How STRC faced its par-value crisis: The events leading to Strategy’s preferred stock downfall. From a bond repurchase and diminishing cash reserves to a bitcoin bear market, the unfolding circumstances that turned STRC’s par-value issue into a broader market discussion.

— Strategy’s preferred stock STRC, intended to maintain a price of $100, fell to a low of $83 on Thursday.

— Several events contributed to this decline, including the buyback of convertible notes at an 8% discount and rival Strive announcing the initiation of daily dividends on its SATA equivalent.

— This downturn was exacerbated by a mix of decreasing bitcoin prices, shrinking liquidity buffers, and declining investor confidence.

STRC, the dividend-yielding preferred equity issued by bitcoin treasury firm Strategy (MSTR), is meant to stabilize at a price of $100, its par value. However, this is not always the case.

On Thursday, the stock price plummeted below $83, approximately 17% beneath the target and marking the lowest point since its launch in July 2025. This security is expected to deliver high returns with low volatility.

Maintaining the stock price near par is vital, as it enables Strategy to efficiently raise capital through at-the-market (ATM) offerings to support the annualized 11.5% payout.

In recent weeks, however, a steep drop in bitcoin prices occurred.

May 14: STRC closed at $100 leading into its monthly ex-dividend date, while bitcoin was trading above $80,000. At first glance, everything seemed normal. (Investors purchasing a stock on the ex-dividend date do not receive the payout, typically causing the price to decrease to reflect the lost value.)

However, beneath the surface, the reality was more complicated. Bitcoin was already trading well below its October peak of $126,000, and STRC had only managed to sustain $100 just before the ex-dividend date, not consistently throughout the month.

Additionally, Strive Asset Management (ASST) chose that day to announce it would be paying dividends on its competing security, SATA, on a daily basis. SATA provides a higher yield of 13%, increasing the pressure on Strategy as it sought shareholder consent to transition STRC from monthly to semi-monthly dividend payments.

STRC’s proposed adjustment was aimed at minimizing volatility around ex-dividend dates and helping the security trade closer to par for extended periods.

May 15: Strategy revealed the repurchase of $1.5 billion of its 2029 convertible notes at an 8% discount. While Strategy carried over $8 billion in convertible debt at that time, Strive had no outstanding debt.

The repurchase was partially funded using a dollar cash reserve established at the end of 2025 to support dividend and debt obligation payments. The use of this fund in the transaction was not disclosed at the time.

Bitcoin’s price fell to $78,000.

May 18: Strategy acquired 24,869 BTC as the leading cryptocurrency approached $76,000.

May 26: The firm confirmed it had tapped into its cash reserves to facilitate the bond buyback. This transaction had reduced the reserve to $871 million.

The buyback diminished that reserve to approximately six months of STRC dividend coverage. The company had previously indicated its aim to maintain about 24 months of dividend coverage.

STRC traded at $99.33, while bitcoin lingered around $77,000.

June 1: Strategy sold 32 BTC, marking its first bitcoin sale since 2022. This action seemed intended to show that the company was prepared and able to sell the token if necessary to meet dividend obligations.

The sale represented only 0.0038% of the company’s holdings. Nevertheless, the company’s common stock (MSTR) fell by 5.9%, and bitcoin dipped to a low of $70,500 before closing at $71,286. STRC ended the day at $98.07.

June 5: Bitcoin slipped below $60,000 for the first time since October 2024, closing around $61,000, according to Decryptnews data. STRC dropped to a low of $90, finishing the day at $93.40.

June 8: Shareholders of Strategy approved the plan to pay STRC dividends bi-monthly. Strategy purchased 1,550 BTC and reported that its dollar reserve had increased to $1 billion.

June 15: Strategy acquired another 1,587 BTC and announced that its dollar reserve had now reached $1.1 billion.

June 18: STRC dipped below $83 during the day, closing at $88.59 as the U.S. approached a holiday weekend with no stock trading on Friday. Bitcoin erased a brief rebound, declining 2.4% to $62,880. Strive CEO Matt Coles, whose SATA also fell, attributed the decline to a leverage-driven liquidation rather than indicative of weakening credit fundamentals.

The company currently holds 846,842 BTC, obtained at an average cost of $75,656 per bitcoin. With bitcoin trading around $62,500, Strategy is facing an unrealized loss of about $11.14 billion.

Simultaneously, its two most recent capital raises have been perceived as dilutive, encountering considerable backlash from the community. The common stock now trades around $112, down roughly 80% from its all-time high in November 2024.

The challenge for Strategy lies in the fact that all these changes took place amidst a bitcoin bear market. As bitcoin continued to fall, investor confidence waned not only in the asset itself but also in the financial products and capital structure associated with it.

The crucial question for investors now is whether STRC can rebound and return to its par value.