Written by: Protos
Compiled by: Luffy, Foresight News
On Monday morning, Michael Saylor touted having more cash on hand to support dividends, aiming to reassure the market, but the price of STRC saw almost no boost. The core market issue is not the size of the reserve fund, but a collapse in investor confidence.
As the publicly traded company holding the largest amount of Bitcoin globally, Strategy diluted common shareholders last week to add $450 million in cash reserves. The company's total cash now stands at $3 billion, a 17% increase compared to the $2.55 billion disclosed on July 5th.
Ample cash should have brought a sense of security to the market, but STRC preferred stock investors, who rely on this cash for bi-weekly dividend payments, are not buying it. As of Monday morning trading, the STRC price fell to $86.60, down 1% from its closing price last Friday.
The expansion of the company's cash reserve theoretically supports dividend payments for a longer period. For any other financial product, this would be a major confidence-boosting positive news, yet the STRC price fell instead of rising. This enterprise has a deep-seated problem that cannot be solved by more cash.
The market is completely indifferent to positive news
Strategy originally designed STRC hoping for long-term stable price fluctuations, but its sharp rises and falls have frequently made financial headlines instead. Strategy regularly adjusts the dividend rate, publicly stating the goal is to stabilize the stock price within the $99 to $100 par value range, a target it has consistently failed to achieve.
When the stock price falls, Strategy raises dividends to attract buyers, supporting the price towards the $100 par value; when the price is too high, the company increases share issuance to suppress gains. Ironically, since the product's issuance, the dividend rate has been raised from 9% to the current 12%, while the STRC price has steadily declined.
Even with cash on hand sufficient for 20 months of dividend payments and a yield far exceeding most junk bonds, STRC still trades today at a 13% discount to par value.
STRC price chart, timeframe from last Friday's close to Monday noon. Source: TradingView
After the company's cash reserve expanded by 17%, the current STRC price is actually lower than pre-expansion levels.
The underlying logic is far simpler than cash size, equity dilution ratio, or leverage calculations; the root of the problem is a lack of market trust. With the broader Bitcoin market not showing an upward trend, failing to boost the valuation of the company's massive Bitcoin treasury assets, the only reason investors were willing to buy STRC back to par value at a premium was their belief in management's long-term commitment to paying dividends. Now, the market has ample reason to question management's sincerity in fulfilling its commitments.
The essence of preferred stock is a contractual promise: to pay dividends on time, adhere to issuance terms, and fulfill all prospectus agreements. Investor decisions also heavily rely on performance guidance and forward-looking judgments provided by management. Investors are bearish on STRC not because they doubt the existence of the $3 billion in cash, nor because they can't calculate how long these funds can support dividend payments; it's because they no longer trust the person making the payment promise — Michael Saylor.
Saylor repeatedly changes promises, eroding market trust
Strategy founder Saylor has repeatedly reversed expectations he previously communicated to the market, and each reversal has significantly diminished market trust in him.
Last summer, the company promised investors it would not issue additional MSTR common shares below 2.5 times price-to-book value (mNAV) unless for paying interest and preferred stock dividends. But just days later, the company quietly amended this promise, adding an exception clause: issuance could proceed unrestricted if management deemed it beneficial. Subsequently, the company sold hundreds of millions of dollars in stock below the 2.5x mNAV threshold.
Another more representative case: for years, Saylor repeatedly stated publicly that the company would never sell Bitcoin, claims verifiable in major interviews and social media posts. But from late June to early July, Strategy sold a total of 3,588 Bitcoins and was approved for a quota exceeding $1 billion for subsequent sales. There are many similar instances of such contradictions.
In early 2026, Saylor assured the market that even if Bitcoin entered a bear market, the company would rely on debt financing to manage operations and would not sell Bitcoin. In a CNBC interview, he stated that during a bear market, simply refinancing existing debt would suffice. Just months later, instead of restructuring debt, the company raised dividend funds by selling Bitcoin.
Additionally, Saylor significantly lowered performance expectations, making it difficult for investors to trust all his subsequent forecasts. In December last year, Strategy slashed its fiscal year 2025 earnings per share guidance from $80 to less than $19, wiping out 76% of expected profits.
Even with cash backing, STRC is by no means a principal-guaranteed investment
Saylor once likened STRC to a high-interest savings account or a money market fund product. But in June, STRC once fell to a historical low of $71.25, with holders seeing paper losses of over one-third, making it incomparable to insured bank deposits or money market funds.
Saylor previously claimed the STRC price would stabilize at $100, but in reality, it dropped to $71.25, causing widespread investor losses. It's difficult for the market to believe his predictions about the product's stable performance anymore.
STRC is neither a deposit nor a money market fund. It has no independently segregated Bitcoin assets as collateral and offers no free redemption rights. For investors wanting to sell their STRC at $100, they can only find other trading counterparties; the company itself will not step in to repurchase and support the price.
The precedent of management repeatedly going back on their word dates back long before the company's Bitcoin accumulation phase. In 2000, the U.S. SEC sued Saylor and two other executives, alleging the company inflated revenue and profits, violating accounting standards. Saylor ultimately paid over $8 million to settle the civil lawsuit.
Over twenty years later, the market is once again wary of Saylor. This time, the company's addition of 17% cash reserves was intended to stabilize the STRC price at its $100 par value, but the positive news was completely ineffective: Monday morning's stock price remained at a 13% discount to $100, even slightly down from last Friday. No amount of cash can compensate for the long-term erosion of market trust.
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