Comprehensive Breakdown of STRC: Strategy's New Money-Making Magic for Buying Coins

Author: Viktor

Compiled by: Azuma, Odaily Planet Daily

Over the past two weeks, we’ve seen a significant increase in STRC trading volume, and its popularity on social media platforms like X continues to grow. Therefore, I believe now is a good time to write an article about Strategy and its new structure. This is my fourth article discussing Strategy and its Bitcoin treasury model:

• The first introduced the gameplay of Strategy, clarifying some common misconceptions about the model.
• The second explained the “full-stack treasury company” model and the mechanism supporting its NAV premium.
• The third detailed the preferred stock approach, a new model launched by Strategy in 2025, which is also the company’s current main strategy.

In this article, we will focus on STRC. It has now become MSTR’s primary preferred stock product and is also the current core focus of Michael Saylor (Strategy founder) and his management team.

TL;DR

2. STRC is a yield-generating instrument backed by Strategy’s Bitcoin treasury, with a dividend rate that dynamically adjusts to keep the price close to par ($100). Currently, you can earn an annualized yield of 11.5% (paid monthly) on a relatively stable and transparent risk profile.
3. Essentially, STRC converts Strategy’s yield demand into structural buy pressure on BTC. As long as Strategy runs both STRC and MSTR’s ATM issuance mechanism (and mNAV > 1), this structure can expand massively without increasing MSTR’s leverage level. This means Strategy can absorb hundreds of billions of dollars (or more) of new demand for STRC while maintaining leverage around 33% and keeping credit risk unchanged.
4. Using the common stock ATM mechanism to maintain leverage, each $1 of STRC issued roughly corresponds to $3 of BTC added to the treasury. Rough estimates suggest that when STRC trades near par ($100) with a daily volume of $100 million, it could generate $100–150 million in BTC purchases.
5. Strategy effectively splits BTC’s risk exposure into two tranches: STRC holders enjoy relatively stable, low-volatility returns, while MSTR shareholders bear the residual upside and volatility of BTC. As Lavoisier said, “Nothing is created, nothing is destroyed, everything is transformed.”
6. The entire structure aims to increase the amount of Bitcoin per share over time. Ultimately, this benefits MSTR common shareholders, as it implies that MSTR’s performance should mechanically outperform BTC in the long run.
7. Short-term, STRC may experience 5–10% dips, but as long as market confidence in the structure remains, arbitrage will typically bring the price back near par.
8. The real risk isn’t a sudden collapse but a prolonged bear market in BTC, which could gradually pressure the entire structure over time. Even in the worst-case scenario—highly unlikely—its development would be very slow due to USD reserves and Strategy’s flexibility in adjusting dividends.
9. If Strategy ultimately fails, it’s unlikely to do so in a dramatic, Luna/UST-like fashion; more probably, it would be a slow, long-term deterioration.
10. If you are bullish on BTC but bearish on MSTR and STRC, that’s logically inconsistent. Given Strategy’s current risk profile (which could change in the future), if BTC doesn’t “die first,” Strategy is unlikely to fail first.

What is STRC, and how does it work?

First, let me briefly review the concept of preferred shares: they are financial instruments similar to debt but legally classified as equity. This means these preferred shares never need to be “repaid,” and Strategy cannot default on them.

In the capital structure, preferred shares rank above MSTR’s common stock, meaning in bankruptcy they are paid out before common shareholders.

So far, Strategy has issued five types of preferred stock (STRF, STRC, STRK, STRE, STRD). I covered each in my previous article. Here are the main features of STRC (also called Stretch):

• It belongs to the “short-duration high-yield credit” category.
• Strategy aims to keep STRC’s price as close to $100 (par) as possible, ideally within a 1% fluctuation range of 99–100 USD.
• STRC pays a floating dividend monthly; current dividend rate is 11.5%.
• If STRC trades significantly below par, Strategy can increase the monthly dividend to make the product more attractive, boosting demand until the price returns near $100.
• If STRC trades above $100, Saylor can issue new shares at $100 via ATM, effectively creating a price ceiling around $100.
• If Saylor prefers not to issue new shares via ATM, the company can also redeem STRC at $101, which discourages market participants from buying above that level.
• Like other preferreds from Strategy, STRC is a perpetual preferred stock—no maturity date, no redemption deadline.

Odaily note: All data on STRC can be found at Strategy.com. The screenshot below is from March 13, 2026, a ex-dividend date, so STRC’s price was below par.

How does Strategy use ATM to control leverage?

Although Strategy’s preferred shares are not debt legally, they can be viewed as a way to introduce leverage into the balance sheet. Strategy distinguishes between leverage ratio and amplification ratio—where leverage ratio considers “convertible bonds / BTC reserves,” and amplification ratio considers “convertible bonds + preferred stock / BTC reserves.”

