TLDR
- Strategy’s preferred stock STRC fell to a record low of $82.53 before recovering to around $88.65.
- Social media users compared STRC’s decline to Terra’s UST stablecoin collapse.
- Benchmark analyst Mark Palmer said STRC is a preferred stock, not a stablecoin.
- Palmer argued STRC cannot “depeg” because it was never designed with a fixed peg.
- STRC offers an 11.5% annual dividend, drawing comparisons to Terra’s former Anchor yield.
Strategy’s preferred stock STRC fell to its lowest level last week and sparked comparisons with Terra’s failed UST stablecoin. The stock dropped to an intraday low of $82.53 before recovering and closing near $88.65 on Monday. However, Benchmark Research said the comparison does not reflect how STRC operates.
MicroStrategy Incorporated Variable Rate Series A Perpetual Stretch Preferred Stock, STRC
STRC Decline Sparks Debate Over Terra Comparison
STRC trades around a target level of $100, and its recent decline has renewed criticism across social media platforms. The stock closed roughly 11% below that level on Monday, and some market participants described the move as a depeg. Critics also pointed to STRC’s 11.5% annual dividend and compared it with Terra’s former 20% yield through Anchor.
The comparison gained attention because both products offered high yields while trading below expected levels. However, Benchmark-StoneX analyst Mark Palmer rejected the argument in a research note released Monday. He stated that STRC and UST use different structures and serve different purposes.
Palmer said STRC is a preferred stock rather than a stablecoin. He explained that stablecoins promise a fixed value, while STRC never guarantees a specific trading price. As a result, he argued that the stock cannot depeg because it was never pegged.
“Strategy’s objective has been to support STRC’s trading at a level near $100, not to guarantee it,” Palmer wrote. He also said the recent move reflected changing market yield expectations rather than a structural failure. Therefore, Benchmark described the decline as a market-driven adjustment.
UST relied on an algorithmic system that linked its value to the LUNA token. The mechanism used mint-and-burn transactions to maintain a $1 target price. When confidence weakened, the process failed, and both assets collapsed.
Analyst Highlights Key Differences Between STRC and UST
Palmer said STRC lacks the feedback loop that drove Terra’s collapse in 2022. Instead, the preferred stock draws support from Strategy’s broader balance sheet and bitcoin holdings. According to Strategy, the company now holds 847,363 Bitcoin valued at about $54.5 billion.
The analyst emphasized that STRC does not depend on token creation or destruction to maintain value. Because of that structure, its price can move independently without triggering a similar collapse. Benchmark therefore viewed the comparison as inaccurate.
The stock’s decline has affected Strategy’s capital-raising process. When STRC trades at or above $100, the company can issue shares and use proceeds to purchase bitcoin. However, that process becomes less effective when the stock remains below the target level.
As a result, Strategy has paused issuance through that channel. Palmer acknowledged that the funding mechanism became “less efficient” after the recent decline. He added that reduced efficiency differs from claims that the model no longer works.
Benchmark maintained its $570 price target for Strategy’s common stock, MSTR. Meanwhile, MSTR fell 2.8% on Monday and marked its fifth consecutive daily decline. The stock closed at $109 while STRC remained below its intended trading level.
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