Strategy's STRC Slump Revives Terra Comparisons, but Analyst Says the Link Breaks Down

Strategy’s STRC preferred stock has dropped sharply below the level it was designed to trade around, touching an intraday low near $82.53 last week and closing Monday around $88.65, according to CoinDesk. The decline revived comparisons on social media to Terra’s UST, the algorithmic stablecoin that collapsed in 2022.

The development matters because STRC is part of Strategy’s broader bitcoin financing machine. When STRC trades at or above $100, Strategy can issue more shares and use the proceeds to buy bitcoin; with the stock below that level, CoinDesk reported that the channel has effectively stopped working and the company has paused it.

Benchmark-StoneX analyst Mark Palmer argued that the Terra comparison misreads the instrument. STRC pays an 11.5% annual dividend and was structured to trade near $100, but Palmer said it was not built as a stablecoin and did not promise a fixed value that could “depeg.”

The distinction is central to the analysis. Terra’s UST relied on an algorithmic mint-and-burn relationship with LUNA and failed when confidence in that mechanism broke. STRC, by contrast, is a preferred stock indirectly supported by Strategy’s bitcoin holdings, which the company said Monday totaled 847,363 BTC worth about $54.5 billion.

Palmer described the drop as a market-driven reset in the yield investors require, rather than evidence that Strategy’s model has broken. Benchmark also reaffirmed its $570 price target on Strategy’s common stock, MSTR, while CoinDesk noted that MSTR fell 2.8% to $109 on Monday for a fifth consecutive decline.