Strategy Inc.'s perpetual preferred stock, STRC, has seen its 90-day correlation with bitcoin climb to nearly 0.70—the highest level since the instrument debuted in July 2025—undermining its role as a relatively steadier income vehicle tied to the company's massive bitcoin holdings.

Market Context

Both assets have sold off sharply this month. STRC has dropped 23% to $76, while bitcoin has fallen nearly 20% to under $60,000, hitting levels last seen in October 2024. The simultaneous decline marks a stark departure from STRC's intended function as a hybrid product offering yield with reduced exposure to BTC volatility.

Analysis

STRC—known colloquially as "Stretch"—was designed as a variable-rate perpetual preferred stock with a $100 par value that pays monthly cash dividends at an annualized rate of 11.5%. The board adjusts the dividend monthly to encourage trading near par, and when shares trade above $100, Strategy can issue additional shares through at-the-market offerings to fund more bitcoin purchases.

But recent market conditions are stress-testing that model. With STRC trading well below its $100 par value, the firm faces limitations on raising additional capital for BTC accumulation. Strategy has recently made small bitcoin sales to cover dividend obligations—a dramatic shift from its long-standing 'never sell' stance.

The tightening correlation changes the risk profile for yield-seeking investors who may have viewed STRC as a way to harvest the 11.5% annualized dividend while partially decoupling from direct cryptocurrency volatility. With the correlation coefficient approaching 0.70, that diversification benefit has largely evaporated.

Market observers are divided on what comes next. Some see the current discount as an attractive entry point for yield-focused capital that could snap back toward par in a recovery scenario, delivering both income and capital appreciation. Others worry that sustained weakness could strain Strategy's capital structure, increase reliance on existing reserves, or dampen the positive feedback loop that has supported aggressive bitcoin accumulation.

Strategy remains the world's largest corporate bitcoin holder with 847,363 BTC worth approximately $50.4 billion as of publication, according to BitcoinTreasuries.net.

Key Numbers

- STRC/BTC 90-day correlation: nearly 0.70 (highest since July 2025 debut)

- STRC price decline this month: 23% to $76

- Bitcoin price decline this month: nearly 20% to under $60,000

- Current annualized dividend rate on STRC: 11.5%

- Par value of STRC: $100 (currently trading at a significant discount)

- Strategy's total BTC holdings: 847,363 BTC worth approximately $50.4 billion

What to Watch

Traders should monitor whether STRC can stabilize above the $76 level or if selling pressure continues. The relationship between STRC's price and bitcoin will be crucial—if correlation remains elevated, the preferred stock offers limited hedging value. Key levels to watch: STRC testing support at $70 and resistance at the $85-$90 range, while bitcoin seeks a floor around the $55,000-$58,000 zone. Any resumption of Strategy's aggressive BTC accumulation through ATM offerings could signal confidence in the structure despite current weakness.