Strategy (MSTR), the top corporate holder of bitcoin, has launched Perpetual Stretch Preferred Stock (STRC), a novel instrument fueling billions in BTC purchases. The firm calls it its “iPhone moment.”
STRC targets a $100 share price with variable monthly dividends. If shares rise above par, dividends are cut; if below, they’re raised-keeping issuance near par and enabling capital raises to buy more bitcoin.
The model has drawn institutions with yields near 11.5%, far exceeding U.S. Treasuries. So far, it’s bought over 50,000 BTC and more than $3.5 billion in bitcoin.
But risks aren’t about default-they’re structural. NYDIG’s Greg Cipolaro stresses that risk lies in governance and subordination, not payment capacity. In stress, Strategy can lower dividends by 25 bps monthly at its discretion, no matter the market.
If confidence wanes, the company may abandon the $100 target. Investors bear losses as yield drops and price falls. Unlike bonds, STRC avoids forced BTC sales-but at investor expense.
"It resembles being short a put on bitcoin asset coverage," Cipolaro said. "Outcomes are path-dependent and shaped by management discretion."
During bitcoin sell-offs, STRC and similar instruments like Strive’s SATA have traded below par, halting economic issuance. The flywheel stops when sentiment shifts.
The model works while markets cooperate. But when conditions turn, investors-not MSTR-absorb the cost.