Strategy's ₱150.45 billion ($2.5 billion) Bitcoin Buy Triggers STRC Warning
A former Goldman Sachs analyst warns that Strategy's 11.5% STRC dividend structure is dangerously dependent on Bitcoin staying bullish, especially after the company funded 85% of its ₱150.45 billion ($2.5 billion) Bitcoin purchase with preferred shares.
Key Takeaway
Strategy's STRC dividend model works only if Bitcoin stays up — a bear market could kill the flywheel.
Former Goldman Sachs analyst Dom Kwok issued a sharp warning about Strategy's preferred shares after the company bought 34,164 Bitcoin last week using STRC proceeds.
Kwok, now co-founder at EasyApp, said backing preferred equity with a highly speculative asset like Bitcoin is an extremely risky game, especially if the bear market continues. He added that he's not bullish on STRC.
The concern centers on what happens if Bitcoin falls hard. STRC trades with a price floor of ₱6,018 ($100), but it's dropped as low as ₱5,597 ($93) in the past three months. Kwok said the juicy yields are attracting yield-starved public market investors, but this is a temporary phenomenon. Strategy can turn off dividends at any time, he said.
CoinShares investment analyst Satish Patel pushed back, saying STRC's volatility has declined recently. He said the instrument now behaves more like a stable, high-yield income instrument anchored around par, rather than a volatile proxy for Bitcoin. The tax treatment helps too — STRC dividends are classified as returns of capital, which offers favorable treatment for holders.
Patel acknowledged the risk but called it economically self-limiting. If the board ever suspended dividends, the entire capital-raising flywheel would collapse, he said. STRC would drop below par, the ATM issuance window closes, no new Bitcoin purchases, and the whole thesis dies. Strategy currently holds ₱135.41 billion ($2.25 billion) in cash reserves to support dividend payments.
This article was written based on reporting from Dlnews.
