Summary
- According to Mark Palmer of Benchmark-StoneX, Strategy’s Stretch (STRC) is experiencing volatility but is not comparable to the stablecoin that collapsed the Terra ecosystem.
- The preferred stock of the Bitcoin investment firm is intended to maintain a specific trading level, but it lacks the ability to technically "depeg," as Palmer noted.
- Last week, STRC dropped to a low of $82.53, but it rebounded slightly to close at approximately $88.65 on Monday.
Strategy’s Stretch (STRC) is under significant pressure, yet it does not mirror the stablecoin that led to a significant downturn in the cryptocurrency market in 2022, as stated by Mark Palmer from Benchmark-StoneX.
Despite STRC's recent decline to record lows, prompting unsettling memories, Palmer argued in a note on Monday that drawing comparisons between it and the failed Terra ecosystem is fundamentally incorrect.
Palmer emphasized that the current concerns regarding STRC have fueled alarmist discussions on social media, neglecting the essential distinctions between this dividend-generating product and the TerraUSD and LUNA tokens, which collectively lost $40 billion in market capitalization during their decline.
“STRC is not a stablecoin,” Palmer emphasized. “It is not supported by an algorithmic arbitrage mechanism, nor does it rely on trust in a reflexive token structure.”
While most stablecoins are underpinned by cash and U.S. Treasuries, TerraUSD attempted to deviate from this standard without any substantial reserves, depending instead on a unique "mint-and-burn" system involving its sister token, LUNA, to maintain its peg artificially.
In contrast, STRC is indirectly supported by the Bitcoin assets held by Strategy. The firm, located in Tysons Corner, Virginia, announced on Monday that it owns 847,363 Bitcoin, worth $54.5 billion based on a Bitcoin price of around $64,400.
As the Terra ecosystem collapsed, TerraUSD "depegged," losing its parity with the U.S. dollar as investor confidence quickly eroded. The project’s Anchor Protocol was well-known for promising a 20% annual percentage yield on deposits.
Similar language was recently employed regarding STRC's performance when it dipped to $82.53 on Thursday, despite currently offering an 11.5% annual dividend. By Monday, the preferred stock closed flat at $88.65, roughly 11.3% below its $100 par value, as reported by Yahoo Finance.
This stablecoin is now 10% depegged btw https://t.co/ZYACvjnxAl pic.twitter.com/TsMwZgserK
— Sisyphus (@0xSisyphus) June 17, 2026
Palmer pointed out that STRC is designed to trade around the $100 mark, but its price has fluctuated since its launch less than a year ago. When STRC is priced at or above this level, Strategy issues additional shares and uses the proceeds to acquire more Bitcoin.
Having remained below its $100 par value for several weeks, some analysts predict that the company may look to enhance the dividend rate of the product to facilitate a recovery back toward that mark.
Additionally, Strategy has other options available. For example, the firm has increased its cash reserves for three consecutive weeks, bolstering its USD reserve to assure preferred stockholders of ongoing dividend payments.
While STRC trades below the $100 threshold, its capacity to purchase Bitcoin may be limited, but Palmer clarified that this does not indicate a fundamental issue.
“There is a significant distinction between stating that Strategy's preferred stock funding mechanism has become less efficient,” he explained, “and claiming that the company's entire model is flawed, as some critics have suggested.”
The investment bank maintained its price target of $570 for Strategy, which is considerably higher than the peak of $457 the company’s shares reached in October.
On Monday, Strategy’s shares dropped by 2.8% to $109, contributing to a downward trend, marking the fifth consecutive day of decline for the company’s stock price.