Strategy’s STRC Dips Below Par Amid Bitcoin Volatility and Rising Competition from Strive

Strategy’s perpetual preferred security, Stretch (STRC), dropped to a low of $97.11 on Thursday, coinciding with a decline in bitcoin BTC$73,728.32 as it fell toward the $73,000 level.

STRC typically experiences selling pressure during bitcoin downturns and in the immediate aftermath of ex-dividend dates, as previously observed on November 20 and February 5. These price adjustments usually reflect the value of the dividend payout, while bitcoin’s volatility tends to dampen investor enthusiasm for Strategy-linked securities. Collectively, these elements have historically exerted short-term downward pressure on the security’s market value.

Management has designed STRC to trade close to its $100 par value, as maintaining this stability allows the company to efficiently raise additional capital through its at-the-market (ATM) program.

In a recent effort to reduce its debt burden, Strategy repurchased $1.5 billion of its 0% convertible senior notes due 2029. This buyback was funded via the company’s U.S. dollar reserves, causing its cash balance to drop from roughly $2.25 billion to $871 million.

With annual preferred dividend obligations totaling approximately $1.7 billion, the current cash reserve now covers only about six months of payments—a significant reduction from the original 24-month coverage goal.

In a recent interview with CoinDesk Senior Analyst James Van Straten, Executive Chairman Michael Saylor outlined several strategies to meet these dividend obligations and strengthen the balance sheet. Potential options include selling bitcoin, issuing further MSTR equity when the stock trades above a 1.22x multiple to net asset value (NAV), or issuing more STRC. Saylor noted that all management decisions are guided by a commitment to maximizing bitcoin per share for the benefit of shareholders.

Meanwhile, competitor Strive Asset Management (ASST) is employing a different strategy. Strive recently announced a plan to implement daily dividend payments for its own perpetual preferred security, SATA. Over the last two weeks, SATA has remained stable near its $100 par value, offering a dividend yield of approximately 13% despite the decline in bitcoin’s price.

While the daily dividend system is not yet active, investors likely view the prospect as a stabilizing mechanism that maintains the security’s price. Furthermore, Strive has completely eliminated the debt acquired through its purchase of Semler Scientific, a move that aligns with the debt-reduction path Strategy is currently following.

The divergence in market performance between the two firms has been stark. Over the last three months, Strive shares have surged approximately 110%, significantly outpacing the 12% gain for MSTR and the 8% rise in bitcoin. This trend indicates that investors may be favoring Strive’s streamlined balance sheet and its higher-yielding preferred security structure.

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