Strategy's dividend-paying preferred stock, STRC, recently fell below $83, about 17% below its $100 par value, marking its lowest level since its listing in July 2025. For this security, which was originally marketed as offering high yields and low volatility, the continued price deviation from par value indicates that the company's ability to raise funds through market offerings to pay dividends is under pressure.

Why did the face value mechanism fail?

STRC is designed to trade around $100 as much as possible. Only when the price is close to par value can Strategy more efficiently replenish its funds through ATM issuance to cover its annualized dividend payout of 11.5%.

However, the continued decline in Bitcoin prices over the past few weeks, coupled with corporate adjustments to debt and cash reserves, has weakened market confidence in this structure. A timeline compiled by CoinDesk shows that the drop in STRC was not triggered by a single event, but rather the result of multiple pressures.

Pressure began to build in mid-May

On May 14, the STRC closed near $100 ahead of its monthly ex-dividend date, while Bitcoin was still above $80,000. On the surface, the price remained stable, but the market was beginning to worry that it could only hold onto its face value briefly around the ex-dividend date and would struggle to maintain stability throughout the month.

On the same day, Strive Asset Management announced that it would pay daily dividends on its competing product, SATA. SATA's yield is approximately 13%, higher than STRC's, which puts more pressure on Strategy's plan to change STRC's dividend payment schedule from monthly to bi-weekly.

On May 15, Strategy announced a repurchase of $1.5 billion in convertible bonds maturing in 2029 at an 8% discount. The company subsequently confirmed that this transaction partially utilized its dollar cash reserves established at the end of 2025. By May 26, these reserves had fallen to $871 million, enough to cover only about six months of STRC dividends, whereas the company's previous target was to maintain coverage for approximately 24 months.

Bitcoin's decline amplifies the impact

Bitcoin weakened in tandem with the capital restructuring. On May 18, Strategy continued to buy 24,869 BTC, by which time Bitcoin had slid towards $76,000. On June 1, the company sold another 32 BTC, marking its first Bitcoin sale since 2022.

This sale represented only 0.0038% of its total holdings, but the market interpreted it as a signal that the company was willing to sell Bitcoin to fulfill its dividend obligations if necessary. On the same day, MSTR common stock fell 5.9%, Bitcoin briefly dropped to $70,500, and STRC closed at $98.07.

On June 5, Bitcoin fell below $60,000 for the first time since October 2024, with the STRC hitting a low of $90 that day before closing at $93.40. By June 18, the STRC had further fallen below $83 during the day, closing at $88.59; during the same period, Bitcoin gave up its brief rebound and fell back to approximately $62,880.

Concerns about unrealized losses on holdings and escalating disputes over financing

At that time, Strategy held 846,842 BTC, with an average purchase cost of approximately $75,656 per BTC. Based on Bitcoin's price of approximately $62,500, the company had a paper loss of approximately $11.14 billion.

Meanwhile, the market has reacted strongly to its two most recent funding rounds, citing dilution pressures from these transactions. MSTR common stock is currently trading at around $112, down about 80% from its November 2024 high.

For Strategy, the more pressing issue is that these financing and reserve adjustments all occurred during a period of Bitcoin's downtrend. As the underlying asset weakens, investors are not only reassessing Bitcoin itself, but also the dividend-paying securities and capital structures built around it. Whether STRC can return to its trading range near $100 has become a key focus of market attention.