Arkham: Michael Saylor's STRC – a repeat of the LUNA crash?

➠ In short: not exactly. STRC shares have detached from par and crashed to $76.2 – roughly 25% below the base price of $100.

➠ STRC is Strategy's perpetual preferred stock with a dividend yield of 11.5% of par value. There are currently 104.89 million STRC outstanding. At an 11.5% rate, Strategy needs about $1.2 billion per year just to pay dividends.

➠ This week, Strategy had $1.4 billion in dollar reserves.

➠ Key difference from LUNA: Saylor is not legally obligated to pay these dividends. If Strategy runs into trouble, payments to STRC holders do not become a priority at all costs.

➠ STRC cannot "liquidate" Saylor. The price decline reflects not forced liquidation, but market fear that Strategy may be unable or unwilling to continue paying dividends.

➠ Investors may have started selling STRC due to doubts about future payouts, problems raising new capital, or simply moving into higher-yielding assets.

➠ For Strategy, this is not a fatal blow, but the long-term risk is growing: to keep STRC afloat, the company needs to pay about $1.2 billion per year.

➠ If MSTR investors decide their money is simply going to pay earlier STRC holders, demand for Strategy's stock could sag even more.

➠ Concerns are growing online that due to STRC's de-peg and MSTR's sharp drop, Strategy may be forced to sell BTC (❗️) to cover dividends or maintain its capital structure. Panickers are discussing a possible trap where selling BTC further pressures the price and adds to the pressure on the company's stock.