STRC不回升錨，BTC就沒有牛市

Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

Strategy's preferred stock STRC continues to worsen its "de-pegging" situation.

During U.S. stock trading hours yesterday, STRC fell below the 80 mark for the first time, hitting a low of $73.62. Although it rebounded slightly by the close, the price was still only $75.69, nearly 25% "de-pegged" from its target par value of $100.

Last week, we wrote an article about STRC's de-pegging situation, titled "STRC De-pegs 11%: Can Strategy's Perpetual Motion Machine Keep Running?", focusing on the reasons behind STRC's de-pegging and briefly outlining the potential future impacts.

However, based on community discussions, it seems many readers are still unclear about the dire consequences of STRC's persistent de-pegging, so I've decided to write another article to break down this issue.

Strategy's Most Important Funding Channel Has Failed

What exactly is STRC? In a word, it is Strategy's cheapest and most efficient funding channel.

The essence of Strategy's business model is to continuously raise funds from the market to accumulate BTC, then raise more funds and accumulate more BTC. This is a cycle that must keep running. Strategy's high valuation largely stems from the market's belief in its ability to continuously raise funds and buy BTC. As long as its fundraising capability remains, it can keep expanding its BTC holdings; and the growing BTC holdings, in turn, further support market expectations of its future fundraising ability.

Over the past few years, Strategy has tried almost every fundraising method – issuing common stock, issuing convertible bonds, and issuing various types of preferred stock – and then pouring the raised funds into BTC. Among all these financial instruments, STRC was once considered by the market to be the closest to "perfect" and was also Michael Saylor's proudest creation. Saylor once boldly stated, "STRC was designed by AI; humans couldn't have designed it."

As a preferred stock, STRC's advantages are very clear. If common stock is issued, existing shareholder equity may be diluted. If convertible bonds are issued, the company has to bear future debt repayment pressure. However, as a perpetual preferred stock, STRC has no maturity date and does not dilute common shareholders; it only requires paying a fixed dividend. For Strategy and Saylor, this is arguably the lowest cost and most efficient way to raise funds.

At its inception, STRC was designed as a product anchored to $100. Strategy's idea was to dynamically adjust the dividend rate to keep STRC trading around $100 over the long term (does it remind you of algorithmic stablecoins?). As long as the secondary market could maintain this price, the company could continuously issue new STRC at near par value, constantly raising new funds to continue buying Bitcoin.

In other words, STRC's core value lies in its continuous fundraising ability, but this ability is premised on maintaining the price near the target par value. When STRC persistently de-pegs, this funding channel is effectively blocked. Because for any investor, if they can buy the same STRC for $75 in the secondary market, they would never participate in a new preferred stock issuance at nearly $100.

For Strategy, the options are either to continuously increase the dividend rate to attract capital (which has proven to have limited appeal) or to accept a lower fundraising efficiency due to discounted issuance (which would mean actively breaking the original target par value). Either way, it means this fundraising machine is beginning to encounter increasing friction.

Funding Tool Has Become a Cash Flow Burden

If it were just a temporary failure of fundraising ability, it might not be too bad. The bigger problem is that STRC requires Strategy to continuously pay high cash dividends.

According to the latest data officially disclosed by Strategy, the total issuance of STRC has reached approximately $10.49 billion, with the current dividend rate at 11.5%. This means that STRC alone corresponds to an annual cash dividend payment obligation of over $1.2 billion. When adding other preferred stocks issued by Strategy, such as STRD, STRK, STRF, this figure further climbs to approximately $1.7 billion.

In the common stock issuance filing on June 21 (note: it's common stock, details below), Strategy disclosed that the company's cash reserves were approximately $1.4 billion. At this cash reserve level, Strategy's book cash can cover less than one year's worth of preferred stock dividend payments.

Breaking Through Requires Money, But Where Will It Come From?

Whether it's to sustain its business model or to escape the current severe cash flow situation and avoid defaulting on dividend payments (the more pressing concern), Strategy needs more capital. Theoretically, Strategy has only three viable paths left to "raise money."

First, issuing common stock.

This is currently the most direct and mature fundraising method. Through its ATM (At-the-Market Offering) program, Strategy can continuously sell MSTR common stock to the market to raise funds.

But common stock financing is not without cost. Continuous issuance means the number of outstanding shares keeps increasing. If the BTC purchased with the new funds cannot outpace the rate of share expansion, the BTC Per Share growth will slow down, and common shareholders will face continuous dilution – pay attention here, the next part is important.

Second, continuing to issue debt.

Over the past few years, Strategy has repeatedly raised funds through debt instruments like convertible bonds, which was a crucial source of capital for its early large-scale BTC accumulation.

However, as the scale of preferred stocks expands and fixed cash expenditures increase, the market has begun focusing more on Strategy's liquidity and debt repayment ability. In the current financing environment, if the company issues bonds again, investors are likely to demand a higher risk premium, meaning financing costs will be significantly higher than in the past.