In fact, the amplification ratio is the true measure of Strategy’s leverage level. Every time Saylor issues and sells new STRC, the leverage increases. To reduce leverage, the main tool is the ATM issuance of common stock—issuing new MSTR shares and using the proceeds to buy BTC, expanding the company while lowering leverage.

This logic is straightforward: suppose a company holds $10 billion in BTC and has $3 billion in debt, with a market cap of $12 billion. Its leverage ratio is 30% (debt / BTC value). If it issues $2 billion in new shares and uses that to buy $2 billion in BTC, the new BTC treasury value becomes $12 billion, debt remains $3 billion, and leverage drops to 25% (debt / BTC).

This example clearly shows that through ATM issuance of common stock, a company can grow its size (market cap from $12B to $14B) while reducing leverage from 30% to 25%.

Is Strategy actively using STRC to buy BTC?

How does STRC demand translate into BTC buy pressure?

As I mentioned, Saylor only sells STRC at $100, not below.

This means that when the price is below $100, all trading volume is just existing, past, and new holders exchanging STRC shares among themselves. When the price hits $100, part of the volume still involves regular STRC trading (some sellers at $100), but the remaining volume reflects Saylor issuing new shares at $100 to meet excess demand.

Last week, the weekly trading volume of STRC was about 40% of the ATM size for that week. I’ll use this figure in examples, but it’s not fixed; in some cases, it could be 25% or 60%.

When STRC trades near par with a daily volume of $100 million, roughly Saylor can issue 40% of that volume via ATM—i.e., $40 million worth of new STRC—and immediately use that to buy BTC.

Odaily note: ATM activates when STRC hits $100.

However, selling STRC increases the company’s leverage (similar to debt), which Saylor would want to keep stable. Currently, Strategy’s leverage is about 33%, and I believe he aims to keep it around that level. This means that each $1 of new debt from STRC issuance should correspond to about $3 of BTC reserves. In the previous example, if Saylor issues $40 million of STRC and uses that to buy $40 million of BTC, he still needs to add another $80 million of BTC to the treasury to keep leverage stable.

How does he do that? As explained earlier, by issuing and selling additional MSTR shares via ATM and using the proceeds to buy BTC. So, Saylor would issue $80 million of new MSTR stock and buy $80 million of BTC immediately.

Thus, roughly, a daily $100 million STRC volume corresponds to about $40 million of new STRC issuance and about $120 million in BTC purchases. Through STRC, Strategy converts demand for stable income into BTC buy pressure.

What if demand for STRC explodes?

Would Saylor be forced to push leverage to the limit?

Note that, according to this model, Strategy can expand STRC’s market cap threefold (adding roughly $80 billion of debt at current $40 billion market cap) without increasing leverage (i.e., credit risk). Saylor has all tools needed to scale STRC to meet market demand while keeping leverage stable at 33%.

This would increase the nominal debt and dividend obligations, but these scale with BTC treasury size, so Strategy bears no additional risk related to BTC price fluctuations.

What is the real limit of this strategy?

The combined ATM mechanisms for STRC and MSTR require two conditions:

1. STRC’s trading price must be at $100. When this occurs, it indicates demand exceeds current market cap, prompting Saylor to issue new shares to meet excess demand.

2. mNAV must be above 1 to use the common stock ATM. I explained in another article that Strategy’s core goal is to increase BTC per share over the long term. When mNAV > 1, selling MSTR shares and buying BTC is accretive; the higher the mNAV, the more beneficial. When mNAV = 1, the operation is neutral; below 1, it’s dilutive, so they avoid it.

You might notice that using MSTR ATM can both expand the company and reduce leverage. But if mNAV > 1, using the ATM of common stock also increases bps (bitcoin-per-share) ratio.

By the way, mNAV is displayed directly on Strategy.com’s homepage. They use the most diluted mNAV as reference, which is correct. Currently, it’s about 1.2x, with a minimum since 2026 around 1.0x.

What if demand for STRC becomes so high that Saylor issues new shares, but mNAV drops below 1? Would that prevent him from using MSTR ATM to keep leverage stable, forcing him to increase leverage?

I think that’s unlikely because stable trading near $100 indicates investor confidence in the structure, so mNAV should be at least above 1.0. Also, they have another tool: lowering dividends.

Can the dividend rate of 11.5% be sustained?

Initially, STRC’s dividend was 9%. The dividend rate is adjustable to match demand and keep the price near par.

Strategy’s current guidance is: if the monthly VWAP is between $95–$99, they will raise the dividend by 25 basis points; if below $95, by 50 bps; if above $101, they will lower it.

So far, they’ve been gradually increasing the dividend from 9% to 11.5%, balancing the structure to keep STRC trading around $100. This week marked the most successful week for STRC: it traded consistently near par with very high volume (~$300–$400 million daily, compared to previous ~$100 million).

