Strategy’s stock is down more than 70% from its peak, and Bitcoin is below $60,000. Some investors are getting nervous, asking if this could be this cycle’s Terra/LUNA — a highly leveraged bet that blows up when things get rough.
The company fired back on Monday with a new capital framework. The package includes up to $1 billion in MSTR buybacks, another $1 billion in STRC buybacks, a bigger cash buffer of $2.55 billion, and an STRC dividend bump to roughly 12%. In a notable shift for a company known for hoarding Bitcoin, Strategy also said it may sell up to $1.25 billion in BTC if needed to meet obligations.
Markets liked what they heard. Both MSTR and STRC jumped more than 12% in after-hours trading.
STRC is Strategy’s perpetual preferred stock, paying a 12% annual dividend on a $100 par value. Critics say its structure creates a feedback loop — great in a bull market, dangerous in a bear. When Bitcoin drops and share prices fall, the same flywheel that amplified gains can accelerate losses.
Ripple CEO Brad Garlinghouse said it on CNBC: “Financial engineering does not drive long-term value.”
But not everyone’s panicking. Bitfire Research says STRC’s recent price drops are about sentiment and liquidity, not solvency. Taran Dhillon from Kula told Cointelegraph that Bitcoin volatility alone probably won’t break Strategy’s structure. The real risk, he says, is whether the company can keep refinancing when capital gets expensive.
Strategy’s plan buys time. Whether it’s enough depends on where Bitcoin goes next.
