Analysis suggests that while the issuance of Strategy’s ‘STRC’, which has emerged as a new axis of demand for Bitcoin (BTC), is rapidly expanding, the market’s understanding of its structure remains lacking.
"Not traditional bonds, but a 'Bitcoin-based debt system'"
In a report on March 20 (local time), NYDIG, a U.S. digital asset management firm, stated that STRC and Strive’s SATA should be viewed not as traditional corporate credit products but as a "managed debt structure backed by Bitcoin."
This structure is a system sustained by access to capital markets and investor confidence, and is explained as being different in nature from typical corporate bonds. In particular, a key change is that Strategy’s recent Bitcoin (BTC) purchase funds rely more heavily on the issuance of preferred stock than on convertible bonds.
According to NYDIG, Strategy issued approximately $1.2 billion (about 1.8 trillion won) worth of STRCs over the past week, bringing the total outstanding balance to over $5 billion. When an additional $5 billion in preferred shares is added, the total value of preferred shares exceeds $10 billion, surpassing convertible bonds in its weighting within the capital structure.
The key is access to capital markets, not 'cash flow'
The report emphasizes that the nature of the STRC structure is not based on corporate performance or cash flow.
These securities are unsecured, and dividends are variable and paid at the issuer's discretion. Instead, the issuer actively utilizes dividend rate adjustments and market signals to keep the price near the par value (usually $100).
NYDIG explained, “This structure is not sustained by operating cash flow, but rather by raising funds from capital markets to purchase Bitcoin and continuing to issue it based on that.” Accordingly, it is pointed out that traditional credit indicators such as the interest coverage ratio (EBIT) are not suitable for assessing sustainability.
Bitcoin Drop = Liquidation? “Not Directly Linked”
Some in the market are concerned about the possibility of chain liquidations if the price of Bitcoin (BTC) falls, but the NYDIG viewed this as an overinterpretation.
The explanation is that most of Strategy's debt is unsecured, and default arises from 'non-payment' or 'bankruptcy' rather than a decline in asset prices. Preferred stock also lacks a mandatory trigger directly linked to the price of Bitcoin.
However, preferred stock investors may be more exposed to dividend deferral or structural subordination risks.
The operating conditions for the 'Bitcoin flywheel' are
NYDIG describes this structure as a 'flywheel'.
When preferred shares trade near their par value, fundraising becomes smoother, and using these funds to purchase Bitcoin expands the asset base. At the same time, if the share price remains above the Net Asset Value (NAV), issuing additional shares becomes more favorable, creating a virtuous cycle.
The report emphasized a cyclical structure leading to “access to capital → purchase of Bitcoin → strengthening financial stability → maintaining investor confidence → additional issuance.”
However, this is a 'conditional' mechanism. If Bitcoin prices fall, investor sentiment weakens, or preferred stock prices decline, issuance becomes difficult and the system may stagnate. In this case, the burden is highly likely to be passed on to preferred stock investors in the form of dividend reductions or changes to terms.
NYDIG likened STRC to an option structure. It is similar to selling a put option, which involves taking on the risk of a decline in Bitcoin's asset value in exchange for a return, but differs in that the expiration date or strike price is not fixed and depends heavily on management's judgment.
Meanwhile, as of the time of writing, Bitcoin (BTC) is trading at $70,885.
🔎 Market Analysis
STRC is a 'Bitcoin-based financing system' rather than traditional bonds, sustained by capital market confidence rather than corporate performance.
Changes in capital structure occur as Bitcoin purchase strategies shift from convertible bonds to preferred stocks.
Although it is not an automatic liquidation structure in the event of a price decline, dampened investor sentiment acts as a key risk.
💡 Strategic Points
Flywheel Structure: Capital Raising → Bitcoin Purchase → Asset Growth → Strengthening Trust → Additional Issuance
The structure operates most stably when the preferred stock price remains near its par value.
If market confidence weakens, there is a possibility that the burden will be passed on to investors through measures such as dividend reductions or changes to terms.
📘 Glossary
Preferred Stock: A type of security with priority in dividends but restricted voting rights.
NAV (Net Asset Value): Based on the actual value of a company's assets minus liabilities.
Flywheel: A mechanism that continuously expands once activated through a virtuous cycle structure.
Selling Put Options: An investment structure that earns a premium (profit) in exchange for assuming the risk of a price decline.
💡 Frequently Asked Questions (FAQ)
Q.
How is STRC different from regular bonds?
STRC is a structure that circulates funds for Bitcoin purchases based on capital market trust, rather than relying on interest and cash flow like traditional bonds. It is unsecured and does not offer fixed dividends, making it structurally more flexible than standard bonds but also subject to greater uncertainty.
Q.
Does it become dangerous immediately if the price of Bitcoin drops?
Since there is no direct liquidation trigger, it will not collapse immediately due to a price drop alone. However, if investor sentiment weakens, fundraising becomes difficult, which could slow down the flywheel structure.
Q.
What is the most important risk from an investor's perspective?
The core risk is a 'collapse of trust.' If preferred stock prices fall or access to the capital market is blocked, investor profitability is highly likely to deteriorate due to factors such as dividend cuts and changes in terms.
TP AI Important Notes
The article has been summarized using a language model based on TokenPost.ai. Key points of the text may be omitted or inaccurate.
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