Odaily note: Chart of STRC since launch.

Demand for STRC fundamentally depends on variables:

• Credit risk: What is Strategy’s current leverage? How much BTC supports STRC? This depends on BTC’s price—if BTC drops, leverage rises, credit risk increases, and demand for STRC declines (price drops).
• Yield: What is the current dividend yield? Higher yield boosts demand.
• Awareness: How many know about STRC? Early months/years are critical; awareness tends to increase over time, boosting demand.
• Confidence: After months of trading and dividend payments, how many are willing to invest? Confidence can change rapidly—if STRC trades in a narrow range near $100, more will see it as safe; a sudden 10% drop in a day can erode trust quickly.

Since launch, we see: credit risk increased (BTC down 45% from all-time high), yield increased, awareness increased, confidence increased. One factor negatively impacted demand, but three others positively, leading to an “ideal” state: STRC stabilizes near $100.

At BTC around $68,000, an 11.5% yield corresponds to the dividend needed to keep the price at par. For a product less than 8 months old, this is quite positive. Saylor expects BTC to grow at a 20–30% CAGR over 20 years. As explained elsewhere, issuing debt at 11.5% to buy an asset growing at 25% annually is reasonable. In theory, higher rates could be paid, exploiting the spread between interest and BTC’s expected return.

The most likely scenario is demand for STRC continues to grow, and Strategy gradually lowers dividends back to 10% (or even lower long-term), reducing company interest costs while controlling demand.

What if everyone wants to sell?

The price would plummet! But we’ve seen similar situations before: in August 2025, STRC dropped from $98 to $92 (6% decline); during the November market selloff, it fell from $100 to $89 (11%); and in February this year, from $100 to $93 (7%).

Saylor’s clear goal is to keep STRC near $100, and it’s a core focus. If the average price falls below $99 for a month, Strategy will raise dividends to restore demand and support the $100 level. As long as market participants trust the mechanism, buyers will step in on dips, seeking arbitrage profits from “return-to-par” trades.

In the short term, panic may cause a 10% drop, but confidence in the structure usually restores the price to near par within days or weeks—just as we’ve seen before.

Why won’t dividends rise infinitely?

Suppose STRC can’t return to par, forcing Strategy to keep raising dividends… with no upper limit, does that lead to a “death spiral”?

Not necessarily. First, the “guidance” on dividends is not legally binding; Saylor has full discretion. They can stop increasing dividends if the monthly average price drops below $99.

If BTC is expected to grow 20–30% annually, they likely have a “maximum acceptable dividend rate,” perhaps around 15%. Once that is reached, they will ignore the trading price and stop raising dividends.

Remember, dividends can be adjusted monthly. If BTC recovers after a bear market, higher dividends aren’t needed forever. As BTC’s price rises, credit risk improves, increasing demand for STRC and pushing its price back toward par. Then, Strategy can lower dividends again. Over the long term, even if dividends spike temporarily to 13%, they are likely to settle back around 8%.

Next, I’ll outline the worst-case scenario: prolonged bear market in BTC forcing continuous dividend hikes.

Understanding risks

While the article suggests little risk, nothing is free. As a holder of STRC, what are the actual risks?

Let me clarify: I believe the market currently undervalues STRC’s risk, given a reasonable bullish view on BTC. But risk exists and is always linked to BTC’s performance.

There’s a mismatch between expectations for BTC’s future price and perceived risk of STRC. Most crypto-native investors expect BTC to perform well over the next few years, with 95% of scenarios not materially affecting STRC. They believe they can earn over 10% with “low risk” within their BTC outlook. But let’s examine the specific risks.

Downside risk and asymmetric upside

STRC’s structure caps upside at the dividend yield (~11.5%), but downside can be 0–10% in days, based on historical prices.

This means a 6% drop in a week results in roughly half a year’s dividend loss. If you need to exit quickly, that’s a concern.

For long-term holders confident it will eventually return to $100, this is less critical—they can exit at no discount. Note that STRC dividends are return-of-capital, so they’re not taxed as income, reducing short-term trading incentives.

BTC and STRC decline together

STRC’s credit risk is directly tied to BTC price. During major BTC sell-offs, STRC often declines as well, meaning the “stable income” component suffers when crypto is most vulnerable.

Long-term trading at a discount

Market trust in STRC returning to par depends on actual credit risk and historical price behavior. If everyone expects a quick 5% bounce but it doesn’t happen, confidence erodes, potentially triggering larger sell-offs.

A scenario: STRC drops 15% over days and can’t rebound. Confidence built up may be lost, leading to further declines.

What can prevent this? The answer is BTC’s price. Saylor’s strategy hinges on BTC’s ability to deliver >20% annual returns over the next decade.

