Strategy’s Stretch (STRC) Product
High yield, low duration, and indirect exposure to Strategy’s large bitcoin balance-sheet holdings
Instrument Summary
STRC is Strategy’s first short-term, high-yield Bitcoin credit instrument, currently paying ~10.25%. Structured as perpetual preferred equity, STRC uses an active monthly dividend-reset mechanism to target trading near par ($99–$101).
Structure & Mechanics
Instrument Type
Perpetual Preferred Equity (no maturity date)
Monthly resets make it function similar to short-duration credit
Dividend Structure
Cumulative monthly dividends
If a dividend is missed or unpaid:
It accrues
It compounds (“compounded dividends”)
It remains owed until paid, redeemed, or liquidated
Dividend Rate
Variable, reviewed monthly
Benchmarked to:
Five-day VWAP of STRC
One-month SOFR
Paid monthly in arrears
Liquidation Preference
$100 per share + all accumulated + compounded unpaid dividends
Senior to common equity; subordinate to debt
Serves as the primary valuation anchor
Economic Backing & Liquidation Framework
Although STRC is not formally collateralized by bitcoin, its economic security is directly linked to Strategy’s dominant asset: its bitcoin treasury.
Economic Backing
Strategy Corp holds a large BTC balance, which drives enterprise value.
Because bitcoin represents the majority of the company’s monetizable assets, all preferred equity—including STRC—benefits indirectly from BTC appreciation and asset coverage.
Tie-In to Liquidation Preference
STRC holders are entitled to $100 + accrued dividends before common shareholders in a liquidation.
While no BTC is pledged as collateral, the probability of recovering this $100 claim is shaped by the company’s bitcoin reserve value:
Higher BTC prices improve asset coverage of preferred obligations.
Even without explicit collateralization, the preferred liquidation claim is economically supported by the size and liquidity of the BTC holdings.
In practice, STRC’s liquidation preference is backstopped economically by BTC—the asset that defines Strategy Corp’s overall solvency.
Dividend Adjustment Plan (Price-Anchoring Mechanism)
Management adjusts STRC’s dividend monthly to keep its trading price close to par.
STRC VWAP Dividend Adjustment < 95 +50 bps or more 95 – 98.99 +25 bps or more 99 – 100.99 ±25 bps discretionary ≥ 101 –25 bps or more
Objective: Maintain STRC trading around $100 by raising yield when the price drifts below par and lowering yield (or issuing additional shares) when it trades above par.
Bottom Line
STRC is a unique bitcoin-economically-backed preferred instrument offering high yield, monthly income, and an engineered par-stability mechanism. Its liquidation preference provides structural downside protection, while the company’s bitcoin-rich balance sheet offers economic support even without formal collateralization. STRC delivers a distinctive blend of credit-like stability and bitcoin-linked upside, making it a differentiated vehicle for yield-seeking investors.