The Chain of Transmission Behind the $1.5 Billion Liquidation: How Does STRC Forced Liquidation Impact the BTC Market?

On June 26, 2026, the crypto market experienced a violent leverage liquidation. Bitcoin broke below the key psychological level of $60,000, hitting a low of $58,000. According to Gate market data, as of June 26, 2026, BTC was quoted at approximately $59,800 USD.

The uniqueness of this decline lies in its driving mechanism—it was not simply a macroeconomic negative or a technical correction, but a complete transmission chain from corporate preferred stock to the spot Bitcoin market. The core anchor is a perpetual preferred stock named STRC, issued by a company called Strategy (formerly MicroStrategy).

Data shows that over the past 24 hours, total liquidations across the network reached $1.5B, with long positions liquidated at $1.21B and short positions at $288 million. Bitcoin single-currency liquidations reached $686 million, and Ethereum $360 million. Over 200k investors were forcibly liquidated. The Fear and Greed Index further slipped from 17 to 12, entering the extreme fear zone.

How Does the Transmission Chain Extend from STRC's Decline to Selling in the BTC Spot Market?

STRC is a variable rate Series A perpetual convertible preferred stock launched by Strategy in July 2025, with a face value of $100 and an annual dividend yield of 11.5%. Its core design logic is: when the STRC price is above face value, the company issues additional preferred shares through an ATM mechanism to raise funds for purchasing Bitcoin. This model operated smoothly during Bitcoin's upward cycle, forming a positive financing flywheel of "issuing preferred stock → buying BTC → asset appreciation → stock price increase."

However, when Bitcoin entered a downward channel, this flywheel began to spin in reverse.

The 90-day correlation coefficient between STRC and Bitcoin has climbed to nearly 0.70, a new high since its listing in July 2025. This means STRC is gradually losing its "quasi-fixed income" stability positioning, with volatility now matching or even exceeding that of the underlying asset itself.

The logic of the transmission chain is as follows: Bitcoin price decline → Strategy's Bitcoin holdings show increased unrealized losses → market questions STRC's dividend payment ability → STRC price falls below face value → company suspends ATM issuance, losing low-cost financing channel → forced to consider selling Bitcoin to pay dividends → market expects increased supply → further pressure on Bitcoin.

Each link in this chain was confirmed on June 26.

How Significant is the Financial Pressure on STRC and MSTR?

Strategy currently holds 847,363 Bitcoins, with a total purchase cost of about $64.1 billion and an average purchase price of approximately $75,651 USD. At the current price of around $59,800 USD, the market value of the holdings is about $53 billion, with unrealized losses exceeding $11 billion. More notably, all Bitcoins purchased in 2024, 2025, and 2026—whose costs are higher than the current price—are now in a loss position.

The price movement of STRC reflects the concentrated release of this pressure. As of June 26, 2026, STRC had fallen to $76, down 24% from its $100 face value. It touched an intraday low of $73.65. MSTR common stock fell below $90, hitting $86.72, a new low since February 2024.

The company's annual dividend obligation has surged from approximately $300 million at the beginning of 2026 to about $1.2 billion—a fourfold increase—while cash reserves have dropped by 38% over the same period. Dividend coverage has plummeted from over seven years to about 14 months. Cash reserves stand at only about $1.4 billion.

These numbers paint a clear picture: Strategy's financial leverage is tightening at an unprecedented rate.

How Does the Negative Feedback Loop Self-Reinforce and Amplify Market Volatility?

Once STRC fell below face value, the company was forced to suspend its ATM issuance plan. This means Strategy lost its core financing channel of raising funds through issuing preferred stock to buy Bitcoin. Meanwhile, the company still needs to pay approximately $1.2 billion in annual preferred stock dividends.

Driven by market panic, investors began to anticipate that the company might be forced to sell Bitcoin holdings to raise cash for dividend payments. This expectation itself puts pressure on Bitcoin's spot price—even if the company has not actually sold any Bitcoin yet.

More critically, the decline in MSTR's stock price further compresses the company's financing space. MSTR stock has fallen about 40% year-to-date in 2026. As the stock price declines, the cost of raising cash through additional stock issuance becomes higher. All funding pressure ultimately falls on the reserve asset—Bitcoin.

This is the core mechanism of the negative feedback loop: price decline → financial pressure increases → market expects selling → price declines further. Each cycle reinforces the next.

What Does the $1.5 Billion Liquidation Data Reveal About Market Structure?

Among the total network liquidations of $200k, long positions accounted for $1.5B, while short positions accounted for only $288 million. The long-to-short liquidation ratio was approximately 4.2:1, indicating that the market had accumulated a large number of leveraged long positions prior to this event.

Bitcoin single-currency liquidations were $686 million, and Ethereum $360 million. The largest single liquidation occurred on the BTC-USD contract on Hyperliquid, valued at approximately $38.0525 million. Over 200k investors were forcibly liquidated.

These data point to a conclusion: the market had accumulated significant leveraged long positions during the earlier consolidation, and the decline triggered by the STRC crisis just happened to trigger a concentrated liquidation of these leveraged positions. Forced liquidation of leveraged positions → spot market selling → price decline → more positions triggering liquidation formed a standard negative feedback loop.

