Strategy’s STRC slump is not a Terra repeat, Benchmark says

Strategy's preferred stock STRC slid to record lows over the past week, and the fall has revived a comparison to Terra's UST, the stablecoin whose collapse erased about $40 billion in 2022 .

While the parallel is spreading on social media , it also misreads what STRC actually is, per Benchmark Research.

Two features invite the comparison. STRC is designed to trade around $100, and it fell to an intraday low near $82.53 last week before closing around $88.65 on Monday, roughly 11% below that level.

Critics have called that a "depeg," borrowing the term used when a stablecoin loses its $1 value. STRC also pays an 11.5% annual dividend, a yield that echoes the 20% return Terra's Anchor protocol advertised before it imploded. A high yield and a price drifting below its target are enough to trigger the memory .

The mechanics are not the same, according to Benchmark-StoneX analyst Mark Palmer. "STRC is not a stablecoin," he wrote in a Monday note.

A stablecoin promises to hold a fixed $1 value, but STRC never made that promise. It is a preferred stock, a class of equity that pays a set dividend, engineered to trade near $100 but with no peg to defend, so it cannot "depeg" the way UST did.

“Strategy’s objective has been to support STRC’s trading at a level near $100, not to guarantee it,” Palmer said. “In our view, what has happened with STRC is best described not as a depeg — something that was never pegged cannot be depegged — but as a market-driven reset of required yield.”

UST was algorithmic, holding its dollar value through a mint-and-burn loop with a sister token, LUNA, and no hard reserves behind it. When confidence broke, the loop unwound and both fell to near zero.

STRC has no such self-reinforcing mechanism. It is backed indirectly by Strategy's bitcoin, which the company said Monday now totals 847,363 coins worth about $54.5 billion.

The drop does affect Strategy's buying engine, however. When STRC trades at or above $100, the company issues new shares and uses the cash to buy more bitcoin.

Below that level the channel stops working - explaining why Strategy has paused it.

Palmer noted that the funding engine had become "less efficient," which was very different from a claim that the company's model is broken.

Meanwhile, Benchmark reaffirmed its $570 price target on Strategy's common stock, MSTR, well above the roughly $457 high it reached in October. The shares have not cooperated so, falling 2.8% to $109 on Monday for a fifth straight down day.

In May, combined exchange volumes fell 3.45% to $4.41T; the lowest since September 2024. RWA perpetual futures volumes rose 10.4% against the trend, hitting a new all-time high.

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