Strategy's STRC preferred stock hits yearly low as yield pressure mounts
In brief
- STRC closed at $91.79, marking its third-lowest close since July 2025 launch
- The $10.5 billion preferred stock yields 12.6% annually at current price levels
- Bitcoin price movements explain roughly 86% of STRC's yield-spread variation
- Strategy may need to raise dividend to ~$12.60 to restore $100 price target
Yield Pressure and Bitcoin Sensitivity
STRC has expanded from $2.8 billion to $10.5 billion over the past year, adding $7.7 billion through at-the-market issuance. The security's performance is tightly coupled to Bitcoin's price movements. Kraken chief economist Thomas Perfumo found that approximately 86% of the variation in STRC's yield spread can be explained by moves in Bitcoin's price, underscoring the product's sensitivity to crypto market conditions.
STRC pays an annual dividend of $11.50, which at the current price yields approximately 12.6% for investors. This rate reflects market expectations about future Bitcoin performance and Strategy's ability to generate returns from its digital-asset treasury. During spring, Strategy maintained the STRC dividend rate unchanged at 11.5% as strong demand and rising Bitcoin price allowed the company to keep the payout steady.
The Short-Selling Challenge
The weakness in STRC's price has created an opening for short sellers. STRC was marketed with a stronger price-stability objective compared to other Strategy preferred securities like STRK, STRD, and STRF, making its current discount harder to justify to existing holders.
Parker White, chief operating officer and chief investment officer at DeFi Development Corp., argued that STRC's soft $100 anchor may have made it vulnerable to short sellers. The mechanics of the short trade are straightforward: the outright borrowing cost is about 60 basis points, making the trade cheap to maintain compared with similar products.
Path to Recovery
Analysts see a clear path for Strategy to defend the stock's value. Andre Dragosh, Bitwise Europe's head of research, stated: "Saylor essentially needs to raise the dividend by slightly more than 1$ to pull STRC to par. Equilibrium dividend is at around 12.6$ right now."
Strategy's at-the-market issuance program may also limit upside above $100, reducing the risk that short sellers face if they position against the stock. The company faces a balancing act: raising the dividend to support the price while managing the cost of capital for its Bitcoin acquisition strategy.
Frequently asked questions
What is STRC and how does it work?
STRC is a variable-rate perpetual preferred stock issued by Strategy that pays annual dividends. The dividend is tied to Bitcoin's performance, allowing Strategy to raise capital for its digital-asset treasury while offering investors yield. It's traded on public markets and has grown to $10.5 billion in size.
Why is STRC's price falling?
STRC's price is sensitive to Bitcoin movements, with roughly 86% of its yield-spread variation explained by Bitcoin price changes. Weak Bitcoin performance and short-selling pressure (enabled by cheap borrowing costs of ~60 basis points) have pushed the stock to yearly lows, creating a mismatch between its current price and its dividend payout.
What would it take to restore STRC to $100?
Analysts estimate Strategy would need to raise the annual dividend from $11.50 to approximately $12.60 to bring STRC back to its $100 price target. This would increase the yield and compensate investors for the current discount.
