The buy-the-coin "perpetual motion machine" strategy has stalled after dropping below $100.

Author: Jae, PANews

The $100 anchor has long been the cornerstone of Strategy’s financing magic. This perpetual motion machine, originally built by Michael Saylor to buy Bitcoin, has now stalled.

On April 14th, Strategy’s perpetual preferred stock STRC fell below its $100 face value on NASDAQ, dropping as low as $99.06, with trading volume sharply decreasing to 47% of normal, and has continued to trade at a discount since then.

The financing efficiency of STRC directly determines whether Strategy can continue to increase its holdings. Once STRC falls below its face value, it means Saylor’s Bitcoin buying financing engine has temporarily stalled.

When this leading digital asset treasury (DAT) with the largest Bitcoin holdings globally loses its most important incremental funding channel, the marginal buying support in the entire Bitcoin market becomes shaky.

STRC’s 11.5% high-yield lock-in price, Strategy’s creation of a perpetual buy-Bitcoin machine

In July 2025, STRC was officially launched, solving Saylor’s pain point: continuously raising funds from traditional capital markets to buy Bitcoin without diluting MSTR voting rights.

The original design of STRC was to keep the trading price near the $100 face value, ensuring the company could continuously raise funds through an “at-the-market” (ATM) issuance program.

• If the price remains below $100, the board increases dividends to attract investors seeking stable cash flow to support the price;

• If the price is significantly above $100, dividends are maintained or reduced to lower financing costs.

Starting with an annualized dividend of 9%, STRC has increased its dividend for seven consecutive months, reaching 11.5% so far. Continuous investor inflows seeking high yields keep STRC above face value for the long term, allowing Saylor to convert traditional market funds into Bitcoin market buying through the ATM program.

Additionally, Saylor abandoned the traditional net profit valuation model used in capital markets, instead adopting a “Bitcoin gain” indicator to define Strategy’s value as a “Bitcoin-based” enterprise.

This indicator measures the percentage growth in Bitcoin holdings per share of common stock.

In Q1 2026, Strategy achieved a 6.2% Bitcoin gain, with a full-year target of 9.5%.

STRC is the leverage tool to achieve this goal: issuing preferred stock with fixed financing costs to buy Bitcoin with long-term appreciation potential.

According to Saylor’s calculations, as long as Bitcoin’s long-term annualized growth exceeds 2.05%, common shareholders will continue to benefit.

Over the past half year, this logical cycle has repeated: issuing STRC for financing → buying Bitcoin → Bitcoin price rising → stock market value increasing → STRC more popular → raising more money to buy more Bitcoin.

STRC is like an endless printing press, continuously supplying ammunition for Saylor’s Bitcoin empire.

STRC falls below $100 anchor, Strategy launches “bi-weekly dividend” surprise

The $100 face value is the lifeblood of STRC’s entire financing flywheel. Once it falls below, ATM issuance stalls, and the printing press stops.

This de-anchoring is a double blow caused by macro headwinds and worsening expectations.

The Iran war became the first straw that broke STRC’s back.

The blockage of shipping through the Strait of Hormuz caused oil prices to surge, igniting inflation fears, and market expectations for Fed rate cuts were pushed back from mid-2026 to 2027.

For STRC, a preferred stock with strong bond-like attributes, the long-term high baseline interest rate means its 11.5% dividend attractiveness is being diluted by rising risk-free rates.

Meanwhile, the crypto market’s fear and greed index once dropped to 9, indicating “extreme fear.” Funds seeking stable returns began selling non-core assets, with STRC, which has relatively weak liquidity, bearing the brunt.

If macro environment is an external trigger, then the dividend decision on April 1st was the pin that burst the bubble.

On that day, Strategy announced maintaining the 11.5% dividend but ended its seven-month streak of monthly dividend increases.

PANews believes the company’s intention was to signal confidence: that interest rates had stabilized and prices were near par. However, in investors’ eyes, this move was misinterpreted as: the company’s financing ability has peaked, losing confidence in Bitcoin’s later-stage gains.

Among STRC holders, retail investors account for up to 80%. Their motivation to enter was the inertia of “monthly dividend increases and prices staying above face value.”

