STRC slide strains Michael Saylor’s Bitcoin dividend plan

Strategy’s perpetual preferred, STRC, fell to an intraday low of $82.61 on June 18 and closed at $88.59. The intraday trough was about 17% below the $100 stated amount and implied a market yield near 13.9%; the close implied an effective yield near 13.0% on the security’s advertised 11.50% annual dividend, payable semi-monthly in cash.

On the same day, MicroStrategy common stock (MSTR) traded at $112.53, down 3.4%, while Bitcoin traded near $62,730, about 2.5% lower. STRC was issued as perpetual preferred equity with dividend mechanics that the issuer intended to adjust monthly to target par; Strategy’s prospectus warns that raising the dividend when the security trades below par may not restore the price and that the company has no legal obligation to maintain par.

STRC has roughly $10.5 billion of notional outstanding. At an 11.5% coupon, annual STRC-only dividend obligations are about $1.21 billion. If the dividend rate were raised to 14% while that notional remained outstanding, the annual cash cost would approach $1.47 billion.

Market participants pointed to trading dynamics and structural leverage as factors that amplified the price move. Ryan Haczynski, head of protocol partnerships at GlobalStake, noted that on-chain STRC derivatives and tokenized share products had been buying and tokenizing STRC while larger market participants built significant short positions. As STRC spent months trading near par, some investors added leverage; Haczynski described margin calls and forced liquidations as amplifiers when price weakness breached key levels. He also referenced public comments that artificial-intelligence tools were used in structuring the instrument.

Criticism of STRC intensified after the price swing. Investor Peter Schiff described the structure as “the most obvious Ponzi,” arguing that payments from new capital support distributions to existing holders. Strategy’s filings classify STRC as perpetual preferred equity with discretionary dividend mechanics and disclose the risk that rate increases may not restore par.

Strategy disclosed balance-sheet actions in late May and early June. The company sold 32 BTC between May 26 and May 31 for about $2.5 million to help fund preferred distributions, then purchased 1,550 BTC for $101.3 million. Total Bitcoin holdings were reported at 845,256 BTC as of June 7, and the company reported a U.S. dollar reserve of $1 billion.

Potential responses outlined by market participants include raising the STRC dividend, issuing MSTR shares to raise cash, buying back discounted STRC, or allowing the security to trade to a new market level. Each option involves trade-offs: higher dividends raise cash obligations; issuing MSTR preserves Bitcoin holdings but dilutes common shareholders; buybacks use cash that could fund dividends or Bitcoin purchases. Analysts have listed opportunistic buybacks, a larger dollar reserve, or a clear plan to generate yield beyond relying solely on Bitcoin appreciation as measures that could affect STRC’s pricing.

If STRC’s market pricing settles at higher implied yields, the security could trade as a higher-yield, credit-like instrument and require different conditions for recovery. The June 18 price swing highlighted the interaction of dividend mechanics, market leverage and Treasury Bitcoin holdings in the structure of a large, Bitcoin-backed preferred security.