Strategy's priority share of STRC has recently collapsed at $100, prompting the market to compare it with Terra's ecological collapse. However, according to Benchmark analyst Mark Palmer, the two structures are not the same, and STRC's fall is closer to a rate of return re-pricing, rather than a “fault off” in the sense of a stable currency.

Why did you show up, Terra?

STRC is designed to trade around $100. Last week, it fell to about $8,253 and collected about 88.65 a week, still below that level by about 11 per cent.

At the same time, STRC provides 11.5 per cent of the annual dividends, which also brings together some market participants to think of Terra ' s Anchor agreement that attracted high returns. Prices deviate from the target range, combined with higher rates of return, resulting in rapid warming of such comparisons.

The agency calls STRC non-stable currency

In a report released on Monday, Palmer stated that the STRC was essentially a preferred share, not a stable currency. Stable currency is usually committed to maintaining fixed prices, but STRC has never made such a commitment.

He noted that Strategy ' s objective was to support as much as possible STRC transactions in the vicinity of $100, rather than to ensure that the price was fixed. As a result, the current changes are more appropriate to be understood as a re-evaluation of the required rate of return by the market, rather than as a “fault”.

Structural differences with UST

The UST operation in that year relied on algorithmic casting and destruction mechanisms with LUNA and lacked hard reserve support. Once market confidence is reversed, there will be a self-enhancement decline in the system, which will eventually be virtually zero.

By contrast, STRC does not have a similar recycling mechanism. The report mentions that the support of STRC comes from Strategy's huge bitcoin holdout. On Monday, the company indicated that its Bitcoin holding warehouse had increased to 847,363, which was approximately $54.5 billion at current prices.

  • STRC Low Point on Last Week ' s Disk: About US$ 82.53
  • Monday closing level: approximately 88.65
  • Strategy Bitcoin hold: 847,363

Suspension of access to finance for less than $100

It was also mentioned that STRC could serve as Strategy ' s financing tool to help companies continue to buy bitcoin when prices reached or exceeded $100. However, when prices are below this level, the passage will be suspended.

In Palmer's view, this is an indication of the current decline in efficiency of the related financing engine, but it is different from “company model failure”. In other words, StRC fluctuations do affect Strategy ' s ability to continue to finance money through the instrument, but do not amount to a Terra-style structural collapse.