Strategy’s STRC preferred stock has become the latest battleground in Bitcoin’s ongoing debate between supporters and critics, with the security’s recent drop below its $100 par value triggering comparisons to Terra Luna and FTX.

For some observers, the decline has become evidence that Michael Saylor’s Bitcoin acquisition strategy is beginning to unravel. 

For others, the selloff represents something far less dramatic: a leverage-driven market event that says more about investor behavior than it does about Strategy’s balance sheet.

The disagreement has created one of the most heated discussions surrounding Strategy since the company began accumulating Bitcoin in 2020.

A Sharp Repricing

STRC, with an IPO in July 2025 at $90, was designed to trade near its $100 stated value through an adjustable dividend mechanism.

The security became an important component of Strategy’s capital-raising efforts, helping fund additional Bitcoin purchases while offering investors an income-oriented instrument linked to the company’s balance sheet.

Last week, STRC briefly fell to approximately $82 before recovering part of its losses. 

The decline pushed its effective yield above 13% while STRC's at-the-market issuance program remained paused below par.

Despite the volatility surrounding STRC, Strategy continues to acquire Bitcoin. 

The company added 1,550 Bitcoin during the week ending June 8th, 1,587 Bitcoin during the week ending June 15th, and another 520 Bitcoin during the week ending June 22nd, bringing its total holdings to 847,363 Bitcoin. 

While those purchases were smaller than some of Strategy's largest acquisitions earlier this year, when STRC traded closer to par value, the company remains one of the largest ongoing buyers of Bitcoin in the public markets.

The Critics Smell Blood

The decline immediately energized some of Strategy’s most vocal critics.

Bitcoin skeptic Peter Schiff described STRC as a “classic centralized Ponzi,” while arguing that the company’s structure ultimately depends on raising new capital.

Others went further.

Several commentators compared the situation to the collapses of FTX and Terra Luna, suggesting that a loss of confidence could trigger a self-reinforcing downward spiral similar to previous crypto failures. 

The tone of much of the criticism reflected broader frustration with Strategy’s growing influence over Bitcoin markets.

Over the past several years, Strategy has accumulated more than 847,000 Bitcoin, becoming the largest corporate holder of Bitcoin and a central figure in the asset’s institutional adoption story.

For critics who have spent years predicting the company’s failure, STRC’s decline appeared to offer validation.

Why Many Analysts Reject the Terra Comparison

Despite the rhetoric, several analysts argue that comparing STRC to Terra Luna fundamentally misunderstands how the instrument works.

According to Bitcoin strategist Jesse Myers, STRC’s decline appears to be primarily the result of a leverage wipeout rather than a deterioration in Strategy’s financial position.

His argument centers on a key distinction: Terra was an engineered system that actively spent reserves attempting to maintain a fixed peg. 

When confidence weakened, the system consumed its own resources defending the peg until those resources were exhausted.

STRC operates differently. 

While Strategy aims for STRC to trade near its $100 par value, the security does not guarantee a fixed price, and the company does not deploy Bitcoin reserves to maintain that level.

Instead, investors determine STRC's value through normal market trading, and the security has recently traded below par. 

A lower market price does not automatically impair Strategy's balance sheet, nor does it force the company to spend Bitcoin defending a target level.

Additionally, JAN3 CEO Samson Mow highlighted that, unlike an algorithmic stablecoin, STRC relies on market pricing and investor incentives rather than reserve deployment or active intervention to move back toward par value.

Can Strategy Be Forced to Sell Bitcoin?

One of the most common claims circulating online is that Strategy could eventually be forced to liquidate Bitcoin to restore STRC's price. 

Analysts largely dispute that characterization, noting that Strategy's debt is unsecured and its Bitcoin holdings are not pledged as collateral for STRC.

Critics have nevertheless focused on the company's sale of 32 Bitcoin earlier this year, portraying it as a symbolic break from Michael Saylor's long-standing "Never Sell Your Bitcoin" mantra and evidence of growing financial pressure. 

The sale was used to help satisfy dividend-related obligations, represented roughly 0.004% of Strategy's holdings, and was not the result of creditor-driven liquidation.

Strategy has sold Bitcoin before, including in 2022, and management has long discussed the possibility of Bitcoin sales at shareholder meetings as one of several capital allocation tools. 

Since the transaction, the company has acquired thousands of additional Bitcoin, increasing its holdings above their pre-sale level.

The transaction has since become a focal point in the broader debate surrounding Strategy's model.

The Leverage Theory

Several market participants believe the most plausible explanation for STRC's sudden decline is leverage among STRC holders, not Strategy itself.

For months, STRC traded within a narrow range near par value, creating a perception that volatility was low. 

According to Myers, that stability likely encouraged investors to borrow aggressively against STRC positions in order to amplify yield.

Once the price began slipping below levels many leveraged traders considered safe, margin calls and forced selling may have accelerated the decline. 

The resulting liquidation cascade pushed prices lower, triggering additional liquidations and creating a feedback loop similar to what frequently occurs in leveraged crypto markets.

Supporters of this view point to STRC’s partial recovery following its intraday lows as evidence that the selling pressure was mechanical rather than fundamental.

The Yield Opportunity Argument

Another factor complicating the narrative is that STRC’s dividend is calculated from its $100 liquidation preference rather than the market price investors pay.

As the market price falls, the effective yield rises.

Mow stated that a discounted STRC may actually become more attractive to long-term income investors because buyers receive the same dividend stream while paying less for the shares.

From that perspective, a discount could eventually attract new demand that helps move the security back toward par value over time.

More Than a Security

The intensity of the debate reflects something larger than STRC itself.

For years, Strategy has become intertwined with Bitcoin’s broader narrative. Bulls view the company as a pioneering capital markets experiment that has accelerated institutional Bitcoin adoption. Bears view it as financial engineering destined to fail.

That divide has become increasingly visible during the current downturn.

Many of the loudest voices predicting Strategy’s collapse are long-time Bitcoin critics. 

Others come from segments of the crypto industry that have historically promoted alternative tokens, DeFi protocols, and yield-generating products that compete for investor capital. 

Supporters of Strategy argue those incentives help explain why some commentators appear eager to frame STRC as the next FTX or Terra regardless of the structural differences.

The result is a debate that extends well beyond a single preferred stock.

A Test for Digital Credit

Perhaps the central question raised by STRC's decline is whether investors are witnessing the most significant test yet of the emerging "Digital Credit" model.

As debate over STRC intensified following the market close, Strategy CEO Phong Le offered a brief response: