STRC trading well below its $100 target level simply makes Strategy’s bitcoin acquisition and funding engine less efficient, because the company can no longer issue the preferred shares on attractive terms, as Benchmark analyst Mark Palmer previously noted. That is very different from suggesting the model is failing.
The bigger issue is one of confidence rather than solvency. STRC was marketed as a low volatility income product designed to trade near $100, and its sharp decline has undermined investor trust.
The real damage is to credibility, Two Prime CEO Alexander Blume argues, not the company’s ability to keep paying dividends. And therefore it may be trust that keeps STRC from returning to its $100 par value.
Michael Saylor’s repeated pivots and deviations from his stated plans have shattered investor trust, leading to a dramatic collapse in Strategy’s (MSTR) ecosystem, Blume told CoinDesk on Thursday.
“Beyond any spreadsheet or logic, markets are about trust, especially when your investor base is retail-centric,” Blume, who heads the bitcoin-focused investment SEC-registered investment adviser, said in a Telegram message.
“Saylor’s repeated pivots and deviations from his stated plans, alongside poor performance of STRC and MSTR, have broken that trust.”
Blume has been sounding the alarm for months. In March, as Strategy’s perpetual preferred stock was still riding early momentum, Blume warned:”There’s no free lunch, a product that pays more than 6% over Treasuries must come with additional risk.”