Original title: IOSG Weekly Brief|MSTR STRC Depth Study: 11.5% BTC Finance Wheel #323
Original by Benji, IOSG Ventures

Core views:

STRC IS A WELL-DESIGNED FINANCING TOOL THAT TRANSFORMS THE DEMAND FOR SOLID HARVESTS INTO A BITCOIN BUYOUT PRESSURE。

IN CATTLE MARKETS, IT PROVIDES 11.5 PER CENT OF FLOATING EARNINGS AND LOW PRICE VOLATILITY, BUT ITS RISK STRUCTURE IS ESSENTIALLY EQUIVALENT TO "SELLING A FALL OPTION" ON BITCOIN ASSET COVER, SO THAT WHEN BTC FALLS, IT DOES NOT REPLACE A REAL FIXED-INCOME PRODUCT。

The real vulnerability of STRC is not the BTC price, but the mNAV. Once MSTR's mNAV falls 1.0 times more than four weeks in a row, the wheel enters a passive mode downward spiral within three months。

We're judging the probability that this trigger will appear in the second half of 2026 by about 70%, when the STRC will have a buy-in point of $85-90. If the trigger doesn't work, it means that Saylor has succeeded in creating a brand-new BTC raw credit tool class。

Background

Strategy (former MicroStrategy) launched STRC ("Stretch"), a constant priority of $100 in target face value to maintain price stability through monthly floating dividends。

As of 31 March 2026, STRC had a nominal size of $5B, with a single-day trade peak of over $300M (data as of March 2026) and, since its launch, has provided more than $3.5B in BTC purchases for Strategy, its most important financing carrier。

As at 12 April 2026, 780,897 BTCs were held on Strategy ' s balance sheet, with a leverage rate of 33 per cent, and the remainder of STRC ATMs was about $21.6B。

• The tool is in an innovative category:IT LOOKS LIKE A MONEY MARKET FUND (PRICE STABILITY, HIGH RATE OF RETURN), BUT THE CREDIT RISK ASSUMED IS ENTIRELY ATTRIBUTABLE TO SINGLE-COMPANY BTC HOLDOUTS。

Before starting the argument, let's make it clear where we might be wrong。

If we were wrong, it would be because:Traditional collectors are really willing to accept reverse risk for spreads of 700bps; STRC is $50 billion in size over three years, becoming a de facto BTC yield curve; and Sailor successfully converts BTC securities into an interest-bearing collateral asset for a portfolio of institutions。

This result will represent the encryption of the case of the largest integration into traditional finance to date - an asset class that did not exist until 2025 and added $50 billion+。

• In this optimistic context, the interest pause in April 2026 was not a warning signal, but a feature:A MATURE INSTRUMENT BEGINS TO STABILIZE RETURNS AFTER EARLY PRICE DISCOVERY IS COMPLETED, SIMILAR TO THE EARLY HIGH-YIELDING DEBT ETF, WHICH FOLLOWS THE DOWNWARD PROCESS OF ADOPTING GRADUAL RE-PRICING。

The argument is broken

STRC CORE INNOVATION:It transforms the money for revenue into BTC's buyout pressure. When the STRC transaction is close to $100, Saylor uses ATM for new distribution (about 40 per cent of the daily turnover), buys BTC with the money received, and issues MSTR common shares more than NAV (mNAV> 1x) for leverage。

The final results are:THE $100 M'S SRC DAILY TURNOVER ALLOWS YOU TO PRY THE APPROXIMATELY $120M BTC PURCHASE。

But the weakness of this mechanism lies in its cyclical nature:STRC can be stable at $100 because investors believe it is stable; and Saylor maintains this trust by increasing dividends。

The anchor is not backed by collateral, but by confidence and is maintained by a continuous stock auction without a formal ceiling. Once that confidence breaks down, the auction becomes more expensive。

Evidence and comparison: STRC vs. other bitcoin convertibles

Critical Insight:For Strategy, STRC converts the demand for solid harvests into BTC accumulated fuel. For investors, it gives Sharp an optimised return in a benign environment, but hides a BTC 's "sell and fall."。

THE DESCRIPTION OF NYDIG IS VERY PRECISE:"IT IS AKIN TO EMPTYING THE BITCOIN ASSET COVER OF A DROP-OVER OPTION IN EXCHANGE FOR A DOWNSIDE RISK OF BTC FALLING TO ERODE ASSET BUFFERS."

