STRC's Return to $100 Par and Its Implications for MicroStrategy's Bitcoin Accumulation Strategy

MicroStrategy's Variable Rate Series A Perpetual Stretch Preferred Stock (STRC) has recently traded near its $100 par value, marking a pivotal moment for the company's leveraged Bitcoin accumulation strategy. This development underscores the interplay between preferred equity issuance and Bitcoin treasury management, a model that has defined MicroStrategy's (now Strategy) capital structure since its aggressive pivot to digital assets. As STRC approaches par, the implications for leverage, Bitcoin purchasing power, and investor sentiment warrant closer examination.

STRC's Role in Capital Raising and Leverage

STRC, introduced in July 2025, offers an 11% annual dividend and is traded on major platforms, including ETFs like the iShares Preferred & Income Securities ETF. Its variable dividend rate is designed to compete with traditional fixed-income products while providing exposure to Bitcoin through MicroStrategy's treasury strategy. The stock's proximity to $100 par has enabled the company to execute a $4.2 billion at-the-market (ATM) program, raising capital to fund Bitcoin purchases and corporate expenses. This mechanism allows MicroStrategy to amplify Bitcoin exposure with minimal dilution of common shares, a critical advantage in a market where equity issuance at a premium to net asset value (NAV) has historically driven stock performance.

The leverage inherent in this strategy is evident in MicroStrategy's balance sheet. By November 2025, the company held over 649,870 BTC, valued at $61.7 billion, while maintaining $8 billion in debt- a leverage ratio of approximately 1:7.5. STRC's role in this model is twofold: it generates high-yield returns for investors and provides a capital-raising vehicle that avoids the dilution associated with common stock sales. For instance, the $2.5 billion raise in July 2025 funded the purchase of 21,021 BTC, further expanding the company's Bitcoin holdings.

Conversion Mechanics and Strategic Flexibility

While STRC's conversion terms are not explicitly detailed in public filings, its perpetual structure and non-callable nature under normal conditions suggest a focus on long-term capital stability. The stock's variable dividend rate and proximity to par enhance its appeal to yield-seeking investors, creating a self-reinforcing cycle: higher demand for STRC allows MicroStrategy to raise more capital, which in turn funds additional Bitcoin purchases. This dynamic is particularly potent when Bitcoin prices are low, as the company can reinvest proceeds at favorable valuations.

However, the conversion mechanics also introduce risks. If STRC's price falls below par, the cost of capital rises, potentially constraining Bitcoin accumulation. This was evident in early 2026, when the company's market NAV (mNAV) premium collapsed to 1.04x, signaling reduced investor appetite for leveraged exposure. Analysts like Adam Livingston argue that such repricing reflects a growing preference for direct Bitcoin ownership over corporate vehicles, a trend that could limit MicroStrategy's ability to issue equity at favorable terms.

Risks and Market Dynamics

The leveraged nature of MicroStrategy's strategy amplifies both gains and losses. During Bitcoin's 2025 appreciation, STRC's high yield and ATM program drove significant returns for investors. Conversely, during market downturns, the same leverage magnifies losses, as seen in the company's 66% stock price decline relative to Bitcoin's resilience in late 2025. This volatility has led to a reevaluation of the risks associated with preferred equity issuance. For example, the $775 million in annual preferred dividends tied to STRC and other instruments increases financial obligations, which could strain liquidity if Bitcoin prices stagnate.

Moreover, the complexity of MicroStrategy's capital structure-balancing debt, preferred shares, and common equity-has drawn scrutiny. While the company's conservative leverage model (8% debt-to-Bitcoin value) suggests resilience to moderate market corrections, prolonged downturns could test its ability to service debt and maintain dividend payments. This is particularly relevant for STRC, whose 11% dividend is not guaranteed and depends on the company's financial health.

Conclusion: A Double-Edged Sword

STRC's return to $100 par highlights the dual nature of MicroStrategy's strategy: it enables aggressive Bitcoin accumulation while exposing the company to capital market risks. For investors, STRC represents a leveraged bet on Bitcoin's long-term value, offering high yields and indirect exposure to the asset. However, the sustainability of this model hinges on continued capital market support and Bitcoin's price trajectory. As the market evolves, the balance between leveraging preferred equity and mitigating dilution will remain a critical factor in MicroStrategy's ability to execute its Bitcoin-centric vision.