Bitwise: Will BTC's recent rise driven by STRC continue?

Author: Matt Hougan, Chief Investment Officer of Bitwise; Translation: Shaw Golden Finance

The recent surge in Bitcoin prices has largely been driven by continuous buying from Strategy. Will this buying momentum continue?

Bitcoin has risen approximately 20% from its February lows, with the current trading price around $76,000. All market participants are watching to see if this rally can persist.

The answer largely depends on Strategy. Indeed, this rebound is driven by multiple factors, including strong net inflows into Bitcoin ETFs (totaling $3.8 billion since March 1) and buyback demand from long-term holders. But Strategy is the most critical single driver, having accumulated $7.2 billion worth of Bitcoin over the past eight weeks.

Its purchase funds mainly come from the proceeds of issuing perpetual preferred stock products, STRC. This article will detail the mechanism of STRC and analyze why this large-scale buying activity is likely to continue for some time.

What is STRC?

STRC is a perpetual preferred stock issued by Strategy. Preferred stock is a hybrid financial instrument, combining features of both bonds and stocks.

The core goal of Strategy issuing STRC is to keep the product’s price stable at $100 per share, while providing investors with high dividends (currently an annualized yield of 11.5%). The company adjusts the dividend rate dynamically to anchor the share price:

• If STRC falls below $100, the dividend rate is increased to attract new buyers;

• If the price exceeds $100, new shares are issued or the rate is lowered to guide the price back toward the target.

Since listing, STRC has generally maintained its $100 price target, with occasional deviations but overall manageable. To stabilize the share price, Strategy has repeatedly increased dividends: initial annualized rate was 9%, now raised to 11.5%.

STRC Price Trend Since Listing

Data source: Bloomberg. Time frame from July 25, 2025, to April 27, 2026.

Why does Strategy issue STRC?

The main purpose of issuing STRC is to continuously increase Bitcoin holdings. Most of the funds raised from STRC issuance are used to buy Bitcoin on the open market.

How does Strategy pay the 11.5% dividend?

This is also the most puzzling point: Strategy’s primary method of paying dividends is by continuously raising funds from new investors.

Isn’t this a Ponzi scheme?

Not at all. The reason is that the preferred stock has real underlying assets—namely, Strategy’s massive Bitcoin holdings.

Currently, Strategy holds $63 billion worth of Bitcoin, with $8 billion in liabilities and $14 billion in total preferred stock. In the corporate capital hierarchy, preferred stock ranks above common equity. This means that in a liquidation scenario: the company would first pay off $8 billion of debt, then $14 billion of preferred stock, leaving about $41 billion of assets for common shareholders.

Will Strategy eventually run out of funds?

The outcome varies depending on Bitcoin’s price performance. Based on current Bitcoin prices, the company’s book value could theoretically sustain dividend payments for 42 years. That is, if Bitcoin prices stagnate until 2068, Strategy would face a crisis; but if Bitcoin grows at 20% annually, it could theoretically cover dividends indefinitely. (Additional note: under certain conditions, Strategy can suspend dividend payments, but the accrued dividend liabilities continue to compound, similar to normal interest accrual.)

What happens if Strategy continues to issue more STRC or Bitcoin prices fluctuate sharply?

This is the core risk. Whether Strategy can maintain its dividend payments while issuing new STRC depends on Bitcoin’s market performance and the scale of new issuance. All else equal, the larger the issuance, the higher the dividend liabilities, and the greater the risk of default; however, Bitcoin’s appreciation increases the asset side of the balance sheet, offsetting this risk.

In short: Buying STRC is essentially a bet that Strategy can balance these factors—avoiding unlimited issuance that could lead to debt crises.

Will Strategy continue to issue more STRC?

I believe it’s highly likely. Market rumors suggest that during the last round of STRC fundraising, Strategy could have raised even more capital if it had wanted. Currently, junk bond yields are below 7%, and private credit funds are flowing out, while STRC’s high 11.5% annual yield is backed by over $40 billion in Bitcoin assets as a safety buffer, making it very attractive. Therefore, I think Strategy will continue to refinance with STRC for tens of billions of dollars.

How much room is left? Key indicator: the ratio of total liabilities (debt + preferred stock) to Bitcoin market value. Currently, this ratio is 33%: liabilities of $21 billion against $63 billion in Bitcoin holdings. Once this ratio approaches 50%, investors will start to question the risk collectively. Based on current Bitcoin prices, the company still has room to issue an additional $10–15 billion of STRC; if Bitcoin prices rise further, the fundraising ceiling could be extended even more.

In summary, we can confidently say that STRC will continue to be issued and expanded.