Strategy’s perpetual preferred stock STRC fell near record lows on Tuesday as investors seemingly balked at the company’s latest Bitcoin acquisitions.
Michael Saylor’s variable-rate perpetual “Stretch” Bitcoin yield product declined by 3.58% to $91.79 on Tuesday, 8.2% below its target value of $100. Markus Thielen, CEO of 10x Research, said the dip is linked to Strategy’s recent Bitcoin buying.
“The market would rather see MicroStrategy [Strategy] not acquiring more $BTC and rather keep the cash for dividend payments,” Thielen told Cointelegraph. “It appears traders are seeing the latest $BTC acquisition as an unsustainable path for STRC.”
Stretch is designed to return a dividend of 11.5%, trading at a par value of $100, but the current effective yield, now that the shares have dipped, is 12.5%. This means the firm may need the cash to support the yield rather than spending it to buy more $BTC.
On Monday, Strategy said it acquired 1,587 Bitcoin for around $100 million last week. The week before, it purchased 1,550 $BTC, also for about $100 million. The combined purchases brought its holdings to 846,842 Bitcoin.
Risk-off sentiment and pressure from competitors
Nick Ruck, director of LVRG Research, told Cointelegraph that “broader risk-off sentiment in crypto markets has weighed on investor appetite.”
“While the variable dividend delivers an effective yield above 12% to anchor the perpetual preferred near its $100 par value, persistent selling pressure and concerns over Strategy’s expanding capital structure and ATM issuance appear to be testing that resilience in the near term,” he added.
Related: Strategy’s Saylor signals $BTC buy as preferred dividend pay date vote looms
The company’s stock (MSTR) has also taken a hit this week, dropping 6.35% on Tuesday to end the day at $122.81, down 67% over the past 12 months.
Meanwhile, Stretch is also facing stiff competition from the Strive perpetual variable-rate preferred shares (SATA), which are trading at $100 and offering an effective yield of about 13%.
$BTC variable-rate perps compared. Source: BitcoinQuant
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