Strategy’s STRC preferred stock has remained below its $100 stated value at $95.31 despite Bitcoin’s rally to about $77,125, prompting Multicoin Capital co-founder Tushar Jain to argue that its 12% dividend does not adequately cover the risk of another deep drawdown.
Summary
- STRC traded at $95.31 on Aug. 21 after falling to $71.25 in June.
- Jain said the 12% dividend does not compensate investors for STRC’s drawdown risk.
- Strategy has used Bitcoin and MSTR sales to fund STRC dividends and share repurchases.
- Bitcoin’s rebound above $77,000 has not returned STRC to its $100 stated value.
Tushar Jain said in an Aug. 22 X thread that STRC had failed to return to its stated value during Bitcoin’s recent rally because its dividend remained too low relative to the losses investors had faced.
“STRC has not repegged despite this monster BTC rally because the dividend is way too low,” Jain wrote.
The Multicoin Capital co-founder said Strategy had marketed STRC as a fixed-income product, yet the security suffered a drawdown of about 30%. According to Jain, investors who accept that degree of downside exposure require a much higher yield as compensation.
STRC closed at $95.31 on Aug. 21, according to Strategy’s website, leaving it 4.69% below its $100 stated amount. The share price has recovered sharply from its June low of $71.25, but the rebound has not restored the level Strategy wants the security to maintain.
Bitcoin, meanwhile, traded near $77,125 on Aug. 22 after reaching an intraday high of $78,763. The cryptocurrency had climbed above Strategy’s average acquisition cost of $75,385, returning the company’s treasury to an unrealized profit at prevailing prices.
Why STRC’s 12% dividend has not restored its price
Strategy currently pays a 12% annualized dividend on STRC’s $100 stated value, split into two monthly payments of $0.50 per share. At the Aug. 21 market price, the $12 annual payout produced an effective yield of about 12.6%.
In its Aug. 2 coverage, crypto.news reported the unchanged rate after STRC ended July at $89.46. The security had spent much of the month well below $100, even after Strategy raised its annualized dividend from 11.5% to 12% for record dates beginning in July.
Strategy’s rate-setting framework allows management to consider STRC’s trading price, competing market yields, credit spreads, Bitcoin’s price and volatility, reserve coverage, capital-market conditions and the company’s complete capital structure. Dividend payments require board approval and are not guaranteed.
Management previously used a more direct framework in which a monthly volume-weighted average price below $95 could lead to a recommended increase of at least 50 basis points. Strategy revised the policy in June, meaning a below-par price no longer produces an automatic increase.
On July 27, the company said management would recommend holding the rate at 12% until STRC recorded sustained trading near $100. Strategy also said it would not issue additional STRC shares below the stated amount, limiting the security’s role in raising fresh capital while it trades at a discount.
Jain argued that raising the rate would create another problem for Strategy because a larger payout would increase its recurring cash needs.
“If Saylor raises the dividend for STRC to get it to repeg, he raises his annual cash burn substantially.”
STRC’s price controls one route to more Bitcoin
Strategy introduced STRC in July 2025 through an initial public offering of more than 28 million shares priced at $90 each. The security began with a 9% annualized dividend, which the company later increased several times as the market price moved below its $100 stated value.
STRC sits above MSTR common stock in Strategy’s capital structure but below the company’s debt. It is perpetual, lacks a fixed maturity date, and does not give holders a contractual right to redeem their shares for $100 on demand.
The company designed the variable dividend to encourage STRC to trade close to its stated value. When the security trades at or above $100, Strategy can sell additional shares without issuing them at a discount and use the proceeds for purposes that may include Bitcoin purchases.
Chief Executive Phong Le connected the two transactions in July, saying Strategy would issue more STRC and buy more Bitcoin after the preferred stock returned to par. The STRC issuance condition makes its market price relevant to the company’s ability to expand its Bitcoin holdings through preferred-share sales.
Jain said failure to restore STRC to $100 would prevent Strategy from buying more Bitcoin through accretive STRC issuance. He also argued that MSTR could trade at a discount similar to a closed-end fund if the company stopped making accretive Bitcoin purchases.
Strategy describes STRC issuance as accretive when the transaction increases the Bitcoin or net Bitcoin attributed to each assumed diluted MSTR share. The company cautions that its Bitcoin-per-share metrics are not measures of shareholder returns, liquidity or conventional investment yield.
Strategy has used buybacks instead of another rate increase
Rather than raising the dividend again in August, Strategy has repurchased STRC shares below $100. The company bought back 288,930 shares for about $25 million during the week ending July 26, paying an average of $86.53 per share.
Further transactions followed as Strategy sold parts of its Bitcoin reserve. Between July 27 and Aug. 2, the company sold 1,638 BTC for $104.7 million, directing $52.4 million to preferred-stock dividends and $52.3 million to STRC repurchases.
During the following week, Strategy sold another 1,690 BTC for $108.6 million and used the entire net amount to buy back about 1.15 million STRC shares. An Aug. 10 report on the transaction showed that the company paid an average of approximately $94.29 per share.
Strategy then raised $333.7 million by selling 3.46 million MSTR shares from Aug. 10 through Aug. 16. Its SEC filing showed that $132.2 million funded the repurchase of about 1.39 million STRC shares, while $52.4 million covered STRC dividends and $149.1 million went into the company’s U.S. dollar reserve.
The transactions increased the reserve to approximately $4.80 billion and kept Strategy’s Bitcoin holdings unchanged at 840,447 BTC for the week. Those coins were acquired for about $63.36 billion, including fees, at an average price of $75,385.
MSTR’s Bitcoin premium faces renewed scrutiny
In the last post of his thread, Jain said the MSTR-to-Bitcoin chart had “fully retraced” and argued that the digital-asset treasury trade had run its course. His statement was an opinion about Strategy’s valuation rather than company guidance or a confirmed market outcome.
MSTR closed at $119.25 on Aug. 21 after rising 6.05% during the session, while Strategy’s website placed its modified net asset value ratio near 1.00. The company warns that its mNAV measure is not the same as net asset value under traditional accounting standards and may not predict the price of its securities.
For U.S. investors, both STRC and MSTR trade on Nasdaq, making the dispute relevant to holders using listed Strategy securities for Bitcoin-related exposure. STRC holders receive cash distributions but do not own a direct claim on a fixed quantity of Bitcoin, while MSTR investors remain exposed to the company’s operating costs, preferred-stock obligations, debt and potential share dilution.
Strategy’s Aug. 17 Form 8-K reported no Bitcoin purchases or sales between Aug. 10 and Aug. 16. The filing left its holdings at 840,447 BTC after two consecutive weeks of sales and disclosed $4.80 billion in U.S. dollar reserves.
