Why STRC holders actually made money

Over the past year, Bitcoin dropped nearly 50% from its all-time high. MSTR fell even harder, cut in half and then some. But STRC, the preferred share, was a different story.

STRC pays dividends every two weeks, with an annualized yield close to 12% at the time of the announcement. Its price did drop, but when you add in the dividends, the total return stayed positive. People who bought STRC were not betting on Bitcoin going up. They were betting that Strategy would stay alive and keep paying them on time.

When Saylor announced the sales, it was not bad news for STRC holders. It was actually good news. The company was openly saying that if cash gets tight, they will sell Bitcoin to cover obligations. That makes those dividends even more secure.

What the announcement actually says

Strategy currently has $2.55 billion in cash on hand, enough to cover about 26 months of dividends and interest when combined with authorized liquidity. That money came from issuing new MSTR common shares last week, raising about $1.15 billion. Instead of buying Bitcoin, they kept it as cash. In the past this company would get money and immediately buy Bitcoin without pausing. Now cash flow safety has been put ahead of expanding the Bitcoin position.

They also raised the STRC dividend from 11.5% to 12%, effective from July. As soon as the news came out, STRC jumped back from the 70s right into the 80s, but it is still far from its $100 par value. The company said they will review the dividend rates every month. In plain terms, if STRC still does not get back near 100, they might raise the rate again. Every time they raise it, more cash goes out the door.

On the buyback side, the company authorized $2 billion. Half is for repurchasing preferred shares and half for MSTR common shares. The preferred share part is straightforward. They can buy something with a $100 face value for $80 in the market, retire it, and basically pay off the debt at a discount while reducing future dividend obligations.

Then comes the explosive part of the whole announcement: the Bitcoin monetization plan. Strategy has formally established a selling mechanism. They can sell Bitcoin to replenish dollar reserves, to pay dividends and interest, or to do buybacks. The reserve replenishment part has a $1.25 billion cap. But for dividends, interest, and buybacks, there is no stated upper limit. That means in theory they could sell more than $1.25 billion, and the boundary is not clear.

From a 32 coin trial to a 3,588 coin real dose

When I was in Prague, I mentioned the term 'market inoculation'. Saylor's earlier sale of 32 coins was meant to let everyone feel it first. The world did not end. The company did not collapse. Bitcoin did not die. Looking back, those 32 coins were the clinical trial, and these 3,588 coins are the real dose.

The rules were barely written before they started using them. One week after the announcement, they sold 3,588 bitcoins for $217 million to pay dividends. I thought this mechanism would stay there as a just in case backup. The speed surprised me.

Strategy's average Bitcoin cost basis is around $75,000. Now they are selling below $60,000, so yes, they are realizing losses. Saylor's explanation is that 'never sell Bitcoin' was advice for regular retail investors. That does not apply to them because they are a finance company. They have to sell when they need to.

Personally, I think the logic holds up. But after shouting that phrase so loudly, saying it was just for retail feels like a pretty sharp turn. I have seen plenty of people present the version that benefits them as eternal truth, then later explain that your understanding was off when things change. Most of them were politicians, and I do not like that.

Who should worry, who can stay calm

For STRC holders, this is clearly good news. The dividends arrived, and the company kept its promise. The people yelling the loudest are probably the ones holding MSTR or Bitcoin bought at the all-time high. Depending on where you stand, the perspective is indeed totally different.

My own take is that this announcement does not show any collapse signal in the short term. Writing selling into the company rules with defined uses and limits is still way more transparent than saying nothing and quietly selling later. I have seen too many shady operations in the market. Compared to teams that only sell secretly when they are desperate and then make up excuses afterward, at least Saylor is being upfront this time.

But change is real, and there is no point sugar coating it. People who bought Strategy before were buying the premium attached to the narrative of 'Saylor only buys, never sells'. Now that narrative has a hole in it. I cannot tell you how the market will reprice that. Time will have to answer.

Three numbers worth watching closely

First, if raising the dividend to 12% still cannot put STRC back near $100, the market still does not trust this new framework. The company may have to keep raising rates, and each increase adds more cash flow pressure.

Second, the entire business model of Strategy goes beyond just holding Bitcoin. It uses low cost financing to buy more Bitcoin when the market gives it a premium. If the premium disappears, the flywheel loses its most important fuel.

Third, and I think it is the most critical: will Strategy keep selling Bitcoin on an ongoing basis? Occasionally selling small amounts to manage cash flow is completely different from continuously selling to keep the whole system running. If it becomes continuous, it would feel like a Ponzi scheme, and Peter Schiff would be right.

The way to tell the difference is to watch whether Bitcoin per share is continuing to grow. That number is more important than anything Saylor says. Do not listen to what he says. Look at the number. Look at the math. It is more important than any praise or criticism in the comments.

  • Can STRC get back to $100?
  • Can MSTR's premium ratio turn positive again?
  • Will Strategy keep selling Bitcoin on an ongoing basis?

Listen less to slogans, watch the data more

I do not hold MSTR or STRK, and I have no financial relationship with this company. I am neutral. I am saying this purely because I think it is worth discussing, especially given how influential Saylor is in our domain.

Whether you are a Strategy shareholder or a Bitcoin holder, do not panic too much for now. But do not pretend nothing has changed either. When you look at this company going forward, listen less to the slogans. Watch the data more. Watch the math. Watch the numbers, and you will be good.