Worst-case: fundamental risk is BTC’s performance

The worst scenario is BTC remains in a long-term bear market, unable to recover strength. Many variables make precise prediction difficult, but roughly:

• STRC trades persistently below par, prompting monthly dividend hikes to restore demand.
• Eventually, dividends become unreasonably high, and Saylor stops increasing them, just maintaining a certain level.
• This weakens market confidence, and STRC trades at large discounts (e.g., 40%), with high dividend yields (~15%), implying effective yields of 25%.
• MSTR’s market price drops below 1x mNAV, limiting its ability to raise cash via stock issuance.
• Strategy relies on USD reserves to pay dividends; currently, reserves cover about 28 months.
• As reserves deplete, they may need to sell BTC or derivatives, risking further declines.
• Annual dividend payments (~$1 billion) could rise to $2 billion, requiring monthly BTC sales of ~$200 million.
• If reserves run out, dividends may be suspended, causing further declines in preferred stock, STRC, and MSTR, with BTC prices also falling.

This is the rough outline of the worst case. Notably, USD reserves provide a buffer—enough to pay dividends for over two years without action.

Currently, BTC is in mid-bear market (~$70,000, down ~45% from top), STRC trades near par (dividend yield 11.5%), and mNAV is 1.2x. Given I don’t expect a two-year bear, and Strategy hasn’t yet used reserves, the overall structure appears quite resilient and safe at current leverage.

Long-term concern: Strategy’s model might be too successful

As I mentioned yesterday on X, the biggest risk for a BTC bull is—it might run too well.

“Strategy’s biggest short thesis is that it might become too large, polluting BTC’s ‘pure’ narrative. This is already happening.”

Strategy owns about 3.5% of BTC’s supply, which could negatively impact future demand by undermining BTC’s decentralization narrative. The high-yield “digital credit” narrative around STRC has also faced criticism, possibly affecting demand indirectly.

As explained, Strategy’s BTC holdings will keep increasing. The only scenario where this doesn’t hold is if BTC endures a two-year painful cycle, which would require a prolonged bear market.

I understand some discomfort with Strategy’s role in BTC’s ecosystem. But if that alone is enough to turn you bearish on BTC, perhaps you never truly believed in BTC’s long-term prospects. From my perspective, it’s not a major issue. Yes, Strategy holds 3.5% of BTC supply, but ultimately, it’s owned by its shareholders.

Is this very different from BlackRock’s IBIT holding a similar BTC stake? Not entirely—IBIT has no bankruptcy risk, but both represent financialized BTC, an inevitable trend.

I don’t see Strategy and STRC as systemic risks to BTC, but I do acknowledge they could influence its narrative negatively. Ultimately, this article aims to help you understand STRC and Strategy’s structure. You can then decide whether you’re more bullish or bearish.

Is STRC the new UST?

Recent social media discussions have often compared STRC to Luna / UST / Anchor, so I think it’s worth clarifying. In fact, they are fundamentally different.

Odaily note: Price chart of Luna before the crash.

UST is a stablecoin, maintaining a 1 USD peg is critical; STRC is preferred stock, ideally trading near $100, with a 1% fluctuation range, but it can drop several percentage points. This has happened before and can happen again, but it’s not necessarily problematic.

UST is backed by LUNA, whose value depends on UST’s success. When UST falls below its peg, users can exchange UST for newly minted LUNA, increasing LUNA’s supply and selling pressure, which weakens confidence and accelerates the death spiral—leading to near-zero value in days.

STRC lacks this reflexive mechanism; its price decline doesn’t trigger forced issuance, redemption, or dilution of other assets, nor does it impact BTC directly.

Anchor offers 18–20% yields, which are significantly higher than STRC’s current ~11.5%. This is largely subsidized and structurally unsustainable. STRC’s yield is simpler: Strategy expects BTC to return over 20% annually over the next decade, and STRC holders get the initial ~11.5% (or dividend rate at issuance), with relatively low volatility. MSTR shareholders bear the residual upside and volatility.

We also understand how Strategy will continue paying dividends: if mNAV > 1, they can issue MSTR stock via ATM; if below 1, they rely on USD reserves (enough to cover over two years of dividends). If reserves run out, they might sell BTC derivatives or the treasury’s BTC directly. In UST and Anchor, it’s essentially “trust me, I’ll keep paying.”

Price drops impact both systems differently: UST loses peg, confidence collapses, and the system risks near-zero; STRC’s lower price means higher effective yield, which can attract new buyers. For example, if STRC trades at $50 with a 12% dividend, the real yield is about 24%.

Time dynamics differ greatly: Luna/UST is fragile, collapsing within days after confidence loss; STRC’s slow decline could take years unless BTC crashes 90% in months.

End of translation.