Author: Alex Liu Source: X, @liu_web3

Who is buying behind the price recovery?

Geopolitical turmoil last week, the macro environment was not favorable for risk assets, and the U.S. large-cap stock index closed lower. But Bitcoin’s price has shown significant resilience.

Such a trend is not simply due to market sentiment, but is closely related to micro-strategy (@Strategy) large-scale spot buying.

In the week from March 9 to March 15, MicroStrategy spent US$1.57 billion to buy 22,337 Bitcoins at an average price of US$70,194, bringing its total holdings to 761,068 coins, accounting for more than 3.6% of the total supply of Bitcoin, and the total holding cost was approximately US$57.61 billion.

Strategy Disclosure Documents

Of the nearly $1.6 billion in purchasing power, as much as $1.18 billion (about 75%) came directly from the net proceeds from the sale of its variable-rate preferred stock STRC (Stretch) during the week. As of mid-March, STRC was worth more than $5 billion.

What is STRC? We need to start with the positioning of micro-strategy companies.

MicroStrategy is not a simple company that "purchases Bitcoin by issuing debt". It essentially builds a complex "Capital-markets refinery."

The system absorbs capital needs from different investor groups (such as bond investors pursuing fixed income, equity investors pursuing high-risk returns), converts them into different securities products, and ultimately funnels all funds into the same underlying reserve asset - Bitcoin.

In this complex system, STRC, which has only been launched for a few months, is gradually becoming the protagonist. It successfully introduced traditional income-seeking capital to Bitcoin’s balance sheet.

Principle: Convert revenue demand into buying orders

To understand the huge power generated by STRC, we first need to clarify its product positioning: it is designed as a financial product similar to "short-term high-yield credit."

STRC's full name is Variable Rate Series A Perpetual Stretch Preferred Stock.

It is a preferred stock, which means that even if the company goes bankrupt and liquidates, its order of payment has priority over ordinary shares (MSTR), and the company cannot default on it (because it is essentially equity capital rather than traditional debt).

STRC basic information

STRC’s core mechanism can be summarized as the following points:

Anchored face value: The goal of the micro-strategy is to keep the secondary market price of STRC as stable as possible around $100 (face value).

STRC’s dividend change guidance at different prices

Variable Dividends: STRC currently pays a monthly cash dividend of 11.50% annualized. The dividend rate is also a tool for dynamic adjustment: if STRC falls below par, the micro-strategy will increase the dividend to make it more attractive; if the price is above $101 (indicating excess demand), it may reduce the dividend rate.

ATM additional issuance mechanism: This is the most important channel for STRC to convert demand into Bitcoin. When market demand is strong and the STRC price reaches or slightly exceeds $100, MicroStrategy will initiate the "At-The-Market (ATM)" process. The company will issue (i.e. sell) new STRC shares directly to the market, absorb excess fiat funds, and immediately use these funds to purchase Bitcoin spot.

Range for raising funds through ATM

Through this design, micro-strategy strips away the high volatility of Bitcoin itself and creates a stable, high-interest legal currency haven for traditional financial institutions (such as pensions, insurance funds, and corporate treasury centers).

When institutions buy STRC to earn 11.50% interest, they are actually providing a steady stream of "ammunition" for micro-strategy's Bitcoin buying plans.

Leverage control mechanism: dual-track ATM issuance

As the scale of STRC issuance expands, the market will naturally have concerns: Will this continuous issuance of fixed-income products make the financial leverage of micro-strategies get out of control?

To answer this question, we need to look at another core tool of microstrategy - MSTR common stock. The micro strategy uses STRC and MSTR as two deliberately paired components of the capital structure.

STRC captures the need for stability and yield, while MSTR common stock absorbs Bitcoin price volatility and provides leveraged upside.

Currently, the micro strategy maintains an "amplification ratio" of about 33%, which is the ratio of the total amount of various preferred stocks and debt divided by the total value of Bitcoin reserves.

In order to keep this leverage ratio from deteriorating while raising large-scale financing through STRC, MicroStrategy adopted a parallel dual-track ATM issuance strategy.

Suppose that the market demand for STRC on one day causes MicroStrategy to successfully issue an additional $40 million of STRC at a face value of $100. This represents an additional $40 million in debt-like obligations on the company's balance sheet. Without any hedging, the company's leverage will increase.

To maintain the stated leverage ratio of 33%, for every $1 of additional debt, the company would need to add $3 of Bitcoin to its treasury.

Thus, suppose the MicroStrategy simultaneously initiates an ATM issuance of MSTR common stock. The company issued an additional $80 million worth of MSTR stock. All of this $120 million (40 million STRC + 80 million MSTR) was then used to purchase Bitcoin.

The result is: the company has expanded (due to the issuance of additional common shares, assuming the stock price remains unchanged), and the total number of Bitcoin holdings has increased, but the proportion of debt-like assets in total assets remains at a safe level of 33%.

The core prerequisite for the smooth operation of this mechanism is the premium on MSTR common shares. As long as the market capitalization of a microstrategy stock continues to be higher than the net asset value of its Bitcoin holdings (i.e., mNAV is greater than 1), purchasing Bitcoin through additional stock issuances is a form of "thickening dilution."

Partial information on MSTR common stocks and micro-strategy companies

This means that although the total share capital has increased, the number of Bitcoins (BPS) corresponding to each share has actually increased. As of March 17, the mNAV of MSTR remained around 1.19.

Potential of fixed income market

As the operating mechanism matures, the throughput of this capital flywheel is expanding at an alarming rate.

On March 9, MicroStrategy revised its Omnibus Sales Agreement. The amendment removes the restriction that a single class of securities can only be sold by a single agent on a single day, allowing a second agent to be designated to continue executing sales during pre- and after-market trading sessions.

