“Strategy is fine,” Jesse Myers posted on Thursday as STRC cratered to a record low. That’s one way to describe a flagship funding instrument trading 13% below par while critics line up to call it a Ponzi scheme.
Strategy’s Stretch preferred stock, launched in late July 2025 to bankroll the company’s Bitcoin accumulation, closed at $88.59 on June 20 after touching $82.53 intraday. The instrument was engineered to hover near its $100 par value through adjustable dividends, currently set at 11.5% annualized. Instead, it’s become a lightning rod for questions about whether Michael Saylor’s capital-raising machine has finally hit a wall.
The numbers tell a stark story. In April, Strategy bought 34,164 BTC for $2.54 billion in a single week. In May, another 24,869 BTC for roughly $2.01 billion. June’s weekly additions? About $100 million each, with 1,550 BTC acquired in the week ending June 8 and 1,587 BTC the following week. The company’s total holdings now stand at 846,842 BTC, but the trajectory has flattened.
STRC’s Discount Blows Open the Yield Math
The mechanics here matter. STRC dividends are calculated from the $100 liquidation preference, not whatever price the market assigns. So when the instrument trades at a discount, effective yields climb for new buyers even as existing holders watch their principal erode.
At Thursday’s close of $88.59, anyone buying STRC locks in roughly 13% effective yield. Drop to $85, and that figure rises to about 13.5%. Analyst Scott Melker highlighted this dynamic on Sunday, noting that the discount could attract income-focused investors willing to bet that Strategy’s dividend coverage holds up.
For those tracking public-company Bitcoin holdings, Strategy’s position dwarfs every competitor. But a treasury north of 846,000 BTC means nothing if the funding flywheel grinds to a halt. In finance, a flywheel describes a self-reinforcing cycle where growth compounds on itself. Issue STRC near par, use proceeds to buy BTC, watch BTC appreciate, repeat. The problem surfaces when any link breaks.
STRC’s widening discount has pushed its effective yield above 12.9% and contributed to a pause in at-the-market share issuance. That’s the pause that matters. Without fresh capital flowing through STRC or MSTR share sales, Strategy’s weekly Bitcoin purchases shrink from billions to pocket change.
The company shifted STRC to a semi-monthly dividend schedule, with payouts now occurring twice per month rather than monthly. Strategy hasn’t directly addressed the Ponzi criticism in recent statements, continuing to present STRC as preferred equity supported by its Bitcoin-focused treasury strategy. The next dividend rate announcement is expected June 30.
The Ponzi Debate Gets Louder
Peter Schiff, the gold evangelist who’s been calling Bitcoin a bubble since it traded under $1,000, described STRC as “a classic centralized Ponzi” in a post this week. His argument: the structure depends on Strategy’s ability to raise fresh capital through new share sales or sell Bitcoin to meet obligations. Without one or the other, the music stops.
Crypto trader DonAlt raised similar concerns, asking why STRC was “trading like a Ponzi” after its sharp move below par. Neither is exactly a neutral observer, but the question has spread beyond the usual bear camp.
That 32 BTC sale earlier in June, the first since December 2022, was tiny relative to Strategy’s holdings. Roughly $2.5 million against a treasury worth tens of billions. But it proved that cash obligations can force limited BTC sales when STRC-led funding becomes less efficient. The symbolism stung more than the size.
Saylor himself dismissed sale concerns as a “nothing burger” back in May, telling CoinDesk that selling BTC for dividends would be offset 20-to-1 by purchases. That ratio looks different now that weekly buys have collapsed from $2.5 billion to $100 million.
Leverage Wipeout or Structural Crack?
Jesse Myers, head of Bitcoin strategy at The Smarter Web Company, pushed back against the doom narrative. In his Thursday post declaring Strategy “fine,” he argued the STRC sell-off resembled a leverage wipeout rather than fundamental deterioration.
His reasoning: STRC’s long stretch near $99-$100 encouraged investors to pile in with heavy leverage, many assuming the instrument would stay above $95. Once the price slipped, margin calls triggered forced selling that accelerated the decline. Classic liquidation cascade, not corporate implosion.
Myers calculated that Strategy could pay STRC dividends for 32 years if conditions remain unchanged, and indefinitely if Bitcoin appreciates at roughly 2% annually. That math requires assuming no further STRC issuance, stable dividend rates, and no catastrophic BTC price collapse, but it illustrates that the company isn’t facing imminent insolvency.
The leverage-wipeout thesis has support in the price action. STRC didn’t drift down gradually over concerns about Strategy’s balance sheet. It plunged from near par to the low $80s in days, consistent with forced selling rather than fundamental reassessment.
Still, the distinction between a leverage wipeout and a structural problem blurs when the instrument’s entire purpose is to fund continuous Bitcoin purchases. If STRC can’t trade near par, Strategy loses its most efficient capital-raising channel. The company retains other options, including MSTR share issuance and cash reserves, but those carry their own dilution and opportunity costs.
The broader context adds pressure. Bitcoin itself has fallen roughly 50% since STRC launched in late July 2025. Saylor blamed an AI capital rotation for part of the decline, arguing that $400 billion in AI infrastructure spending drained flows from Bitcoin ETFs. Critics pointed to his own 32 BTC sale as evidence that the treasury model faces stress regardless of macro explanations.
For investors watching market sentiment, Strategy’s situation captures a broader anxiety: what happens to levered Bitcoin plays when the underlying asset enters a prolonged drawdown? The company’s 846,842 BTC treasury gives it enormous upside exposure if prices recover, but the same concentration amplifies pain during bear markets.
The pace differential between April and June is worth quantifying. Strategy’s 34,164 BTC purchase in a single April week represented about 4% of the company’s current holdings acquired in seven days. June’s combined additions of roughly 3,137 BTC across two weeks amount to 0.37% of holdings. That’s a 91% slowdown in accumulation rate, measured by share of existing treasury.
Strategy’s next moves likely depend on whether STRC stabilizes near current levels or continues sliding. A prolonged discount makes fresh issuance dilutive and unattractive. Recovery toward par would reopen the capital spigot. The June 30 dividend rate announcement could signal which direction management expects.
Melker’s point about yield-seeking buyers offers one path to stabilization. If enough income investors view 13% yields backed by an 846,000 BTC treasury as attractive, buying pressure could narrow the discount. But that requires confidence in Strategy’s ability to meet obligations without forced BTC sales, exactly the concern driving current skepticism.
The Ponzi framing, while provocative, captures a real structural dependency. STRC’s value proposition assumes continuous capital formation: new investors buy near par, proceeds fund BTC purchases, BTC appreciation supports the cycle. Remove any component, whether through market skepticism, leverage blowups, or prolonged Bitcoin declines, and the loop weakens.
Myers and Melker see a buying opportunity. Schiff and DonAlt see a trap. Strategy itself remains publicly committed to its Bitcoin-first treasury model, treating the STRC discount as a temporary dislocation rather than a fundamental problem.
The company holds more than 846,000 BTC against the criticism. Whether that’s a fortress or a trap depends on where Bitcoin trades over the next several years, and whether STRC can reclaim the par value that makes the whole flywheel spin.
“The discount may also attract income buyers,” Melker noted Sunday, calculating that the effective yield makes STRC competitive with high-yield bonds. For now, that’s the bull case: wait for yield-seekers to close the gap, watch the flywheel restart, and trust that Bitcoin’s long-term trajectory bails out any short-term funding stress.
