‍Strategy's perpetual preferred stock, STRC, played a key role in the company's Bitcoin strategy this week,its daily trading volume exceeded $1.1 billion.

In an X-page article, Strategy announced April 13 as the equity registration date for STRC.

Michael Saylor also pointed out that after $1.156 billion of liquidity flowed into the market, the security closed at par with its face value, with a fluctuation of only "one cent."

The surge in trading volume comes after Strategy revealed it purchased 13,927 Bitcoins between April 6 and April 12 for about $1 billion.

With this purchase, the company now holds 780,897 Bitcoins,The total purchase price is $59.02 billion, with an average price per Bitcoin of $75,577.

The acquisition will be funded entirely through the sale of 10.02 million STRC shares at market price, resulting in net proceeds of approximately $1 billion, the company said.

Meanwhile, STRC’s record trading activity combined with weekly Bitcoin purchases funded entirely through the priority program signals a significant shift in the company’s focus.

For equity investors, this shift could significantly alter the balance of potential returns and risks.

An increase in preferred stock may reduce short-term dilution to common shareholders due to lower preferred stock issuance.

However, preferred stock confers priority over a fixed interest in the capital structure over common stockholders, meaning preferred stockholders are entitled to receive dividends before common stockholders receive any dividends.

In other words, preferred shareholders have priority in payment, so common shareholders can only benefit if there is profit left after the company fulfills those obligations.

This approach could boost returns if Bitcoin performs well, but it also increases reliance on continued market access and tight dividend management.

While this shift may increase short-term purchasing power and reduce dilution, butin the long term, it can also increase financial leverage and execution risk for common shareholders.

How STRC Preferred Stock Leads BTC Buying Strategy

STRC will be launched in July 2025 and will operate in a manner distinct from Strategy's MSTR common shares.

The preferred stock carries a floating interest rate annualized dividend rate of 11.50% as of April. Its floating-rate structure is designed to incentivize the stock to trade strongly near its $100 face value.

This stable price anchor allows Strategy to efficiently leverage its ATM issuance program.

Issuing new STRC shares at a consistent priceenables companies to quickly raise capital and convert it into Bitcoin, minimizing the friction and discounts typically seen in large-scale secondary market offerings.

Market observers pointed out that STRC aims to provide investors with double-digit returns and minimal price fluctuations, combining high-yield income with capital stability.

Strategy Executive Chairman Michael Thaler basically said this:"STRC provides money market-like stability with market-leading risk-adjusted returns."

According to the STRC.live website, STRC has funded the acquisition of nearly 70,000 Bitcoins since its inception. The most recent transaction volume of $1 billion on April 13 could have been enough to purchase over 6,000 additional Bitcoins.

Unsurprisingly, STRC's market capitalization has surged along with the utility's boom, nearly doubling from $3.4 billion in February to $6.36 billion today.

STRC still has $21.6 billion worth of shares available for future issuance,This means there is still huge room for further accumulation of Bitcoin.

Reserves, refinancing and preferred stock risks

Despite the upbeat sentiment, some analysts have expressed concerns about the sustainability of the model, citing Strategy's own financial disclosures.

Strategy set up a $2.25 billion reserve in early February after its software business generated insufficient operating cash flow to meet its financial obligations.

The reserve serves as a financial safety net and is designed to cover nearly 2.5 years of preferred stock dividends and interest on outstanding debt.

This reserve is necessary because the company needs to rely on this set aside cash to make fixed payments in the absence of sufficient regular business revenue.

If this reserve is depleted before Strategy generates enough new revenue or finds other sources of financing,the company may be pressured to sell assets or issue additional shares, which would put both preferred and common shareholders at risk.

Critics argue that structures that rely on continued market access may appear stable until financing conditions change.

Independent Bitcoin analyst Derin Olenik recently published a critical analysis of the company's debt position, warning that current ATM growth rates are unsustainable.

