Foreign media: When the priority share under Strategy fell to a low level, a voice emerged in the market that compared it to TerrausD. However, according to Benchmark-StoneX analyst Mark Palmer, this comparison is not valid. The reason for this is that STRC is not a stable currency and does not depend on Terra's algorithms to maintain it.

STRC drop triggers analogy

STRC fell to $8.53 last week and received 88.65 a week, still about 11.3 per cent below $100. As the product was designed to be traded around $100, the term “de-conduced” appeared on social platforms after prices continued to fall below nominal values.

According to Palmer, this formulation is inaccurate. TerrausD relied on LUNA's Casting-Destroy mechanism to maintain a United States dollar peg, lacked hard reserves such as cash or dollar debt, and, once confidence was reversed, prices were quickly unstable. STRC does not have such an algorithm structure, and therefore there is no technical “de-alignment”.

Indirectly linked to bitcoin hold

According to the article, the support of STRC comes more from Strategy ' s overall asset and financing arrangements than from some automatic balancing mechanism. Strategy disclosed on Monday that the company currently held 847,363 bitcoin. The value of these assets is estimated to be approximately $54.5 billion, at prices in the text.

STRC is designed to help companies issue new shares more smoothly when prices are close to or above $100 and to use the collection funds to continue to buy bitcoin. So, when STRC is below face value for a long time, the efficiency of Strategy continues to expand bitcoin holding through this tool.

  • STRC currently has an annualized rate of 11.5%.
  • Last week's low point was 82.53 dollars.
  • Monday closing price is 88.65.

Market concerns about changes in financing efficiency

According to analysts, it is more important to focus on the efficiency of financing than on the failure of the corporate model. If STRC prices continue to be low, the market expects that Strategy may increase the rate of dividends in order to attract buyouts and drive prices back to a level closer to nominal value.

The article also mentioned that Strategy had accumulated cash reserves for three consecutive weeks to enhance the confidence of preferred shareholders in the ability to pay of dividends. This means that even if STRC is below $100, it will limit the pace of its purchase of currency, it does not mean that fundamental problems have arisen in the corporate structure.

The central judgement of Palmer is that STRC pressure suggests that Strategy’s access to bitcoin through preferential equity financing has become less smooth, but that this is still a completely different type of risk from Terra’s ecological breakdown in the year as a result of the failure of the stabilization mechanism.