Bitcoin has fallen by roughly 50% since Strategy launched its Bitcoin funding vehicle, Stretch (STRC), in July 2025, with the instrument’s drop below its $100 par value now weighing on the company’s ability to raise capital and continue large-scale purchases.
STRC fell to a record low of $82.53 on Thursday before closing at $88.59, well below par. The decline has pushed its effective yield to about 12.9%, exceeding its adjustable 11.5% dividend rate and signaling rising pressure in the structure.
Funding slowdown hits bitcoin accumulation pace
The widening gap between yield and dividend has slowed Strategy’s at-the-market share issuance, limiting fresh capital inflows. As a result, Bitcoin purchases have decelerated, even as the company holds 846,842 BTC.
Recent buying activity shows a clear reduction. In June, Strategy acquired 1,550 BTC for $101 million in one week and 1,587 BTC for $100 million in the next. These purchases are significantly smaller than April’s $2.54 billion acquisition of 34,164 BTC and May’s $2.01 billion buy of 24,869 BTC.
The shift has also affected liquidity management. The company recently sold 32 BTC, worth roughly $2.5 million, to meet dividend obligations, a small but notable move given its broader accumulation strategy.
Pressure on the “flywheel” strategy
The drop in STRC challenges Strategy’s self-reinforcing model, where capital raised through the instrument was continuously deployed into Bitcoin purchases. Critics, including Peter Schiff, argue the system relies heavily on constant inflows to sustain itself, while others attribute the decline primarily to short-term leverage unwinding.
Strategy has adjusted by moving STRC to a semi-monthly dividend schedule, doubling payout frequency without increasing total obligations. Even so, with shares trading about 13% below par, the funding slowdown has become increasingly visible.
Leverage unwind cited as key driver
Market participants point to leverage dynamics as a central factor behind STRC’s decline. The instrument had traded near $99 to $100 with significant leverage support, but a drop below $95 triggered margin calls that accelerated selling.
Analyst Myers said the pressure appears linked more to leverage unwinding than structural weakness, estimating the company could sustain dividend payments for decades under current conditions, and indefinitely if Bitcoin posts modest annual growth of around 2%.
At current levels, STRC’s yield—near 13%—may attract income-focused traders, according to market watcher Scott Melker, potentially helping stabilize demand.
Broader market impact and rising volatility risks
The slowdown in STRC issuance removes a steady source of buying pressure from the Bitcoin market at a time when sentiment is turning cautious. Spot exchange-traded products have recorded recent net outflows, including a single-day withdrawal of $90.7 million.
Attention is shifting toward derivatives markets, where open interest in Bitcoin futures has climbed toward $70 billion, suggesting leveraged positions are driving price action. The unwinding of trades tied to STRC’s previous trading range has already contributed to volatility, and elevated leverage across the system raises the risk of further forced selling.
Although the 30-day Bitcoin Volatility Index remains lower than in past cycles, current conditions point to a market still vulnerable to sudden shocks.
Yield appeal and next steps in focus
STRC’s elevated yield introduces a new dynamic, potentially attracting capital focused on income rather than price gains. With borrowing rates in digital asset credit markets typically ranging from 10% to 16%, the instrument offers a synthetic yield on Bitcoin, which does not generate income on its own.
This could establish a new base of demand for STRC and help stabilize its price, supporting Strategy’s ability to resume its accumulation strategy.
Focus now turns to the company’s next dividend rate announcement on June 30. Strategy retains alternative financing options, including nearly $1 billion in cash reserves and the ability to issue equity, which could signal whether it intends to maintain its long-term Bitcoin acquisition strategy despite current funding constraints.
Concerned about Bitcoin volatility and funding risks? Explore deeper insights in this detailed market outlook now.
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