STRC was marketed as a low volatility income product designed to trade near $100, and its sharp decline has undermined investor trust.

• Strategy still has the U.S. dollar reserves to comfortably meet its dividend obligations for almost 10 months. The current price doesn't put those payments at risk.
• MSTR fell 8% to $86 on Thursday, its lowest level since February 2024, while STRC dropped to $75, trading at a 25% discount to its intended $100 par value.
• CEO of Two Prime, Alexander Blume, said repeated changes in Strategy's plans, combined with the weak performance of MSTR and STRC, have undermined trust among retail investors.

Traders may be panicking about Strategy's (MSTR) stock falling, 8% lower at of writing on Thursday at $86, amid concerns about its ability to meet dividend obligations, but the bigger issue is not if the company is about to implode.

STRC, the perpetual preferred stock meant to hold a $100 par value, has continued its collapse to $75, a 25% discount to its peg. MSTR is 8% lower on Thursday as of writing at $86, its lowest point since February 2024.

The company's enterprise multiple to net asset value (mNAV) now sits at just 1.05, as it continues to compress from the high-flying premium that long underpinned the company's bull thesis.

It's worth noting that despite STRC trading around $75, Strategy still has the U.S. dollar reserves to comfortably meet its dividend obligations for almost 10 months. The current price doesn't put those payments at risk.

STRC trading well below its $100 target level simply makes Strategy's bitcoin acquisition and funding engine less efficient, because the company can no longer issue the preferred shares on attractive terms, as Benchmark analyst Mark Palmer previously noted. That is very different from suggesting the model is failing.

The bigger issue is one of confidence rather than solvency. STRC was marketed as a low volatility income product designed to trade near $100, and its sharp decline has undermined investor trust.

The real damage is to credibility, Two Prime CEO Alexander Blume argues, not the company's ability to keep paying dividends. And therefore it may be trust that keeps STRC from returning to its $100 par value.

Michael Saylor’s repeated pivots and deviations from his stated plans have shattered investor trust, leading to a dramatic collapse in Strategy’s (MSTR) ecosystem, Blume told CoinDesk on Thursday.

"Beyond any spreadsheet or logic, markets are about trust, especially when your investor base is retail-centric," Blume, who heads the bitcoin-focused investment SEC-registered investment adviser, said in a Telegram message.

"Saylor's repeated pivots and deviations from his stated plans, alongside poor performance of STRC and MSTR, have broken that trust."

Blume has been sounding the alarm for months. In March, as Strategy's perpetual preferred stock was still riding early momentum, Blume warned:"There's no free lunch, a product that pays more than 6% over Treasuries must come with additional risk."

That risk has now materialised, hitting retail buyers the hardest.

"Ironically, the human foibles of arrogance and emotion, and the persuasiveness of a charismatic leader, are what the cold, algorithmic functions of Bitcoin were designed to protect people from," Blume said. "Saylor's incentives are not the same as a retail investor. Unfortunately, it's the retail investors, sold STRC as a retirement income product and MSTR as amplified bitcoin, that have paid the price."

While Blume stopped short of predicting a full unwind, he said Strategy looks "highly unlikely" to be a meaningful buyer of bitcoin for the foreseeable future.

In May, combined exchange volumes fell 3.45% to $4.41T; the lowest since September 2024. RWA perpetual futures volumes rose 10.4% against the trend, hitting a new all-time high.