Key Takeaways
- STRC hits record low.
- Peter Schiff’s ‘death spiral’ warning back in focus.
- Michael Saylor defends a Bitcoin-backed credit model.
Strategy’s variable-rate perpetual preferred stock STRC fell to a record low on Wednesday, closing at $89 after touching an intraday low of $88.51.
The decline has reignited criticism from longtime Bitcoin skeptic Peter Schiff, who argues that the stock’s structure could force Strategy into an increasingly difficult balancing act between supporting STRC’s market price and limiting shareholder dilution.
Record Low Strategy STRC Raises Concerns
STRC was launched as part of Strategy’s expanding suite of Bitcoin-backed capital market products, offering investors income exposure tied to the company’s bitcoin treasury strategy.
Because the preferred stock’s dividend can be adjusted, the structure is intended to provide management with a tool to support the market price if shares drift significantly away from the $100 reference value.
However, the latest decline suggests investors are demanding a higher yield to hold the security.
At Wednesday’s closing price of $89, STRC’s 11.50% dividend equates to an effective yield of roughly 12.9% — significantly above the stated rate calculated on par value.
The move highlights a central challenge for Strategy.
If management wants to push the security back toward $100, it may need to increase the dividend rate and raise financing costs.
However, if it leaves the rate unchanged, investors may continue to discount the shares, potentially leading to further declines.
Schiff Says Falling Price Reinforces ‘Death Spiral’ Thesis
Schiff, one of Bitcoin’s most vocal critics, argued earlier this month that a decline in STRC’s market price could create a self-reinforcing negative cycle.
“If Saylor raises the yield to 13%, he will have to sell even more MSTR at bigger discounts to fund it. If he doesn’t raise the yield, the STRC price will keep falling,” Schiff wrote on X on Werdnesday.
It comes after his comments on June 2, when STRC fell below $98, in which he said investors would increasingly question Strategy’s “ability and commitment” to maintain the dividend.
He argued that a lower share price would force Saylor to raise the coupon rate, describing the process as a potential “death spiral.”
“The only way to stop the death spiral is for MSTR to cancel the dividend. Then STRC crashes, taking MSTR and BTC with it,” he said back in April.
Wednesday’s drop to $89 represents a much larger deviation from par than when Schiff first made those comments.
What Is The ‘Death Spiral’?
Schiff’s argument centers on the economics of the preferred stock.
As the share price falls, the effective yield rises, signaling higher perceived risk.
To restore the price, Strategy could raise the dividend rate, but doing so would increase the amount of capital required to service the security.
Critics argue that this could ultimately require additional capital raises or share issuance and, in turn, increase dilution for existing investors.
Schiff has repeatedly described Strategy’s broader financing model as dependent on continued investor demand and rising bitcoin prices, comparing it to a “Ponzi-like” structure.
Strategy has consistently rejected these characterizations and maintains that its capital strategy is designed to increase Bitcoin ownership, while providing different risk and return profiles for investors.
Saylor Defends Strategy’s STRC and Capital Structure
Saylor addressed some of those concerns during a recent appearance at the BTC Prague conference.
Discussing Strategy’s decision to sell 32 Bitcoin earlier this year, Saylor said maintaining the credibility of the company’s debt and preferred securities was essential to preserving access to capital.
“If we’re able to sell the Bitcoin to fund the dividends on the credit, the credit becomes more credit worthy,” Saylor said.
He argued that refusing to ever sell Bitcoin would undermine confidence in Strategy’s capital structure.
Saylor described building STRC as part of its mission to create “digital credit” products built on Bitcoin capital.
During the conference, he said Strategy was attempting to create income-generating securities that could bridge the gap between Bitcoin’s volatility and investor demand.
Saylor said: “Hundreds of billions of dollars and 17 years to get here and what we know is Bitcoin is the dominant global digital capital network.
Adding: “So, what is that worth? Even if only 10% of capital wants to be digital, then that’s a hundred trillion dollars.”
As STRC trades at its lowest level since launch, investors are closely watching whether the preferred stock can stabilize closer to its $100 target value.
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Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
