STRC trading well below its $100 target level simply makes Strategy’s bitcoin acquisition and financing engine less effective, as the company can no longer issue preferred shares on attractive terms, as Benchmark analyst Mark Palmer previously noted. This is very different from suggesting that the model is a failure.
The biggest problem is trust rather than creditworthiness. STRC was marketed as a low-volatility income product designed to trade near $100, and its sharp decline undermined investor confidence.
The real damage is to credibility, says Alexander Blume, CEO of Two Prime, not to the company’s ability to continue paying dividends. And it may be confidence that is keeping STRC from returning to its $100 face value.
Michael Saylor’s repeated pivots and deviations from his stated plans have broken investor confidence, leading to a spectacular collapse of 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 runs the SEC-registered investment advisor specializing in bitcoin investments, said in a Telegram message.
“Saylor’s repeated pivots and deviations from his stated plans, as well as the poor performance of STRC and MSTR, have shattered that trust.”
Blume has been sounding the alarm for months. In March, when Strategy’s perpetual preferred shares were still gaining momentum, Blume warned, “There is no free lunch; a product that yields more than 6% over Treasuries must carry additional risk.”
