Bitcoin's Latest Rally: Brought to You by STRC

The recent bitcoin rally has been fueled in large part by purchases from Strategy. Can they continue?

Bitcoin is up roughly 20% from its February lows, trading around $76,000. Everyone is wondering if the rally can continue.

To a large degree, the answer lies with Strategy. Yes, there have been multiple drivers of the recent rally, including strong buying from ETFs ($3.8 billion since March 1) and renewed purchases by long-term holders. But Strategy has been the single biggest factor, having added $7.2 billion in bitcoin over the past eight weeks.

The purchases have been financed by the issuance of STRC, a perpetual preferred equity instrument. In this memo, I’ll explain what STRC is and why I think the purchases will continue for some time to come.

What is STRC?

STRC is a “perpetual preferred stock” issued by Strategy. A preferred stock is a hybrid financial instrument that shares aspects of a bond and a stock.

Strategy’s goal with STRC is to have it trade at a price of $100/share while offering investors a high dividend yield (currently 11.5% annually). Strategy tries to maintain that share price by adjusting the yield up or down. If STRC trades below $100, Strategy can increase the interest rate to attract new buyers. If STRC trades above $100, Strategy can either issue more shares or lower the interest rate to drive prices back to $100.

Since it began trading, STRC has done a good—but not perfect—job of sticking to its $100 share price. To achieve this, Strategy has periodically lifted the dividend: It started at 9% and has since jumped to 11.5%.

STRC’s Share Price Since Inception

Source: Bloomberg. Data from July 25, 2025 to April 27, 2026.

Why does Strategy issue STRC?

Strategy issues STRC because it wants to buy more bitcoin. Most of the capital raised by issuing STRC is used to purchase BTC on the open market.

How does Strategy pay the 11.5% dividend?

This is the part that breaks people’s minds: Strategy pays the dividend mostly by raising money from other investors.

Wait, isn’t that a Ponzi scheme?

No, because the preferred stock is backed by something of real value: Strategy’s massive bitcoin holdings.

Today, Strategy has $63 billion of bitcoin, $8 billion of debt, and $14 billion of preferred equity. Preferred stock sits above regular shareholders in a company’s capital stack. That means, if the company were liquidated, Strategy would pay off its $8 billion in debt first, followed by its $14 billion in preferred equity. It would then have $41 billion left over for common shareholders.

But won’t Strategy eventually run out of money?

It depends. At current bitcoin prices, the company could hypothetically pay existing dividends for 42 years. So yes, if bitcoin goes nowhere until 2068, Strategy is cooked. But if bitcoin rises by roughly 20% a year,¹ Strategy could pay the dividends forever. (Of note: Strategy can suspend paying the dividend in certain circumstances, but it continues to compound its liability as if it were being paid.)

What if it issues more STRC? Or if bitcoin’s price is volatile?

This is where things get real. Strategy’s actual ability to pay the dividends on STRC depends on both how bitcoin performs and how much STRC the company issues. Other things equal, the more STRC that is issued, the larger the dividend liability becomes, and the higher the risk of default. But that, of course, gets offset by any gains in bitcoin, which would bolster the company’s balance sheet.

All of which is to say: The bet you’re making when you buy STRC is that Strategy will strike the right balance—that it will not issue so much STRC that it gets into trouble.

So will Strategy keep issuing STRC?

I’d bet on it. Rumors suggest Strategy could have raised even more capital in its last STRC offering if it had wanted. With junk bonds yielding less than 7% and investors fleeing private credit, STRC’s 11.5% yield—backed by a more than $40 billion bitcoin cushion—looks particularly attractive. I suspect Strategy will raise billions more through STRC.

How much, exactly? The number I'd watch is Strategy's total obligations (debt + preferred equity) as a percentage of its bitcoin holdings. Today, that sits at 33%: $21 billion in obligations against $63 billion in bitcoin. If that number pushes toward 50%, I think investors will start asking questions. But at today’s bitcoin prices, that still gives room for another $10-$15 billion in STRC issuance. And more if bitcoin rallies.

I don’t think we’re done STRC-ing at all.

Note:

(1) The reason this is not strictly 11.5% is you have to account for bitcoin’s volatility and fixed calendar of payouts; you need a buffer for those instances when bitcoin’s short-term performance doesn’t align perfectly with the distribution date. 20 percent would likely more than cover this, but the actual return needed could be more or less depending on bitcoin’s path and the timing of issuance.

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