STRC Preferred Stock Volatility Doesn't Echo Terra Collapse, Analyst Says
Strategy's preferred stock, STRC, has experienced significant price weakness, dropping to a low of $82.53 last week before recovering to around $88.65. However, Benchmark-StoneX analyst Mark Palmer argues that comparisons to the 2022 Terra ecosystem collapse are misguided. Palmer emphasizes that STRC is not a stablecoin; it lacks an algorithmic arbitrage mechanism and is not dependent on reflexive token structures. Instead, STRC is indirectly backed by Strategy's Bitcoin holdings, which total 847,363 BTC worth $54.5 billion. STRC is designed to trade near $100, but its price has been cyclical. The product currently offers an 11.5% annual dividend, and Strategy can adjust the dividend rate or use cash reserves to support the price. Palmer maintains a $570 price target for Strategy shares, which closed at $109 after a fifth straight day of declines.
Key facts
- STRC fell to $82.53 last week, recovering to $88.65 on Monday.
- Analyst says STRC is not a stablecoin and lacks algorithmic peg.
- STRC is backed indirectly by Strategy's 847,363 Bitcoin holdings.
- Strategy may increase STRC's dividend rate to support its price.
- Palmer maintains a $570 price target for Strategy shares.