STRC, Strategy’s perpetual preferred stock, has played a key role in the company’s Bitcoin strategy this week, with daily trading volume exceeding $1.1 billion.
In the X post, Strategy declared April 13th as the STRC record date. Michael Saylor also noted that the securities closed with only “a penny of volatility” after $1.156 billion in liquidity passed through the market.
This spike in transactions came after Strategy disclosed that it had purchased 13,927 Bitcoins between April 6th and April 12th for approximately $1 billion.
With this purchase, the company now holds 780,897 Bitcoins, purchased for a total of $59.02 billion, at an average price of $75,577 per coin.
The company said the acquisition was fully funded through the sale of 10.02 million STRC shares on the over-the-counter (ATM) sale, resulting in net proceeds of approximately $1 billion.
Meanwhile, the combination of record trading activity at STRC and weekly Bitcoin purchases funded solely through its Priority Program signals a major shift in focus for the company.
For equity investors, this change can significantly alter the balance of potential return and risk. Increased reliance on preferred stock may reduce the immediate dilution to common stockholders because fewer common shares will be issued immediately.
However, the capital structure has more fixed receivables than equity. This means that preferred stock holders are entitled to receive dividends before common stockholders receive anything. In other words, preferred shareholders receive payments preferentially, so common shareholders can only benefit if there is enough profit left in the company after fulfilling these obligations.
This approach may increase returns if Bitcoin performs well, but increases reliance on continued market access and disciplined dividend management. While this transition may increase purchasing power and reduce equity dilution in the short term, it also increases financial leverage and execution risk for public shareholders in the long term.
How STRC preferred stock led Strategy’s Bitcoin purchases
Established in July 2025, STRC was designed to operate fundamentally differently than Strategy’s MSTR common stock.
The annualized dividend rate for preferred stock fluctuates and was 11.50% as of April. Its floating rate structure is intended to strongly incentivize trading near the $100 par value.
This stable price anchor allows Strategy to efficiently utilize ATM issuance programs. Issuing new STRC shares at a consistent price allows the company to quickly raise and convert funds into Bitcoin, minimizing the friction and discounting often seen in large secondary offerings.
Market participants point out that STRC aims to combine high-yield income and capital stability to provide investors with double-digit returns and minimal price volatility.
Basically, Michael Saylor, Strategy’s executive chairman, says:
“STRC provides money market-like stability with market-leading risk-adjusted returns.”
According to STRC.live, STRC has funded the acquisition of nearly 70,000 Bitcoins since its founding. The recent $1 billion trading volume on April 13th could fund the purchase of over 6,000 additional BTC.
Unsurprisingly, STRC’s market capitalization has ballooned along with the utility, nearly doubling from $3.4 billion in February to $6.36 billion today. With $21.6 billion worth of STRC shares still authorized for future issuance, the path to further BTC accumulation remains vast.
Bears point to increased provisioning, refinancing and preferred stack risks
Despite market optimism, several analysts have expressed concerns about the sustainability of the model, citing Strategy’s own financial disclosures.
The company established a $2.25 billion reserve in early February because Strategy’s software business does not generate enough operating cash flow to meet its financial obligations. This reserve serves as a financial safety net and is intended to cover dividend payments on preferred stock and interest payments on outstanding debt over approximately two and a half years.
Without sufficient regular business income, the company relies on this accumulated cash to cover fixed payments, and therefore reserves are required. If this reserve is depleted before Strategy generates sufficient new revenue or finds additional sources of capital, the company could face pressure to sell assets or issue additional stock, putting both preferred and common stockholders at risk.
Critics argue that structures that rely on continued market access can appear stable until funding conditions change.
Independent Bitcoin analyst Delin Olenik recently published a critical analysis of the company’s mandate, warning that the current rate of ATM growth is unsustainable.
According to Mr. Olenick’s calculations, STRC’s debt has grown astronomically, with the notional amount increasing by about 30% compounded monthly.