This loosening of operational constraints allows micro-strategy to gain greater financing flexibility and throughput space in the 24-hour trading window of the crypto market.

The numbers are immediate: In the single week of March 9-15, STRC generated $1.18 billion in net revenue.

According to recent trading volume calculations, the amount of funds this machine can absorb every day can even cover about 1% of the global Bitcoin spot market trading volume. Compared with miners' new output of only a few hundred coins every day, this ability to absorb funds has completely changed Bitcoin's original supply and demand balance.

Looking at the larger traditional financial market, the outstanding size of the global fixed income market in 2024 will be approximately US$145 trillion, according to SIFMA.

If fixed-income instruments such as STRC with the underlying endorsement of Bitcoin can attract even 0.1% of the global fixed-income market's capital allocation, it will be worth hundreds of billions of dollars.

The scale of the traditional bond market is extremely large, and the supply of Bitcoin is relatively scarce. When the micro-strategy successfully establishes a compliant and stable arbitrage bridge between the two, a large amount of traditional savings may be implicitly converted into the underlying demand for Bitcoin in a "familiar appearance (i.e., preferred stocks with monthly dividends)".

Potential risks

Although the operating logic of micro-strategy has shown great vitality in mathematics and markets, there is no perfect financial instrument that is absolutely risk-free. We must objectively assess the possible risks to holding STRC and the system as a whole.

Risk 1: Asymmetry between returns and drawdowns

For STRC investors, the long-term potential gain from buying at $100 is capped at an annualized dividend of 11.50%. However, due to the highly volatile nature of digital asset markets, STRC may experience retracements of 5% to 10% in the short term (for example, during several market declines in 2025, STRC briefly fell to $92 or even $89).

Although the micro-strategy will attract buying by increasing the dividend rate and prompting the price to return to par value, for investors in urgent need of short-term liquidity, this temporary discount will lead to actual principal losses.

Risk 2: Strong correlation with Bitcoin market

Since the underlying credit of STRC relies on the Bitcoin asset pool held by the micro-strategy, when the price of Bitcoin plummets, the overall balance sheet of the micro-strategy deteriorates, and the credit risk of STRC will also increase, triggering short-term panic selling.

This makes this nominally "stable" asset unable to provide an absolute hedging function similar to that of U.S. Treasury bonds in extreme market conditions. Players holding BTC suffered both interest-bearing principal and risky positions.

Risk 3: Erosion feedback of market confidence

If STRC were to remain at a discount for an extended period of time for some reason (such as falling to $90 and not recovering for several days), market confidence could be dampened. Investors will doubt its ability to return to par value, leading to hesitation in copying the market and triggering more stop-loss selling.

This deterioration in psychological expectations requires strong external intervention (such as a substantial increase in dividends or a sharp rise in Bitcoin itself) to reverse it.

Risk 4 (extreme scenario): Deep bear market lasting several years

This is also the core basis for economist Peter Schiff and others to criticize the micro-strategy model as "recursive debt". If Bitcoin enters a deep, multi-year bear market:

• The MSTR premium (mNAV) may fall below 1, causing the micro-strategy to no longer be able to balance leverage by issuing additional shares.

• STRC's price has been below par for a long time, and MicroStrategy has been forced to continuously increase its dividend rate to maintain the price, causing fixed expenses to continue to expand.

• MicroStrategy currently has $2.25 billion in cash reserves. Based on the current scale of dividend payments, this cash is enough to support dividend payments for about 25 months without issuing new shares or selling coins at all.

• If the bear market lasts for more than 25 months and reserves are exhausted, MicroStrategy will face a choice: either stop paying STRC dividends (which will directly destroy the credit system it has established on Wall Street), or be forced to sell its Bitcoin spot holdings to pay fiat interest.

Is this a scam similar to Terra Luna? Compared to the rapid death spiral that triggered the UST crash in 2022, the mechanics of microstrategy appear more solid.

Luna Collapse

UST is a stablecoin that promises rigid redemption. Once unanchored, it will trigger unlimited issuance and runs at the algorithmic level; STRC is essentially a preferred stock and does not require rigid repayment of principal, and the micro-strategy has a cash buffer period of more than two years. Therefore, even if the worst-case scenario occurs, the decay process will be a slow frictional consumption rather than an instantaneous collapse within a few days.

Conclusion

From a financial engineering perspective, MicroStrategy's STRC is a highly aggressive and proven innovation. It uses the mechanism of dynamically adjusting the dividend rate every month and the huge US dollar cash buffer pool to successfully encapsulate the highly volatile Bitcoin into a short-term high-yield credit product that can be accepted by traditional funds.

Every dollar's desire for stable income is being transformed into actual momentum that pushes up the spot price of Bitcoin.

For investors who are optimistic about Bitcoin in the long term, the biggest long-term risk at present may be ironic: the system "works too well."

As of March 2026, MicroStrategy’s Bitcoin holdings have accounted for 3.6% of the total circulation of the entire network. As STRC and its supporting tools continue to attract traditional funds, the concentration of currency holdings in micro-strategies will only become higher and higher.

This situation where a single company controls a huge amount of chips is, to a certain extent, eroding the fundamental narrative of Bitcoin as a "decentralized, censorship-resistant digital gold."

When trillions of dollars of fixed-income funds in the traditional market pour in indirectly through highly centralized and financial channels such as STRC, the price of Bitcoin will undoubtedly gain unprecedented support.

But in this historical process, Bitcoin is also irreversibly evolving from a decentralized experiment by cyberpunks to a link in Wall Street’s capital structure.