Strategy's STRC buys more BTC than spot ETFs, posing new market risk

Strategy's (MSTR) preferred stock, STRC, is purchasing more Bitcoin than U.S. spot ETFs, emerging as a major buyer but also a new market variable, according to an analysis by on-chain analytics firm Pine Analytics reported by CryptoSlate. The firm noted that from March 9 to March 15 this year, STRC raised $1.18 billion and acquired 17,994 BTC. In the same period, the 12 U.S. spot Bitcoin ETFs recorded net inflows of only $763 million. Unlike spot ETFs, shareholder sales of STRC do not impact Strategy's BTC holdings. However, Pine Analytics highlighted that STRC's weakness is maintaining its $100 par value. While its volatility has compressed from an initial 18% to around 2%, there are concerns that a prolonged period below $100 could create pressure to halt issuance. A collapse of STRC would exert significant downward pressure on the entire market, the firm explained. STRC is a product that pays holders a monthly variable dividend targeting an 11.5% annual yield from Strategy's cash. The dividend rate falls when the price is above par and rises when it is below. Strategy only uses funds raised when STRC exceeds $100 to buy BTC, making it a key funding source for its recent acquisitions.