Strategy built a financial machine that converts seemingly insatiable investor demand for stocks and high-yield preferred shares into a vehicle for accumulating massive amounts of bitcoin (it now holds more than 4% of the eventual maximum supply). But with the crypto asset nearly 50% below its record high from October, one of the machine’s most important components is now trading well below its intended price, raising new questions about how smoothly the company can keep funding its bitcoin accumulation strategy.
The immediate concern is Strategy’s Variable Rate Series A Perpetual Stretch Preferred Stock, better known simply as Stretch (STRC). Strategy designed the security to trade close to its $100 stated value by adjusting its dividend rate. STRC does not mature, and its dividends are not guaranteed, but it currently provides an annualized cash dividend equal to 11.5% of that $100 target price.
On Tuesday afternoon, STRC was trading at $87.85. Because the current annualized dividend amounts to $11.50 per share, someone buying at that market price would receive an effective annual yield of roughly 13.1%, assuming Strategy keeps paying the dividend at its present rate. Put another way, this basically means that it has become more expensive for Strategy to accumulate bitcoin. Although the company hasn’t done this and has stated it won’t issue new STRC at prices below $99, issuing new STRC around $88 while owing $11.50 annually would saddle Strategy with an effective financing cost above 13%, substantially more than its advertised 11.5% rate at $100.
The rate offered on STRC by Strategy has already climbed considerably over time. STRC launched in July 2025 with a 9% annual dividend, but Strategy has repeatedly increased the payout as it attempted to hold the stock near its target. In February, the company raised the rate from 11.25% to 11.5%, where it has remained through June. Strategy has also approved a shift to twice-monthly dividends, with the first payment under the new schedule set for July 15.
The perceived issues with STRC are also emerging alongside some deterioration in Strategy’s favored performance metric, known as BTC Yield. This is the percentage change in the ratio between a company’s bitcoin holdings and its assumed diluted shares outstanding.
Strategy previously reported a 13% year-to-date BTC Yield after selling 32 bitcoin between May 26 and May 31. The tiny sale, which raised about $2.5 million for a STRC dividend, was described by Michael Saylor as a way to “inoculate the market” against the idea that Strategy could never sell. Since then, the company has resumed buying, but continued MSTR issuance has pushed its reported year-to-date BTC Yield down to 11.8% as of June 22. In addition to accumulating more bitcoin, Strategy has used recent MSTR sales offerings to build a dollar reserve intended to cover preferred dividends and interest payments, meaning not every new dollar raised produces additional bitcoin per MSTR share.
Strategy has historically found it easier to expand its bitcoin holdings when the crypto asset’s price is on the rise. When MSTR trades at a premium to the value of the company’s bitcoin, Strategy can sell common shares and use the proceeds to buy enough bitcoin to increase the amount attributed to each remaining share. When that premium contracts, the same issuance becomes more dilutive. STRC was supposed to provide another route to capital, but that route is also less appealing when the preferred stock trades below $100, as it is today.
Strip away the layers of preferred shares, convertibles and company-specific metrics, and MSTR remains a leveraged wager on bitcoin’s long-term appreciation. That leverage can amplify the upside in a bull market, but it also introduces additional financing costs and capital-market risks that direct bitcoin holders do not face.
Strategy Critics Start Dunking
Some longtime Bitcoin advocates see the current problems as a predictable result of wrapping increasingly complicated financial products around a scarce digital asset. Critics have compared the treasury-company boom to the yield farming and leveraged DeFi trades that proliferated on Ethereum and other networks in 2020 and 2021.
Those systems often depended on sustained crypto token prices, ever-increasing user deposits, and incentives paid through new crypto tokens effectively created out of thin air. The most notorious failure was Terra, whose UST algorithmic stablecoin lost its dollar peg in May 2022. UST holders were supposed to be able to exchange the token for a dollar-equivalent amount of LUNA, but mass redemptions caused the system to mint enormous quantities of LUNA. Its supply hyperinflated, its price collapsed, and the mechanism intended to restore UST’s peg stopped functioning. The resulting collapse erased tens of billions of dollars from UST and its associated LUNA token while helping trigger failures elsewhere in the crypto industry.
Despite Bitcoin’s 2.5% rise, $MSTR is down 2.5%, increasing the discount. That means if MSTR sells more discounted shares to buy Bitcoin, the loss to shareholders will be even greater. Maybe shareholders are finally wising up and selling rather than waiting to be sacrificed.
— Peter Schiff (@PeterSchiff) June 22, 2026
Parker Lewis, the author of Gradually, Then Suddenly, has argued that investors should not confuse leveraged corporate exposure with holding bitcoin itself. “Investing in leveraged bitcoin stock cos carries asymmetric risk,” Lewis wrote on X. “Lower your time preference.”
Peter Schiff, a longtime gold advocate and persistent critic of both bitcoin and Strategy, was less restrained. After noting that MSTR had fallen despite a daily gain in bitcoin, Schiff wrote, “Maybe shareholders are finally wising up and selling rather than waiting to be sacrificed.”
Bitcoin Treasury Advocates Not Worried
Bitcoin treasury executives and supportive analysts reject the comparison to Terra. Jesse Myers, head of Bitcoin strategy at The Smarter Web Company, attributed STRC’s sudden decline to a liquidation cascade among investors who had taken leveraged positions after months of relatively stable trading. He argued that short selling, margin calls, and forced liquidations pushed the preferred shares away from $100 without changing Strategy’s underlying balance sheet.
Myers also noted that STRC is not an algorithmic stablecoin promising redemption at a fixed price. It is a preferred security whose market value can fluctuate, and its holders have a claim within Strategy’s capital structure rather than a token backed by an automatic mint-and-burn mechanism, as was effectively the case with Terra’s UST.
STRC down to $82.6 today. Here’s my read:
1. Strategy is fine. If everything stays as is, they can pay STRC dividends for 32 years. If BTC appreciates at ~2% CAGR, they can pay dividends indefinitely.
2. Why the sell-off? This appears to be a liquidation cascade.
Over… pic.twitter.com/ia75w9TXWj
— Jesse Myers (@Croesus_BTC) June 18, 2026
Benchmark analyst Mark Palmer similarly noted comparisons between STRC and TerraUSD were strained in a note released on Monday, according to Decrypt. “There is a meaningful difference between stating that Strategy’s preferred stock funding engine has become less efficient . . . and asserting that the company’s overall model is broken, as some of its detractors have suggested,” Palmer wrote.
JAN3 CEO Samson Mow, who focuses on nation-state level bitcoin adoption, has pointed to STRC’s variable dividend as a “self-repairing” mechanism. In theory, Strategy can raise the dividend when STRC falls below $100, attracting buyers until the price recovers. The drawback is that every increase makes the financing more expensive and commits Strategy to larger distributions if its board continues declaring them.
Tom Lee has nearly matched Michael Saylor’s unrealized $BTC losses with a fraction of the capital in under a year.
Incredible. This is why Ethereum $ETH is the future. 🚀 pic.twitter.com/HxnToywrYJ
— Kyle Torpey (@kyletorpey) June 14, 2026
Of course, the situation with digital asset treasury companies more generally becomes even harsher when going beyond bitcoin. BitMine Immersion Technologies (BMNR), which adopted Ethereum’s ether as its primary reserve asset in 2025, offers a useful example of how quickly the corporate crypto trade can reverse. BMNR traded around $15.22 on Tuesday, approximately 90.5% below its all-time high of $161 from less than a year ago. As of this writing, BitMine is sitting on nearly $10 billion in paper losses on its ether holdings, according to data from DropsTab.
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