Strategy's "Death Spiral" Concerns Dismissed: Cash Buffer and STRC Structure Seen as Key Defenses

Odaily Planet Daily News Recent market concerns have been building around Strategy (MSTR) potentially falling into a "death spiral sell-off," triggered by Bitcoin's price temporarily dropping to around $60,000, sparking discussions about the stability of its leveraged treasury model. However, Wall Street institutions such as Benchmark and TD Cowen have released reports explicitly refuting this pessimistic narrative and maintaining "Buy" ratings on Strategy.

Benchmark analyst Mark Palmer stated that the "death spiral" hypothesis ignores multiple buffer layers: before any large-scale Bitcoin sale, the company would first need to consume approximately $1 billion in cash reserves for dividend payments, while its current Bitcoin reserve of around $55 billion also provides a strong buffer. STRC is a type of perpetual preferred stock designed to maintain a price of approximately $100 and offer a floating annualized yield of around 11.5%. Analysts believe this mechanism forms a cycle of "yield demand → financing → BTC accumulation," positioning it as the core capital engine for its long-term treasury model.

TD Cowen pointed out that even during significant Bitcoin pullbacks, the STRC structure has demonstrated relatively low volatility, helping to stabilize the capital structure, and positions it as a "yield and capital preservation tool" rather than a purely high-risk speculative instrument. However, there are also critical voices in the market suggesting that this structure could create a risk mechanism akin to a "negative feedback loop," potentially triggering asset sell-off pressure under extreme circumstances. (The Block)