WHEN DID HE DO WELL

STRC, WHEN DOES IT GET BAD

STRC WHEN WILL IT FALL: DEATH SPIRAL

The key issues are:STRC WILL ENTER A SELF-ENHANCED LOWER CYCLE? THE ANSWER IS YES, BUT SUBJECT TO CERTAIN CONDITIONS. THE MECHANISM HAS THREE INTERRELATED PATHS OF FAILURE。

PHASE 1: BTC FALLS BREAKING $100 ANCHOR

When the BTC crashes (e.g. 45% retreat from historical heights at the end of 2025), Strategy's leverage will go mechanically. Based on 780,897 BTC, 33% leverage rate (MSTR 8-K as of 12 April 2026), if BTC drops by 50%, the leverage rate is pushed to about 66%. At this point in time, the credit quality of STRC deteriorated, as its preferential claim to the remaining assets became thinner. The price fell $100。

This has happened three times (August 2025:ABOUT $92, 2025 NOVEMBER: LOW POINT ON DISK, FEBRUARY 2026: ABOUT $93), BUT EACH TIME THE BTC REBOUNDED QUICKLY AND PULLED THE ANCHOR BACK。

Phase II: Stock-up trap

Guide to SEC by Strategy:If monthly VWAP is between $95 and $99, the rate of dividends is increased by 25bps per month; if $95 falls, the rate is increased by 50bps per month。

from 9% to 11.5%, the dividends have risen cumulatively in about eight months (august 2025 to april 2026) 250bps, averaging about 31bps per month - this rate is faster than the re-pricing of the preferred shares of any similar company under stable market conditions。

In April 2026, it was the first suspension after seven consecutive increases. Two readings: (a) demand is steady — looking at more; and (b) Strategy has touched the traditional fixed buyer's sensitive ceiling for yield — looking empty. This is the single most valuable signal for the next 1-2 months。

If the BTC continues to be depressed, the dividends will have to continue up to attract the buyer back to the face. Under the 5B scale, an increase of 100bps would mean additional cash expenditure of about $50M per year; if STRC expands to $20B (the authorized ATM level), the cost per 100bps becomes $200M per year。

The bear market, which lasts for more than six months under the current upward adjustment, will push the rate of return on STRC to 13-15 per cent; at this level, annual dividends of $20B-size will exceed $2.6-3 billion, draining a significant portion of the potential gains from Strategy BTC’s reserves, forcing it to choose between “continue to raise” and “renounce stabilization.”。

There are no official ceilings on the increase in dividends, and this "no ceiling" movement is precisely the point of focus on empty space。

Phase three: mNAV falling 1 times and the wheel breaks

That's the real breakpoint. Strategy buys BTCs and leverages them with the issuance of MSTRs (mNAV> 1x) at prices higher than NAVs. If the BTC falls deep enough to double the mNAV, the distribution stock dilutes the value of existing shareholders, and Saylor cannot leverage the distribution。

Then Strategy faces a dilemma:(a) Continue to issue STRC at a higher rate of dividends and accept a higher leverage; (b) unilaterally reduce the interest rate (25 bps per month) by the terms of the SEC filing; allow for a fall in the price of the STRC; and (c) sell BTC into a falling market。

Saylor repeatedly stated that he would never sell BTC. BitMEX Research concludes that (b) is most likely to happen: "Strategy will not sell bitcoin, it will simply give up STRC's quest for stability." The pressure will be passed on to STRC holders。

An early warning signal has been lit:During the week of April 6-12, 2026, the MSTR ATM increased the amount of $0 - all financing was completed through STRC ($1.00B, 1,028 million share; MSTR 8-K). The mNAV has reached the point where Saylor is not willing to take the risk of diluting ordinary shares. The third phase of the prefix has been partially triggered — the wheel is already operating on one leg。

Quantified collapse scenario

Why is this different from UST/Terra:UST relies on algorithmic casting mechanisms, supported only by endogenous coins (LUNA). STRC is supported by real BTC, and Strategy has discretion to choose lower dividends instead of mandatory liquidation。

THE STRC FLOOR IS NOT ZERO - IT IS THE PREFERRED CLAIM FOR SURPLUS ASSETS IN LIQUIDATION. BUT IF THE BTC DROPS OVER 60% AND STAYS LOW, THIS FLOOR MAY BE WELL BELOW $100。

THE KEY VARIABLE IS TIME. EACH PREVIOUS STRC RETREAT WAS REPAIRED WITHIN WEEKS BECAUSE THE BTC REBOUNDED. A REAL CRASH REQUIRES A CONTINUOUS BEAR MARKET (WHICH LASTS FOR MORE THAN THREE MONTHS UNDER $50K), ALLOWING THE STOCK-UP MECHANISM TO OPERATE LONG ENOUGH TO ERODE CONFIDENCE。

