Bitcoin has been under pressure for months. Since October, the price has dropped significantly, leaving many investors nervous and forcing others to step back from the market. But one company refuses to slow down.
Strategy, the company led by Michael Saylor, has continued buying bitcoin throughout the entire downturn. While many investors hesitate during a bear market, Strategy is doing the opposite: it keeps accumulating more.
Over the past few years, the company has become the global benchmark for institutional bitcoin investing. Its approach is bold, controversial, and impossible to ignore.
And now, a new financial product called STRC is attracting increasing attention.
But with high rewards often come high risks.
The “Bitcoin Treasury Strategy”
Strategy’s approach is built around what the company calls the Bitcoin Treasury Strategy.
Most companies keep their cash reserves in traditional assets such as government bonds, money market funds, or simply bank deposits. These assets are considered safe and liquid, but they also suffer from one major problem: inflation slowly erodes their value.
Strategy decided to take a completely different path.
Instead of holding large amounts of cash in traditional financial instruments, the company converted almost all of its corporate reserves into bitcoin. In other words, Strategy treats bitcoin as its primary treasury asset, similar to how companies once held large gold reserves.
This idea was first introduced in 2020 and has since turned Strategy into the largest corporate holder of bitcoin in the world.
A Massive Bitcoin Position
Today, Strategy owns approximately 738,731 BTC.
Those coins were acquired at an average purchase price of $75,862 per bitcoin, representing a total investment of about $56.04 billion.
With bitcoin currently trading around $70,000, the company is sitting on a sizeable unrealized loss.
For most companies, such a situation would trigger caution. Management teams would likely pause their purchases and wait for markets to stabilize.
Strategy, however, continues buying.
How Strategy Keeps Funding Bitcoin Purchases
The big question many investors ask is simple:
Where does the money come from?
Strategy regularly raises fresh capital through financial markets. It does this primarily in two ways:
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Issuing new shares
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Selling convertible bonds
These funds are then often used to purchase additional bitcoin.
The company measures its success with a metric it calls “BTC Yield.” This refers to the amount of bitcoin per share. The goal is simple: increase the number of bitcoins backing every share over time.
If bitcoin rises in value in the long run, shareholders benefit from this growing exposure.
But Strategy has recently introduced another way to raise capital.
Enter STRC: A New Financial Product
One of the most interesting developments is the creation of Stretch (STRC).
STRC is a perpetual preferred stock issued by Strategy. Unlike ordinary shares, preferred shares typically pay a fixed dividend and have priority over common shareholders when it comes to payouts.
The structure is unusual.
Strategy aims to keep the price of STRC close to $100 by adjusting the dividend rate. If demand weakens and the price drops, the company can increase the dividend to attract buyers. If demand becomes too strong, it can lower the dividend.
At the moment, STRC offers a dividend of about 11.5%, paid monthly.
That’s extremely attractive in today’s market, where many government bonds yield far less.
As a result, STRC has started to gain popularity among investors looking for high income with relatively stable pricing.
Why Some Companies Are Buying STRC
The stable price and high yield make STRC look almost like a hybrid between a bond and a stock.
Some companies are already using it as a treasury investment.
For example, Strive recently announced that it purchased $50 million worth of STRC shares.
The appeal is obvious:
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A high yield paid monthly
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A relatively stable price around $100
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Exposure to the Strategy ecosystem
But the structure behind STRC is closely tied to Strategy’s core bet on bitcoin.
The Big Assumption Behind the Model
Strategy’s strategy ultimately depends on one key belief:
Bitcoin will rise faster than the 11.5% dividend promised to STRC investors.
If bitcoin appreciates significantly over time, the massive bitcoin holdings on Strategy’s balance sheet will grow in value. That growth would help maintain confidence in the company and its financial products.
As long as investors believe in this vision, the model can keep working.
But it is not without risks.
The Risks Behind STRC
Although STRC may look appealing, investors should understand that the dividends are not guaranteed.
Strategy has the right to reduce or even suspend the dividend at any time. If that happens, the $100 target price could quickly lose its support.
Another important detail: STRC is still a stock, not a bond.
That means in the event of bankruptcy, creditors would be paid first. Even preferred shareholders could end up receiving nothing.
What If Bitcoin Stays in a Bear Market?
Another critical question is what happens if bitcoin enters a prolonged bear market.
Strategy owns an enormous bitcoin reserve that could theoretically be sold to meet financial obligations. But such a move would create a serious problem.
If a company holding hundreds of thousands of bitcoin suddenly started selling large amounts, the market could react violently. Prices could drop sharply, potentially triggering even more selling.
In the worst case, this could create a negative feedback loop, sometimes called a death spiral.
The Danger of High-Yield Financial Structures
History shows that very high yields often attract aggressive financial strategies.
Hedge funds, for example, may decide to borrow money (use leverage) to buy STRC. They could rely on the monthly dividends to cover their own financing costs.
As long as the dividends keep flowing, the system works.
But if something breaks, for example if Strategy reduces the dividend, the entire structure could collapse quickly.
Crypto investors have seen something similar before.
A Reminder of the Terra-Luna Collapse
In 2022, the crypto world witnessed the dramatic collapse of the TerraUSD ecosystem, developed by Terraform Labs.
At the time, investors could earn yields of nearly 20% on UST deposits through the Anchor protocol. The returns looked incredibly attractive and billions of dollars flowed into the system.
But the model proved unsustainable.
UST eventually lost its dollar peg, triggering a catastrophic collapse that wiped out tens of billions of dollars. The crash also caused a chain reaction of bankruptcies across the crypto industry.
Major firms such as Three Arrows Capital, Celsius Network, Voyager Digital and BlockFi all fell in the aftermath.
A Bold Experiment
Strategy’s financial engineering and relentless bitcoin accumulation make it one of the most fascinating experiments in modern finance.
Supporters see the company as a pioneer of the bitcoin-based financial system.
Critics worry that the structure could become fragile if market conditions change.
One thing is certain: as long as Strategy keeps buying bitcoin and launching new financial products like STRC, the entire market will be watching closely.
Because if the model succeeds, it could inspire many other companies to follow the same path.
And if it fails… the consequences could ripple across both traditional finance and the crypto industry.
