STRC slips below $99 as Strategy's Bitcoin model faces growing doubts

Strategy's perpetual preferred stock dipped below $99, exposing the fragility of a Bitcoin accumulation machine that now dominates the market.

Strategy's STRC perpetual preferred stock fell below $99 on May 29, raising questions about the company's ability to sustain its 11.5% dividend and Bitcoin-buying engine.

"The current wave of demand is being driven less by organic market participation and more by financial engineering," Markus Thielen, chief executive officer of 10x Research, said.

STRC traded at roughly $99.28 on May 27 before slipping below the $99 threshold two days later, according to market data. The preferred stock pays an 11.5% annual cash dividend, and its price recovery toward the $100 face value each month enables Strategy to sell new shares and funnel proceeds into spot Bitcoin. That mechanism has accounted for roughly 70% of buying across a universe that includes stablecoins, ETFs and futures, 10x Research estimated. Strategy has acquired 171,238 Bitcoin year-to-date, exceeding the roughly 62,000 coins produced by the global mining network over the same period.

The risk is that any sustained decline in STRC could close the at-the-market share selling program, removing the primary bid supporting Bitcoin. Strategy's average purchase price across its roughly 843,700 Bitcoin holdings sits at about $75,700, slightly below where the token trades near $77,500. A fall below that level would not only pressure Strategy's balance sheet but could erode confidence in STRC itself, creating a feedback loop that runs in reverse.

The company has used much of its cash reserves to buy back debt, according to recent filings, adding to the strain on its balance sheet. Strategy represented about 12% of all Bitcoin trading activity in the last three weeks, and some weeks accounted for more than 20% of total volume, TD Cowen managing director Lance Vitanza said in a report.

For most of Bitcoin's history, demand came from a diffuse mix of retail speculators, institutional hedgers and ideological buyers. That has changed. ETF flows that defined the 2024 bull run have dried up. Retail trading volumes in South Korea — a barometer of speculative appetite — have fallen as local equities outperformed. Miners, once a natural source of accumulation, are now selling every coin they produce to fund AI infrastructure shifts.

That leaves Strategy as the dominant force. The company's ability to keep buying hinges on STRC's price stability. Saylor has likened Strategy to a real estate developer and said the firm would consider selling Bitcoin if doing so improved its capital structure or increased "Bitcoin per share," a key metric used to market the stock.

"Strategy has made it clear that marginal sales of Bitcoins aren't off the table for dividend coverage or tax purposes, but any disposals would be dwarfed by ongoing accumulation," Mark Palmer, an analyst at Benchmark-StoneX, said.

The next record date for STRC's dividend falls around June 15. Whether the stock can recover toward $100 by then will determine whether the buying machine can keep running.

This article is for informational purposes only and does not constitute investment advice.