The first pause in dividend hikes shattered this belief, leading to a mass exit by retail investors, a sharp drop in trading volume, and the anchor at face value breaking.

When STRC drops below face value, it affects not only Strategy itself but also the entire Bitcoin market supply and demand.

When STRC trades below face value, ATM market issuance loses its meaning. Discounted issuance further depresses the price, creating a vicious cycle that forces Strategy to halt issuance.

Data confirms this: latest financing tracking shows no new financing for STRC. Last week, Strategy completed a large purchase of 34,164 Bitcoin using leftover funds from previous financing.

With the financing halted, this largest long position in the Bitcoin market has paused temporarily. The marginal weekly buy support of $10-2B in Bitcoin market has been lost.

Facing this tool failure, Strategy quickly responded, attempting to regain pricing power through financial measures.

Strategy announced a shareholder vote on April 28th, proposing to increase the dividend payout frequency from monthly to bi-weekly.

This is a targeted psychological tactic for retail investors. Shortening the payout cycle reduces the price gap caused by ex-dividend dates (the next trading day after dividend distribution). Historically, STRC drops an average of 45 cents on ex-dividend days, taking about 12 days to return to face value.

Bi-weekly cash flows can significantly reduce reinvestment delays for investors sensitive to cash flow, making the instrument more attractive to retail and income-focused funds.

If approved, STRC will become one of the few listed equity instruments worldwide offering bi-weekly dividends.

To counter market skepticism about a Ponzi scheme, Strategy also emphasized its holdings of non-Bitcoin assets. It disclosed holding about $2.25 billion in cash reserves, enough to cover all preferred dividends for about 30 months without issuing new shares or selling Bitcoin.

Additionally, its traditional business software unit generates $320 million in gross profit annually, ensuring the company’s survival in extreme market conditions.

3.2x Bitcoin reserves spark controversy, STRC faces chronic slow blood loss risk

Despite holding Bitcoin reserves as support, controversy surrounding this instrument has never ceased.

Traditional finance experts like Peter Schiff argue that Bitcoin itself generates no income, and STRC’s high dividend is effectively sustained by new investor inflows or sacrificing common shareholders’ interests.

Their logic: Bitcoin price drops → STRC price declines → financing ability diminishes → unable to buy more Bitcoin to support the price → forced to sell Bitcoin to pay dividends → Bitcoin price further declines.

While Strategy can intervene to prevent a “death spiral,” it will face a dilemma: either significantly dilute common shareholders to raise funds or continue to increase yields to maintain attractiveness, paying higher financing costs.

Thus, STRC is unlikely to experience a UST-style death spiral but faces a “self-reinforcing” downward risk, more akin to “chronic slow blood loss.”

Strategy counters that the STRC model is based on Bitcoin’s long-term deflationary appreciation. As long as Bitcoin’s appreciation rate exceeds financing costs, preferred stock financing will generate a positive asset accumulation effect, not a transfer of funds from one side to another.

It disclosed that Bitcoin reserves currently cover over 4.3 times the principal of preferred stock, meaning only if Bitcoin falls below about $18,000 would STRC become materially insolvent.

However, capital markets tend to react before fundamentals do. Before reaching this threshold, the secondary market price of STRC might collapse due to Bitcoin market panic.

It is also important to note that investors trading STRC often overlook its legal definition. Nominally, it has a face value and fixed dividends, but legally, it is an equity security, with no mandatory principal repayment or fixed maturity date.

In the capital hierarchy, STRC ranks behind convertible bonds, secured debt, and other debt categories.

A fall below $100 face value marks a critical threshold for Bitcoin as a DAT asset entering a mature phase.

For ordinary investors, de-anchoring of STRC is a warning. In the crypto market, no form of “pegging” is absolute; liquidity is always the primary survival principle.

While the 11.5% high yield is attractive, it implicitly involves credit risk and liquidity traps.

In the journey toward a “Bitcoin-based” system, a fall below face value for STRC is just a brief episode. Ensuring the structural robustness of the financing machine while scaling up remains the key to winning this long race.