STRC, a dividend-paying preferred stock that Strategy (formerly MicroStrategy) founder Michael Saylor has outrageously promoted as a competitor to high-yield bank accounts, traded 5.3% below its par value at one point today.
Multiple crypto derivatives of STRC are mirroring the crash.
No US bank account or money market is allowed to lose money like that, and such customers would enjoy FDIC and SIPC protection against loss, anyway.
Unfortunately, STRC has no insurance. Nor does Strategy guarantee its price or dividends. As of writing time, STRC and its unauthorised crypto proxies remain about 4% below their formerly stable trading range.
Despite its incredible risks, STRC has grown to a market capitalisation of $10 billion, more than triple its size at the start of the year.
It grew for one reason. Backed by a company holding tens of billions of dollars worth of bitcoin ($BTC), STRC pays an annualized dividend rate of 11.5% — far higher than traditional USD savings products.
Its promoters, like Saylor, CEO Phong Le, and a legion of others online, repeatedly insinuated that Strategy would pay dividends while STRC traded near $100, its quasi-peg that has nonetheless repeatedly failed to hold — including another panic this week.
Although Strategy will pay a monthly dividend of 0.96% on the full $100 par value of STRC this month, its stock price has already lost 3.8% of its value this month as of writing time, including a momentary loss of -5.3% intraday.
DeFi traders are stacking risks on top of Strategy’s risky STRC