Total market cap fell 1.6% in 24 hours, while total trading volume increased counter-cyclically by 1.8%. The pattern of falling prices with rising volume suggests that selling pressure has not yet been fully released. BTC's market cap dominance is as high as 55.8%, indicating a continued concentration of funds toward Bitcoin.

What Does the Fear and Greed Index Dropping to 12 Mean?

The Fear and Greed Index fell from 17 to 12, entering the deep zone of extreme fear. This reading is approaching the lowest historical levels since the index's inception.

Looking back, scenarios where the index fell below 12 are extremely limited. It touched 8 during the "Black Thursday" in March 2020; dipped to 6 after the Terra-Luna collapse in May 2022; and the bottom reading during the FTX crash in November 2022 was about 12. In February 2026, the index even touched an all-time low of 5.

From this perspective, the current reading of 12 is within the lowest 10% range since the index was created. However, extreme readings themselves are not directly equivalent to "the bottom is here"—historically, extreme fear readings can persist for weeks or even months.

Stablecoin market cap remains high (USDT + USDC over 12%), suggesting ample on-exchange liquidity but extremely low risk appetite. A large amount of capital is sitting on the exchange as "cash," waiting for clear entry signals.

How Does This Crisis Compare to Past Crypto Market Crashes?

Market narratives are highly focused on the STRC leverage crisis, with several KOLs comparing this crash to the Luna event. However, on a structural level, there are fundamental differences.

Luna's collapse originated from a design flaw in its algorithmic stablecoin—de-pegging triggered a death spiral, ultimately leading to the entire ecosystem going to zero. In contrast, the STRC crisis is essentially a stress test of corporate leverage during a Bitcoin downturn. STRC is a perpetual preferred stock listed on Nasdaq, and its price movement reflects the market's assessment of Strategy's ability to continue paying dividends.

Arkham explicitly stated that Strategy has no legal obligation to pay STRC dividends. Even if the company is in trouble, it does not face a Luna-style "liquidation" risk. This is fundamentally different from Luna's forced liquidation mechanism.

However, this does not mean the risk can be ignored. To maintain the existence of STRC, Strategy needs to pay $1.2 billion in dividends annually. If MSTR investors realize that their funds are being used to pay preferred stock shareholders, they may reduce their purchases of MSTR in the future. In the long run, this could cause continuous erosion of the company's capital structure.

Summary

The STRC leverage crisis reveals the increasingly tight coupling between corporate leverage and crypto asset prices. The discount on one company's preferred stock, through the complete transmission chain of STRC → MSTR → BTC, ultimately triggered $1.21B in long position liquidations across the network.

The core mechanism of this event is not complicated: Bitcoin price decline leads to expanded unrealized losses for Strategy (over $11 billion) → STRC falls 24% below face value → company suspends ATM issuance, limiting financing capacity → market expects the company may be forced to sell Bitcoin → selling pressure expectations further depress BTC price → more leveraged long positions are liquidated.

The Fear and Greed Index has fallen to 12, with the market in a state of extreme fear. But extreme fear itself does not constitute a bottom signal—it is merely a description of market conditions.

Key points to watch next include: the possible dividend rate adjustment for STRC on June 30; the volume and price action of Bitcoin in the $58,000 - $60,000 range; and whether the Fear and Greed Index rebounds. These variables will collectively determine whether this leverage liquidation is nearing its end or just beginning.

Frequently Asked Questions

Q: What is STRC? How is it different from regular cryptocurrencies?

A: STRC is a perpetual preferred stock issued by Strategy (formerly MicroStrategy) on Nasdaq, with a face value of $100 and an annual dividend yield of 11.5%. It is not a native on-chain token, but a corporate preferred stock listed on a traditional stock exchange. Its price is highly correlated with Bitcoin, with a correlation coefficient of 0.70.

Q: Why does the decline in STRC cause Bitcoin to fall?

A: The transmission chain is as follows: STRC falls → Strategy suspends ATM issuance (loses financing channel) → market expects the company may sell Bitcoin to pay dividends → selling pressure expectations depress BTC spot price → triggers leveraged long position liquidations → further price decline.

Q: How is the $1.5 billion in liquidations distributed?

A: Long positions liquidated $200k, short positions $288 million. Bitcoin liquidations were $686 million, Ethereum $360 million. The largest single liquidation was approximately $38.05 million.

Q: What does a Fear and Greed Index of 12 mean?

A: 12 is in the deep zone of "extreme fear," within the lowest 10% range since the index's inception. Historically, the index touched 8 in March 2020, 6 in May 2022, and 12 in November 2022.

Q: Will Strategy be forced to liquidate its Bitcoin holdings?

A: There is no forced liquidation mechanism. Strategy has no legal obligation to pay STRC dividends, and even if it doesn't, it won't face a Luna-style forced liquidation. However, maintaining STRC's existence requires paying about $1.2 billion in dividends annually, which could cause ongoing financial pressure on the company.