MicroStrategy's STRC preferred stock dropped to a record low on Thursday, closing at $88.59 and touching an intraday low of $82.50, marking a significant setback for the company's AI-assisted Bitcoin funding strategy. The security, formally known as Strategy's Variable Rate Series A Perpetual Stretch Preferred Stock, was designed using AI-assisted design according to CEO Michael Saylor, who stated in interviews that he used AI to create the product. STRC was pitched as financial engineering for the Bitcoin era, but its drop below $100 makes that engineering look less stable than advertised. The security was built to trade close to $100 through Strategy's ability to adjust its dividend rate monthly to support that target price, but with STRC roughly $11 below par, that mechanism strains significantly. Over the past month, STRC has fallen more than 10%, creating renewed concern about the company's primary Bitcoin financing tool.
Despite Bitcoin holding near the $62,900 zone, Strategy-linked securities continue to weaken, creating a notable divergence between Bitcoin's recovery and preferred stock performance. As reported by AMBCrypto, STRC's rapid growth from $2.8 billion to $10.5 billion suggests issuance is outpacing confidence, leaving markets wary of future obligations. The recent market decline has intensified pressure on STRC, with Bitcoin breaking below the $60,000 support level on June 5th, closing around $61,000 and falling below $60,000 for the first time since October 2024. According to CoinDesk, Bitcoin remains under pressure, hovering around $62,880 and roughly 50% below its October all-time high, which historically has influenced STRC's trading performance. The broader crypto market experienced significant stress, with ETH falling to a low of $2,157.14 and SOL dropping below $100, touching $95.95.
The June 18, 2026 selloff exposed the fragility of Bitcoin-backed digital credit instruments for the first time. STRC fell to an intraday low of $82.50, a steep discount to par for an instrument designed to behave like a steady bond, before recovering to close near $88.59. SATA, the preferred stock of Bitcoin treasury company Strive, tumbled from its $100 par into the low $90s, with one company executive noting it touched as low as $92.88 intraday before recovering toward $97.71. Strive's chief executive Matt Cole called it "the most difficult day in the history of Digital Credit," attributing the plunge not to any deterioration in issuer creditworthiness but to a leverage-driven liquidation cascade. The episode revealed that these instruments can lose nearly 20% in a single session, far beyond what a truly stable income security should experience. Selling came on heavy volume and cascaded through these thinly traded instruments, with the damage resulting from a cascade of margin calls and forced selling, not a real credit event.
The slide carries two implications for the firm's Bitcoin strategy that trace back to how STRC funds the company's purchases. STRC is engineered to trade near $100 and pays an 11.5% annual dividend rate for June, unchanged for a fourth straight month. The design only works while STRC trades near or above $100, as Strategy issues new shares and uses the proceeds to buy Bitcoin. With STRC roughly $11 below par, that mechanism strains significantly. A higher dividend rate means a larger annual cash obligation, and Strategy currently funds that obligation by selling MSTR shares. The constraint is MSTR's net asset value premium, which has compressed toward 1x, leaving little room to dilute further. As noted by Bull Theory, when Strategy sold just $2 million worth of Bitcoin last time, the price dropped 20%, and if forced into consistent selling, the impact on Bitcoin would be significant. Strategy's own filings note STRC is not collateralized by its Bitcoin and carries only a preferred claim on residual assets, making it a credit product rather than a Bitcoin proxy.
The selloff has created a split among commentators regarding the fundamental versus technical nature of the decline. Peter Schiff, a longtime Bitcoin critic, framed the decline as a structural failure, while others attribute it to technical factors. Jesse Myers, Head of Bitcoin Strategy at The Smarter Web Company, attributed it to a leverage-driven liquidation cascade and expects Strategy to raise the dividend on June 30, possibly to 11.75% or 12%. The market is freaked out that this depeg is like Terra/Luna, but Myers argues this is not an asset like that. Opportunistic hedge funds will recognize that this is a firesale and the fundamentals are unchanged for STRC and step in as buyers. The next signal comes June 30, when STRC shifts to twice-monthly payments, which will determine whether that cadence and a possible rate increase can pull the stock back toward par and shape Strategy's next funding moves. Michaël van de Poppe, founder of MN Capital, argued that STRC cannot break this cycle unless Bitcoin crashes toward $10,000, and he expects it to move back near par within a week.
