Strategy's STRC Preferred Shares Sink to Record Low as Leveraged Selling Snowballs

Strategy's STRC preferred shares slid to a new all-time low this week, changing hands in the $73–$78 range and extending a decline that started in mid-June. After spending months trading close to their $100 par value, the shares were at $82.60 on June 18. By Wednesday, STRC set a fresh low, then fell another roughly 10% on Thursday. That leaves the security down about 25% from par in less than two weeks. Jesse Myers, head of Bitcoin Strategy at The Smarter Web Company, said the move looks like a liquidation-driven "leverage cascade" rather than a deterioration in fundamentals. In his telling, the long stretch near par encouraged leveraged buying on the assumption the price would stay above $95. Once the shares started slipping, aggressive shorting by hedge funds helped trigger margin calls, accelerating forced selling. Posting on X under the handle Croesus_BTC, Myers wrote that the day's trading reflected "a clear liquidation cascade" that "rapidly push[es] prices lower," setting off additional liquidations. On the balance-sheet side, Strategy says its bitcoin holdings give it ample capacity to fund preferred dividends. The company reported holding 847,363 BTC in a June 22 update and said it had also lifted its USD Reserve to $1.4 billion. Against that, total debt and preferred obligations are roughly $8 billion. On June 17, Strategy said its BTC reserve equates to 32 years of dividend coverage at current rates, and potentially indefinite coverage if bitcoin appreciates about 2% per year. STRC's current dividend rate is 11.50% annualized. Strategy moved to semi-monthly dividend payments this month, with the first record date under the new schedule set for June 30. At current prices, the math looks more compelling for new buyers. With STRC trading around $73–$78, the effective yield is roughly 15–16%, based on an $11.50 annual dividend on a $100 par security now priced at a steep discount. Myers framed the upside case from $82.60 on June 18: investors at that level were earning about a 13.7% effective yield, plus roughly 18% potential price upside if the shares returned to par. With the stock lower, both the implied yield and potential rebound to par are larger. Myers also pointed to the possibility Strategy could lift the dividend rate on June 30, potentially to 11.75% or 12%, which would further boost the effective yield for investors who bought the dip. Another potential support, he said, is open-market repurchases of STRC funded by proceeds from new MSTR share issuance. Because MSTR trades at a premium to Strategy's net asset value, buying back discounted preferred shares could be accretive to MSTR holders without shrinking the company's bitcoin holdings. Michael Saylor retweeted a June 22 post from an investor who said they bought $1 million of STRC and planned to hold until the shares return to par. Bitcoin traded near $59,000 on Thursday, down more than 2% on the day, according to CoinGecko. MSTR shares have also fallen sharply alongside bitcoin, retreating from highs above $300 earlier this year. Lower bitcoin prices reduce the mark-to-market value of Strategy's collateral, even as management maintains that dividend coverage remains substantial. The next key date is June 30, the first semi-monthly record date and the point at which Strategy could announce a revised dividend rate. A hike would increase the effective yield for current holders and may help attract new buyers to a security trading about 25% below par. In a June 24 post, Saylor described STRC as "income for investors who believe in Bitcoin." As of Wednesday, the company had not issued a public statement specifically addressing the selloff.