More importantly, unlike preferred stock or common stock, the interest payments and principal repayment on bonds are rigid obligations. Against a backdrop of declining cash reserves and rising dividend expenses, continuing to expand the debt scale will undoubtedly further burden the company's finances and compress future financing flexibility.

Third, selling BTC.

From a financial perspective, this is the fastest way to replenish cash reserves. Strategy has certainly considered this path. In an official post on X regarding dividend payment pressure, it stated, "When factoring in its massive Bitcoin reserves, it is sufficient to cover 32 years of dividend payments."

But for Strategy, this is also an extremely dangerous choice. Earlier this month, Strategy sold a portion of its Bitcoin holdings for the first time. Although the sale was only 32 BTC, and the company packaged it as a "proactive market desensitization test," mentioning it would "buy more back later," this move caused a sharp short-term market decline.

As the largest single holder of Bitcoin on the market, Strategy's moves can easily trigger chain reactions. If it increases the sale volume, it will undoubtedly have a huge impact on the already fragile BTC price. If BTC falls further, Strategy's so-called "reserves" will also shrink rapidly.

In summary, under the current circumstances, every viable funding channel for Strategy comes at a higher cost than in the past.

Has Strategy Already Made a Choice?

Looking at Strategy's latest moves, besides hinting at possibly selling BTC, the company seems to have chosen its path.

Since June, Strategy has relied on its common stock ATM program for three consecutive weeks to raise funds. The latest round (June 22) is particularly typical.

According to Strategy's latest 8-K filing, the company sold 2,714,839 shares of MSTR common stock in one week, raising a total of $335.5 million. However, during the same week, Strategy purchased only 520 BTC, spending a total of $34.9 million, with an average purchase price of about $67,068. In other words, of the $335.5 million raised, only about 10% was actually used to continue accumulating BTC, while the rest was primarily used to replenish the company's cash reserves, increasing cash from the previous ~$1.1 billion to the current ~$1.4 billion.

Seems effective, right? But there's another trap here.

For MSTR common stock shareholders, the most crucial piece of information is how much BTC the funds raised from each new common share can ultimately buy back, and whether that is sufficient to cover the BTC equity corresponding to that share. If the new financing can buy back more BTC than the share originally represented, then common shareholder equity is actually enhanced. Conversely, if the funds raised buy back less BTC than the share's original BTC equity, common shareholders suffer dilution.

Clearly, Strategy's recent common stock issuance has come at the expense of diluting common equity. Strategy's official data also shows that MSTR's BTC per share has dropped from a peak of 220,900 Sats to 218,046 Sats.

This is also the biggest limitation of common stock financing. For most listed companies, issuing common shares is just one of many financing methods. But for Strategy, common stock is itself a core part of its business model.

Over the past few years, the reason Strategy has been able to continuously grow is essentially due to the continuous operation of the flywheel: "Raise funds ➡️ Buy coins ➡️ Solidify market expectations ➡️ Raise more funds ➡️ Buy more coins..." The core market expectation for Strategy is its ability to continuously create more BTC equity for common shareholders, not dilute it.

However, when Strategy is increasingly forced to rely on common stock financing to replenish cash reserves rather than continue accumulating BTC, the logic of this flywheel changes. While common stock financing can temporarily alleviate Strategy's cash pressure in the short term, it is difficult to become a long-term replacement for STRC.

Once common stock financing consistently erodes BTC per share equity, the foundation for MSTR's high premium could also be challenged, and this premium is precisely the core competitive advantage of Strategy's entire business model.

What Will Happen to BTC?

Over the past few years, Strategy has become the most important marginal buyer in the BTC market (arguably without peer). As of now, Strategy holds a total of 847,363 BTC, accounting for about 4% of the current circulating supply, valued at over $50.7 billion. The market has long been accustomed to Saylor's massive weekly purchases.

But this situation is changing. Strategy can still raise funds through common stock, but most of the capital is no longer flowing into BTC; instead, it is prioritized for replenishing cash reserves. This means that with the same scale of financing, the amount of new buying pressure entering the BTC market is decreasing.

More worryingly, this situation could persist. If STRC cannot recover its peg for a long time and preferred stock financing remains blocked, Strategy will have to rely on common stock financing for cash flow over the long term, further compressing the proportion of funds used for BTC accumulation. For the BTC market, this means that the most stable and certain institutional buying pressure of the past will no longer grow continuously like it did in previous years.

But what deserves more vigilance is that if common stock issuance excessively dilutes MSTR shareholder equity, Strategy might have to consider another funding channel – selling coins.

From a weakening of new buying pressure to the potential emergence of selling pressure, today's Strategy is no longer the largest marginal buyer of BTC, but a massive sword hanging over BTC.