STRC debt is growing at an alarming rate, with nominal value growing at a compound rate of about 30% per month, according to Oleinik's calculations.

At this rate,The company's debt may more than double every three months and may increase tenfold within a year, which will greatly intensify the pressure on cash flow and reserves.

If this trend continues, Oleynik estimates Strategy will deplete its $2.25 billion in reserves in just nine to 10 months, instead of the two and a half years expected.

To cover such a loss without selling Bitcoin, Strategy would need to significantly dilute its common shareholders, he warned.

Even if MSTR returns to its previous all-time high, Oleynyk calculates that the company would still need to issue more than 1 billion new shares to pay preferred stock dividends, which would dilute existing common shares by nearly 400%.

With this in mind, he concluded: "If ATM machines stop being issued, the accumulation of Bitcoin will also stop. If issuance continues, regardless of the stock price, the math shows that the equity will be excessively diluted. From the perspective of ordinary shareholders, STRC should not be regarded as a digital credit, but as a digital suicide attack."

STRC is an easy way to add Bitcoin

However, supporters of the strategy dispute the dire situation presented by Oleynik.

According to them, Strategy has successfully attracted a unique group of investors who are income-oriented buyers willing to accept STRC's fixed claims and limited upside.

This strategy maintains Bitcoin exposure for common shareholders by putting the money of these conservative investors into assets that anticipate greater long-term volatility and upside.

Preferred investors will receive a yield-oriented instrument that currently trades more akin to short-term credit than a cryptocurrency alternative.

In practice, "short-term credit" refers to debt securities or financial instruments with relatively short maturities (usually less than five years).

These investments are generally considered less risky because their value is less sensitive to changes in interest rates and they are expected to return principal more quickly.

For STRC, this means its trading behavior is more stable and predictable, similar to short-term corporate bonds, rather than experiencing typical price fluctuations like cryptocurrencies.

It is worth noting that Strategy itself has been referring to STRC as its flagship "digital credit" tool.

Proponents argue that the model works as long as Bitcoin appreciates faster than the cash cost of paying preferred stock dividends.

In this scenario, each successful STRC issuance translates capital market demand into additional Bitcoin holdings, and as Bitcoin appreciates in value over time, the fixed priority claims become smaller and smaller relative to the asset base.

Saylor also reassured anxious investors, saying: "Our breakeven accounting yield on Bitcoin is approximately 2.05%. If Bitcoin grows faster than that, we will be able to pay dividends indefinitely without issuing new MSTR shares."

MSTR common stockholders remain the main audience

The real question for MSTR holders is whether this financing model can still increase the value of the common stock over time.

In the short term, the situation is optimistic. STRC’s trading volume hit an all-time high, its stock price remained parity, and Strategy used this market channel to purchase $1 billion worth of Bitcoin in one week.

This result supports management's viewthat STRC can serve as a reliable, repeatable financing channel rather than a one-time financing vehicle.

In the long run, the situation is inherently more complex. Each successful STRC capital raise adds a layer of fixed equity claims in front of the common shares.

The strategy's own risk disclosure acknowledges that future issuances of preferred stock may dilute existing shareholders, while adverse changes in financing conditions may make it more difficult to maintain necessary dividend reserves.

Equity dilution refers to the reduction in the shareholding ratio of existing shareholders when new shares are issued, thereby reducing each shareholder's claim on the company's assets and profits.

Financing conditions are critical because if a company does not have access to low-cost or stable funding, it may have difficulty raising sufficient funds to pay dividends or maintain its financial structure, thereby increasing the overall risk to preferred and common shareholders.

In short, STRC has not only demonstrated its advantages but also exposed its risks. It worked as expected, attracting a lot of liquidity and maintaining a price level close to par value.

However, this also creates tension, as each issuance tie the broader strategic argument more closely to the company's ability to maintain market access, maintain dividend support, and keep Bitcoin valuable enough to justify the financial system built around it.