STRC drops to a historic low, Saylor's perpetual motion machine stalls.

Article: Little Cake, Deep Tide TechFlow

Last July, Michael Saylor used a clever analogy when pitching STRC to Wall Street: it’s a "digital credit engine." Investors buy this preferred stock, receiving a high dividend yield of 11.5% annually; Strategy uses the raised funds to buy Bitcoin; as Bitcoin rises, STRC remains stable around a face value of $100; the company continues to issue more shares and buy more coins. Capital circulates endlessly within this closed loop, with every participant being a winner.

In less than a year, this engine has stalled.

On June 19, STRC dropped to $85.32 intraday, hitting a new all-time low. The previous trading day, it briefly touched $82.53, more than 17% below face value. RSI fell to 24, entering an extreme oversold zone. Trading volume surged to nearly 8 million shares, far exceeding the average daily volume of 3.6 million shares.

For a preferred stock designed to "stay near $100," dropping to $85 indicates that the underlying logic is loosening.

What kind of machine did Saylor build?

To understand the collapse of STRC, we first need to understand its purpose.

STRC’s full name is "Variable Rate Series A Perpetual Stretch Preferred Stock." It was listed in July 2025 at an issuance price of $90, issuing about 28 million shares, raising $2.5 billion. Its dividend rate is adjusted monthly, currently set at 11.5%. The design goal is clear: through a floating interest rate mechanism, keep STRC trading close to its $100 face value.

When STRC trades above $100, Strategy can continuously issue new shares via an ATM (at-the-money) offering plan, converting the premium into cash, then pouring all of it into Bitcoin. This is the core gear of Saylor’s capital machine: common shares of MSTR absorb Bitcoin’s volatility, while STRC continuously generates ammunition.

In April this year, Strategy boasted in an agency statement about the machine’s data: STRC’s market cap is $6.4 billion, with a 30-day average trading volume of $339 million, and a volatility of only 1.7%. Saylor called it a "non-cyclical financing tool," meaning it can operate regardless of Bitcoin’s price movements.

Reality delivered a loud slap.

Triple Impact

The collapse of STRC is driven by three mutually reinforcing forces.

First, Bitcoin’s price halved. BTC fell from its all-time high last October to around $63,000 now, a decline of over 50%. On June 17, the new Fed Chair Kevin Warsh’s first FOMC meeting signaled a hawkish stance, with dot plots showing nine officials expecting rate hikes by 2026, and PCE inflation expectations raised to 3.6%. Forward guidance on interest rates was completely canceled. On that day, Bitcoin decoupled from US stocks; the S&P 500 and Nasdaq surged on news of peace between Iran and the US, but BTC declined against the trend.

Second, dividend coverage is under pressure. In May, Strategy repaid $1.5 billion of convertible bonds due in 2029. This move directly shortened STRC’s dividend coverage period from 24 months to about 7 months. For 28 million shares of STRC, with an 11.5% annual dividend rate based on a $100 face value, the annual cash dividend exceeds $320 million. As cash reserves shrink, market doubts emerge: where does the money come from?

The answer was revealed on June 1. Strategy disclosed that between May 26 and 31, the company sold 32 Bitcoin at an average price of $77,135, cashing out about $2.5 million to pay STRC dividends.

This was Saylor’s first Bitcoin sale since 2022.

32 BTC, insignificant compared to Strategy’s total holdings of 840k BTC, accounting for less than 0.004%. The amount was only $2.5 million. Saylor explained it as "vaccination," a proactive sale to get the market used to it and eliminate panic expectations.

The market didn’t buy it. MSTR fell over 4% after hours. Investors’ logic was simple: when someone who promised "never to sell Bitcoin" begins to sell, no matter how much, faith begins to crack.

Third, competitors like Strive’s SATA are stealing STRC investors. SATA, also a Bitcoin-backed preferred stock, is currently trading near its $100 face value, with an annualized yield of about 13%, higher than STRC’s 11.5%. More importantly, since June 16, SATA has been paying dividends daily, far more frequent than STRC’s semi-monthly payments. Strive has no outstanding debt, and SATA holds the highest priority in the capital structure, not competing with convertible bondholders for cash flow.

The price gap between STRC and SATA has widened to about $15, a record. Both are Bitcoin-backed high-yield preferred stocks—one at face value, the other trading at a 17% discount. The market is voting with its feet.

Reverse Flywheel

The chain reaction triggered by STRC falling below face value is exactly the mirror image of Saylor’s capital machine design.

The positive cycle: STRC above $100 → ATM issuance → cash inflow → Bitcoin purchase → Bitcoin rises → STRC stabilizes → continued issuance.

The reverse flywheel: Bitcoin falls → STRC drops below face value → ATM halts → financing channels close → forced sale of Bitcoin to pay interest → market confidence erodes → STRC further declines.

Strategy has already paused the premium issuance plan for STRC. This means the company has lost an important tool for Bitcoin acquisition. Meanwhile, options markets show increased bearish activity on STRC.

Saylor’s counterargument also has some logic: he recently calculated that for every Bitcoin sold to pay interest, Strategy can buy back 10 to 20 coins through other capital operations. The entire model only requires a 2.3% annual Bitcoin price increase to operate perpetually. Currently, Strategy holds over 840k BTC, with an average cost of about $75,540, and the current price is $63,000, resulting in an unrealized loss of over $10 billion. In Q1, it recorded a net loss of $12.54 billion.

Mathematically, Saylor’s reasoning may hold water. The problem is, the market never only looks at math. When the price signals of STRC continue to worsen, and the narrative of "selling Bitcoin to pay interest" replaces the belief of "never selling," no matter how sophisticated the model, capital outflows cannot be stopped.

STRC Testing Faith

STRC dropping to $85 does not threaten Saylor’s survival. Preferred stock ranks above common equity in the capital structure but below debt, so bondholders are unaffected. The 840k BTC Saylor holds are not at risk of forced liquidation.

What is truly being tested is a more fundamental question: can the Bitcoin Treasury Company model sustain its financing machine in a bear market?

Last year, STRC was Saylor’s proudest invention—a financial product that allowed traditional fixed-income investors to participate in the Bitcoin narrative. Today, it has become a mirror, reflecting the fragility of leverage strategies in counter-cyclical environments.

Bitcoin only needs to rise by 2.3% to restart this machine. But in the current environment—where the Fed signals hawkishness, rate hike expectations reignite, and the Fear & Greed Index drops to 22 (extreme fear)—that seemingly insignificant 2.3% carries more weight than ever.