Bitcoin's dramatic decline of over 40% following the launch of Strategy's Bitcoin funding vehicle, Stretch (STRC), has ignited a firestorm of criticism and concern regarding the sustainability of the investment strategy employed by Michael Saylor's company.
Since its introduction in July 2025, BITCOIN has faced a stark downturn, with recent trading data revealing STRC has dropped below its nominal par value of $100, closing at $88.59 on Thursday. This steep slide has led critics to argue that the funding model resembles that of a Ponzi scheme, a claim amplified by prominent market observers such as Peter Schiff.
Market Reaction to STRC's Performance
Critics contend that the alarming descent of STRC—once viewed as a stable investment linked to a robust Bitcoin acquisition strategy—now undermines trust in Saylor's funding framework. Amidst talk of leverage wipeouts, concerns about whether the investment channel for Bitcoin continues to function smoothly have intensified.
STRC's structure aimed to maintain a trading position near its par value by offering adjustable dividends, currently standing at an enticing 11.5% annualized. However, with the instrument trading at a deep discount, its capacity to raise capital for Bitcoin purchases is increasingly under threat. The effective yield for investors has climbed above 12.9%, prompting a pause in share issuance—a critical component of Strategy's capital-raising 'flywheel.'
Investor Sentiment and Strategy's Response
As the crypto investment landscape shifts, the pace of Strategy's Bitcoin accumulation has markedly decelerated. From purchasing over 34,000 BTC in one week during April, Strategy has resorted to modest additions of around $100 million in June—far less than previous figures. Notably, the company even sold a small amount of its Bitcoin holdings to meet dividend obligations, raising alarms about the cash-flow sustainability.
Understanding the Volatility
Despite the turmoil, some analysts believe this drop is more indicative of a leverage wipeout rather than a fundamental weakening of Strategy's business model. Jesse Myers, head of Bitcoin strategy at The Smarter Web Company, asserted that Strategy could continue to pay STRC dividends for up to 32 years under stable market conditions.
Meanwhile, investor Scott Melker pointed out that STRC's dividends remain attractive for income-focused buyers, especially with yields pegged against the $100 liquidation preference rather than the market price. At current trading levels, STRC could offer yields exceeding 13% for new investors willing to capitalize at discount rates.
As Strategy prepares for its next dividend announcement on June 30, stakeholders remain cautious yet hopeful. The underlying question persists: can Michael Saylor's funding strategy withstand the current market turbulence, or has the flywheel finally begun to stall?
Source: Cointelegraph