At this pace, the company’s debt could more than double every three months and increase tenfold within a year, dramatically accelerating pressure on cash flow and reserves.
If this trajectory holds, Olenik estimates that Strategy will burn through its $2.25 billion reserves in just nine to 10 months, instead of the expected two-and-a-half years.
He warned that covering such a deficit without selling Bitcoin would require significant dilution of Strategy’s common shareholders.
Even if MSTR returns to its all-time high, Olenik estimates that the company would need to issue more than 1 billion new shares to pay the preferred dividend, diluting its existing common stock by nearly 400%.
Considering this, he concluded:
“If ATM issuance stops, Bitcoin accumulation will stop. If issuance continues, calculations will result in super dilution regardless of the stock price. From the perspective of general shareholders, STRC should not be viewed as digital credit, but rather as a digital kamikaze.”
MSTR bulls think STRC is a cleaner way to add Bitcoin
But supporters of the strategy object to the dire situation envisioned by Mr. Olenik.
They say Strategy has successfully capitalized on a distinct investor base of income-driven buyers willing to accept STRC’s fixed claims and limited upside.
By directing the proceeds from these conservative investors into assets with long-term volatility and upside potential, Strategy maintains Bitcoin exposure to public shareholders.
Preferred investors currently receive a yield-focused product that trades more like short-term credit than a cryptocurrency proxy. In practice, “short-term credit” refers to bonds or financial instruments that mature over a relatively short period of time (usually less than five years).
These investments are often considered to be low risk because their value is less affected by changes in interest rates and investors expect their principal to be returned more quickly. For STRC, this means trading behavior is more stable and predictable, similar to short-term corporate bonds, rather than subject to price fluctuations typical of cryptocurrencies.
Notably, Strategy itself consistently refers to STRC as its flagship “digital credit” product.
Bitcoin analyst Adam Livingston said:
“(STRC) is a machine that converts capital market access into long-term Bitcoin exposure, but as BTC continues to compound, the fixed claim becomes smaller and smaller relative to the asset.”
Proponents argue that the model will work as long as Bitcoin appreciates faster than the cash cost of paying preferred dividends.
In this scenario, each successful STRC issuance translates capital market demand into additional Bitcoin holdings, but as Bitcoin appreciates over time, the fixed preferred debt becomes smaller relative to the asset base.
Saylor also reassured nervous investors:
“Our BTC break-even ARR (accounting rate of return) is approximately 2.05 percent. If Bitcoin grows faster than that over time, we could cover our dividend indefinitely without issuing new MSTR shares.”
MSTR common stockholders remain the primary audience.
The real question for MSTR holders is whether this funding model will continue to increase their common stock over the long term.
In the short term, the evidence is positive. STRC posted record sales, maintained par value, and Strategies used this market access to purchase $1 billion in Bitcoin in one week.
This result supports management’s view that STRC can serve as a reliable and repeatable funding channel rather than a one-time funding tool.
Looking at the longer horizon, the situation becomes inherently more complex. Each successful STRC increase adds a layer of fixed debt in front of the common stock.
Strategy’s own risk disclosures acknowledge that future preferred issues may dilute value to existing shareholders and that adverse changes in financing conditions may make it difficult to maintain necessary dividend reserves.
Dilution refers to the reduction in the ownership percentage of existing shareholders when new shares are issued, thereby reducing each shareholder’s claim to the company’s assets and profits. Financing terms are important because if a company does not have access to cheap or stable funding, it may struggle to raise sufficient capital to support dividend payments or maintain its financial structure, increasing overall risk to both preferred and common shareholders.
Ultimately, STRC indicates both strength and risk. It performs as intended by providing significant liquidity and maintaining prices close to par.
But with each round of issuance, tensions arise as the broader strategic thesis becomes ever more tightly tied to a company’s ability to maintain market access, maintain dividend support, and maintain enough value to justify a financial stack built around Bitcoin.
(Tag translation) Bitcoin
