Controversy is mounting over Strategy’s 11.5% dividend preferred stock, ‘STRC’. As it has been suggested that this preferred stock raised as much as $2.7 billion and as little as $1.2 billion in just two days this month, criticism has spread among Bitcoin (BTC) investors that it is a ‘high-risk product effectively packaged like a deposit product.’
According to Protoss on the 13th, virtual asset YouTuber 'CoffeeZilla' took direct action against the structure and marketing wording of STRC in an 18-minute video. He pointed out that STRC is neither a bank deposit, a money market fund, nor a savings product with insurance, and that investors must find another buyer, not the company, to recover their principal.
STRC is designed to typically pay monthly dividends and keep its stock price around $100, but it has fluctuated by more than 9% in a short period. Furthermore, criticism persists that the actual structure is different from the appearance of a fixed income, as the board of directors can suspend dividend payments at its discretion. CoffeeZilla, citing the fact that 80% of STRC investors are retail investors, argued that complex financial engineering products are being sold to ordinary investors without sufficient understanding.
The controversy is also rooted in Strategy's aggressive Bitcoin purchases. The company currently holds 780,897 BTC, with an average purchase price of around $75,577. With Bitcoin recently trading at around $74,000, the fact that the valuation of the company's assets falls below the average purchase price is also cited as a burden.
CoffeeZilla raised questions about the sustainability of STRC, comparing its 11.5% return to Terra Luna's Anchor Protocol's 20% annual return. Conversely, Strategy supporters countered that STRC is merely a financing tool for purchasing Bitcoin. However, as the company itself has stated that it is not obligated to hold assets to back STRC, the risks associated with the issuance structure are unlikely to disappear easily.
Strategy Stock Price: 'Amplification' Emerges as a Variable Rather Than Bitcoin
View full Alpha Report →The market does not view this controversy as merely a YouTube dispute. This is because, given that STRC can accelerate the pace of Bitcoin purchases using funds from retail investors, it could impact Strategy's future financing capabilities and the supply and demand of BTC. Warnings are resurfacing that the structure and risks of financial products promising high returns must be scrutinized more closely.
🔎 Market Analysis
STRC is a preferred stock marketed for its high dividend (11.5%), but controversy is growing due to its structure, which actually lacks principal guarantee or stability.
In particular, as it is being used as a means of financing for Bitcoin purchases, criticism is spreading that it is a "packaged sale of high-risk products."
Large-scale capital inflows in the short term act as a variable that can affect BTC supply and demand.
💡 Strategic Points
For high-dividend products, it is essential to examine 'dividend sustainability' and 'structural risks.'
If the price of Bitcoin falls, the stability of STRC may also be shaken.
As it is a market selling method rather than a repurchase structure, liquidity risk is also important.
📘 Glossary
Preferred Stock: Stock that receives dividends before common stock but has restricted voting rights.
Dividend Yield: The ratio of dividends to the investment amount; the higher the yield, the greater the potential for risk.
Money Market Fund (MMF): A representative low-risk product that seeks stability by investing in short-term financial instruments.
Liquidity Risk: The risk of being unable to convert assets into cash at the desired time.
💡 Frequently Asked Questions (FAQ)
Q. Is STRC a safe deposit product?
Q. Why is a high rate of return like 11.5% possible?
Q. Does the STRC controversy affect the Bitcoin market?
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