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Strategy's (Nasdaq: MSTR) Stretch (STRC) preferred stock has spent the past week unsettling two very different communities: TradFi investors watching a Nasdaq-listed security drift nearly 20% below its stated par value, and DeFi users watching stablecoins backed by that same instrument follow it lower.
The episode is a stress test for a novel corner of crypto-adjacent structured finance — one that borrows heavily from mechanisms that traditional markets have used for decades, just repackaged in ways that obscure some of the inherited risks.
What STRC Is
STRC, branded internally as "Stretch," is a Nasdaq-listed perpetual preferred stock with a $100 stated par value, launched in July 2025. Its defining feature is a variable monthly dividend rate that Strategy adjusts with the goal of keeping the market price anchored near $100. As of June 2026, it carries an annualised dividend rate of 11.50%, paid in cash — up from 9% at launch, following seven consecutive rate increases.
STRC is not collateralised by Strategy's bitcoinn and carries only a preferred claim on residual assets — making it a credit product, not a Bitcoin proxy. When STRC trades at or above par, Strategy can issue more shares and use the proceeds to purchase more Bitcoin. When it falls below par, that issuance window closes.
What Happened
STRC hit an intraday low of $82.53 last week — its lowest since launch — before recovering to around $88–$91 by Monday. The 52-week range now runs from $82.53 to $100.42. The slide was not a single event but the culmination of several weeks of pressure: Bitcoin fell from above $80,000 in mid-May to below $60,000 on June 5 for the first time since October 2024; rival Strive launched a competing instrument (SATA) offering a higher 13% yield; and Strategy's buyback of $1.5 billion of its 2029 convertible notes at an 8% discount drew down its cash reserve.
A hawkish pivot from the Federal Reserve on June 17 — with nine of 18 FOMC officials now projecting at least one rate increase in 2026 — added further pressure on both Bitcoin and the income-oriented buyers STRC targets.
The distinction matters. Benchmark analyst Mark Palmer described STRC as "not a stablecoin" and characterised the recent selloff as "a market-driven reset of required yield" rather than a depeg — noting to The Block that something which was never pegged cannot technically depeg. Strategy's objective has been to support STRC trading near $100, not to guarantee it.
Analysts at both Benchmark and TD Cowen have pushed back on the more bearish readings. FT Alphaville, meanwhile, noted that while STRC is not a typical death-spiral convertible — there is no direct conversion into common stock — a sustained discount still forces difficult choices: richer preferred terms, more equity issuance, or drawing on the Bitcoin reserve itself.
As of June 21, Strategy's dedicated dollar reserve stood at $1.4 billion, per its latest 8-K filing, intended to cover dividend and debt obligations during periods of market stress.
STRC's dips below par are not new. Since launch, the stock dropped to $92.20 in August 2025, $96.61 in September, $96.75 in October, and $90.52 in November — recovering each time, aided by dividend rate increases. The current episode is the deepest drawdown on record.
The DeFi Layer: When STRC Becomes Stablecoin Collateral
What amplified the story was the ecosystem that has grown on top of STRC since its launch. Several DeFi protocols began using STRC as collateral precisely because it generates real, non-inflationary cash flow — an attractive alternative to over-collateralised crypto backing or algorithmically-maintained pegs.
The most prominent example is Apyx Finance, whose apxUSD stablecoin is primarily backed by STRC preferred shares. As of March 2026, Apyx held approximately 288,888 STRC shares valued at around $29 million, with a circulating apxUSD supply that had scaled to as much as $500 million before the June stress event.
As Bitcoin fell sharply, apxUSD briefly slipped to as low as 93 cents on June 4, with a separate report placing the low at $0.90 during the wider sell-off period. Because preferred equity makes up the majority of its reserves, the stablecoin is influenced by volatility in the underlying shares: when STRC trades below its $100 par value, the market value of apxUSD's reserves declines, producing volatility in secondary markets.
Apyx's response was pointed: "This is not a bug, it is the expected behavior of a stablecoin backed by preferred equity rather than cash deposits. Holders who understand STRC's risk profile and its history of mean-reversion should view these episodes as the asset class working through its normal cycle, not as evidence of a broken peg."
Meanwhile, it was business as usual for Strategy's bitcoin acquisition endeavours. The company scooped up an additional 520 BTC for about $34.9 million According to Bitcoin Treasuries, Strategy holds 847,363 BTC as of June 22, 2026, acquired at a total cost of approximately $64.10 billion at an average of around $75,646 per coin — a position now sitting at an unrealised loss of roughly $9.3 billion with Bitcoin trading in the low-to-mid $60,000s.
If Bitcoin enters a prolonged drawdown, Strategy may have to issue more equity at unfavourable terms, sell further Bitcoin, or cut payouts — each option carrying its own signal risk for a market that was sold on the instrument's stability.
For the stablecoin protocols built on top of STRC, that is the scenario the stress tests haven't yet been written for.
