverage line, they must also issue about $2 of MSTR to invest in BTC. $1 STRC + $2 MSTR = $3 BTC buying pressure.

On April 14, Strategy raised about $1 billion in a single day via STRC. With a 3x leverage, that corresponds to about $3 billion in BTC buying pressure, perfectly matching the scale of BTC accumulation in the first two weeks before April’s ex-dividend date.

When BTC falls, collateral shrinks, and credit risk for STRC rises, Strategy must raise the dividend rate to compensate for the increased risk. But higher dividends mean greater cash flow pressure and higher default risk. This creates an unstable feedback loop. During the BTC plunge from $120k to $60k in October last year, STRC’s dividend rate was raised from 7% to 11.5%, barely pulling the buying pressure back.

Conversely, when BTC stabilizes and rises, collateral increases, credit quality improves, and at the same dividend rate, STRC becomes more attractive, further boosting demand. BlackRock’s Preferred and Income Securities ETF listed Strategy’s preferred stock as its second-largest holding in April, with market value rising from about $200 million in March to $344 million, directly endorsing Strategy’s current credit status.

Strategy’s flywheel has turned positive: more funds buy STRC → Strategy amplifies BTC purchases 3x → BTC price is supported → STRC’s collateral base becomes more solid, credit spreads compress → at the same dividend rate, STRC becomes more attractive → more funds buy STRC.

Ex-dividend Arbitrage

The dividend mechanism of preferred stocks differs from bonds. Bonds accrue interest daily; you earn a day’s interest just by holding one day. Preferred stocks pay dividends on fixed dates in a lump sum. For STRC, as long as you hold the stock at the close on the day before the ex-dividend date, you receive the full $0.96 monthly dividend.

This creates a clear arbitrage window: buy just before the ex-dividend date, collect the dividend, then sell the next day. Data from the past few months shows that STRC’s average decline after the ex-dividend date is about 20 cents, far less than the $0.96 dividend itself. A single arbitrage trade can net roughly $0.40 to $0.50 per share.

Arbitrageurs won’t miss this opportunity.

As shown in the chart, trading volume begins to rise in the week before the ex-dividend date, peaks on or the day before, then quickly subsides afterward. The volume surge in April was much steeper than in March, indicating increasing participation in STRC ex-dividend arbitrage.

However, such arbitrage activity may not be entirely positive.

For STRC itself, the two to three weeks after the ex-dividend date tend to enter a “dead zone”—liquidity shrinks, bid-ask spreads widen, and the share price remains below $100 for a long time. This repeated deanchoring erodes STRC’s role as a “money market product,” pushing it toward a more bond-like, monthly volatility profile.

For Saylor, his BTC buying can be easily front-run by arbitrage funds. Since STRC issuance concentrates in the two weeks before the ex-dividend date, his BTC purchases are also focused in this period.

Now, arbitrage traders flood in each month at the same time, knowing Saylor will use that money to buy BTC in the spot market. They can buy BTC early, push up the price, then sell at a profit after Saylor’s buying drives the price higher.

In recent weeks, Coinbase’s spot premium around STRC ex-dividend dates has risen significantly.

Solutions include changing the dividend frequency—such as from monthly to biweekly—to share arbitrage gains more evenly; or launching a more primitive, more frequent dividend derivative product to disperse concentrated arbitrage activity.

Indeed, Saylor acted swiftly, announcing on Saturday that Strategy submitted a proposal to change STRC’s dividend payment from monthly to biweekly, with the same annual dividend obligation and rate.

If approved, the first biweekly dividend will be paid on July 15.

Bitwise advisor Jeff Park pointed out that no corporate bonds currently pay dividends semiweekly, and retail investors’ preference for higher-frequency payments has been validated by the success of weekly dividend ETFs.

More deeply, Jeff Park sees this as a milestone in the crypto industry’s “streaming payment” vision penetrating traditional capital markets: the frequency of interest payments essentially reflects the efficiency of converting monetary energy into kinetic energy. The digital currency era should break the artificially set time cycle limits.

He believes STRC sets a new benchmark for traditional companies and is optimistic about future evolution toward daily and even real-time payments.

DeFi’s New Narrative

The emergence of STRC injects new vitality into the dull DeFi market.

Over the past year, yields on stablecoins in DeFi have been declining. Deposits on Aave’s stablecoins yield about 2% annually; Ethena’s USDe and Sky’s USDS are below 4%; even Pendle’s main stablecoins’ PT struggles to break 6%. These yield levels, coupled with the risk exposure of smart contracts in the AI era, have discouraged many DeFi veterans.

DeFi needs a credible, sizable yield source to bring TradFi funds back on-chain, and STRC offers just that opportunity.

Two projects are attempting to package STRC’s yield on-chain:

Apyx Protocol uses a dual-token model. apxUSD is the base stablecoin, backed by STRC, preferred stocks like SATA, and US Treasuries with excess collateral; apxUSD is a staking version that captures underlying dividend and interest income, currently with an annualized yield of about 12.78%. Its supply has reached $130 million, with corresponding yield and leverage products available on Pendle and Morpho.

Saturn Credit’s sUSDat is a staking interest-bearing stablecoin that captures STRC’s yield. The protocol’s TVL surged from zero to over $72.6 million in just over a month.

According to Pendle’s market data, PT-sUSDat’s current annualized yield is 9.2%.

Success and Challenges

The more successful Saylor’s carefully designed financial machine runs, the more difficult a problem becomes to ignore.

Strategy’s current BTC holdings are approaching 3.5% of the total supply, and the accumulation continues at tens of billions of dollars per month.

What was Bitcoin’s original value proposition? A decentralized, entity-independent, manipulation-proof monetary asset.

When a listed company’s perpetual preferred stock becomes the primary marginal buyer of BTC—an asset that is decentralized, entity-independent, and manipulation-resistant—has Bitcoin begun to diverge from its original form?