Strategy’s move to create a Digital Credit Capital Framework has sharpened scrutiny of one of its most complex financing tools: STRC.
Farside Investors, a UK investment adviser, argues that STRC’s price-stability mechanism is fundamentally unstable. The product was largely issued around $100, with a mechanism intended to guide the market price back toward that level.
In theory, if STRC trades below $100, Strategy can raise the dividend to support the price. If it trades above $100, the company can lower the dividend. Farside says that structure creates a dangerous feedback loop. If investors become more concerned about Strategy’s credit risk, STRC could fall. Raising the dividend to support the price could then increase cash strain and further weaken confidence.
Farside said borrowing at 11.5% to buy bitcoin looks unattractive on basic financial terms. Even if bitcoin performs well over the long term, it may not rise smoothly enough to cover that cost without forcing asset sales during weak markets.
STRC has recently traded around $75, roughly 25% below its target price, before rebounding to $86. Farside said that suggests the stability mechanism is already failing, or at least no longer functioning as investors may have expected.
