Strategy's STRC Dips as Investors Balk at Latest BTC Buying Spree

Strategy's perpetual preferred stock STRC has hit its lowest point this year as investors seem hesitant about the company's recent Bitcoin acquisitions. On Tuesday, the variable-rate perpetual 'Stretch' product fell by 3.58% to $91.79, which is 8.2% below its target value of $100.

Markus Thielen, CEO of 10x Research, believes this dip in STRC's price is directly linked to Strategy's recent Bitcoin buying spree. 'The market would rather see [Strategy] not acquiring more BTC and rather keep the cash for dividend payments,' Thielen said.

Stretch is designed to return a 11.5% dividend, but with its current effective yield at 12.5%, it may be unsustainable for Strategy to buy more Bitcoin without having enough funds to support the yield. In the past week alone, Strategy has acquired over $200 million worth of Bitcoin.

Industry experts point out that the broader risk-off sentiment in crypto markets and pressure from competitors are also contributing factors to STRC's decline. Nick Ruck, director of LVRG Research, added that 'persistent selling pressure and concerns over Strategy's expanding capital structure and ATM issuance appear to be testing that resilience in the near term.'

Strategy'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.