THE LONGER STRC REMAINS BELOW FACE VALUE, THE LONGER ITS DIVIDENDS CONTINUE TO RISE, THE MORE IT IS LIKE A COMPANY EXTENDING ITS INCREASINGLY FRAGILE DEBT AT EVER HIGHER INTEREST RATES — A MODEL THAT HAS A VERY CLEAR ENDING IN CREDIT MARKETS。

Capital structure priorities:THE ORDER OF LIQUIDATION IS AS FOLLOWS: REVERSIBLE DEBT (APPROXIMATELY $8.2B) STRC IS RANKED AFTER $8.2B UNCOLLATERALIZED DEBT AND STRF PRIORITY SHARES。

Industry perspective

"StRC risks are significantly higher than short-term United States debt ... When music stops, investors may feel offended. – BitMEX Research, A Bit of a Stretch (November 2025)

"The appropriate way to assess STRC risks is to look at them from the perspective of governance and subordination, rather than focusing solely on payment risks. — Greg Cipolaro, NYDIG Global Research Manager (March 2026)

"IT'S SIMILAR TO EMPTYING THE BITCOIN ASSET COVER WITH A DROP-OVER OPTION - BY TAKING THE DOWNSIDE RISK OF BTC FALLING TO ERODE THE ASSET BUFFER IN EXCHANGE FOR A GAIN. – NYDIG STUDY (MARCH 2026)

Here's the core difference between analysts' views:SRC IS CONSIDERED BY MANY TO BE THE SAFEST 11.5 PER CENT OF THE CURRENT MARKET IN TERMS OF REVENUE ACQUISITION; IT IS SEEN AS A CREDIT RISK OF MISPRICING PRODUCTS THAT ARE PACKAGED INTO MONEY MARKETS。

Looking at the core concerns of the empty schools directly corresponds to the stock-up mechanism described above:STRC DOES NOT SUDDENLY DEFAULT, BUT RATHER SLOWLY RE-PRICING -- THE LONGER THE BTC GETS DOWN, THE MORE IT SLIDES FROM A QUASI-MONETARY INSTRUMENT TO A HARD-WON PRODUCT. THIS GRADUAL SLIDE IS THE REAL RISK, NOT THE COLLAPSE OF ONE NIGHT。

Inferences and projections

Bottom line:STRC is a truly innovative financial instrument that works very well in an environment that it is designed to do well — a smooth BTC with uplifts, open capital markets, mNAV> 1x。

In this situation, it can provide 11.5 per cent of the manageable gains and is indeed attractive. But its downside structure is asymmetric: good times earn votes, bad times take on a centralized, single name BTC credit risk. It is not a substitute for national debt or diversified high-yield debt, but a bet that Strategy BTC accumulates leverage positions for the continued operation of the wheel - it is simply packaged into solid harvests。

Three new signals (as of April 2026)

Signal one: The first increase in dividends was suspended in April (CoinDesk, 1 April 2026)。

After seven consecutive increases in August 2025 to March 2026 (from 9% to 11.5%), Saylor maintained the dividends in April. Two readings are: (a) demand is stable at this rate of return and is seen to be high; and (b) Strategy has touched the traditional fixed buyer's yield-sensitive ceiling and is blind。

This is the single most valuable signal for the month of May - June, and the point around which the mNAV trigger frame above revolves。

SIGNAL II: MSTR ATM WAS ADDED TO $0 ON APRIL 6-12, AND ALL FINANCING WAS COMPLETED BY STRC ($1.00B; MSTR 8-K, APRIL 2026)。

At the current BTC price level, mNAV has reached the point where Saylor is reluctant to take the risk of diluting ordinary shares to continue MSTR. The prefix of the third stage of the death spiral has been partially triggered — the wheel is operating on one leg。

Signal III: Last week the BTC bought an average price of $71,902 per item, less than Strategy ' s historical cost of $75,577 per item (MSTR 8-K as of 12 April 2026)

Strategy is buying into a weak DCA. The wheel is still spinning, but every marginal buy is buffering against thinness, not thickness — in contrast to the build-up of the 2024-2025 round。

Investment recommendations

HOLD, WAIT FOR BETTER ENTRY POINTS AND BTC TO GO。

Current status:Hold's current position, don't hold until there's a better signal. MSTR's mNAV has been compressed to the nearest 1.0 times. STRC remains at $100 face value and pays 11.5 per cent dividends, reflecting that the dividends mechanism is still functioning as designed. But the security margin is very narrow。

Rebuilding condition:The BTC station is $70-75K, and MSTR mNAV is confirmed at more than 1.1 times for two consecutive weeks. At that time, STRC returns to re-entry conditions near the $100 nominal value。

ACCORDING TO HISTORICAL DATA, IN THE FOLLOWING SET OF $95, AFTER WHICH BTC REBOUNDED, 7-11 PER CENT OF THE CAPITAL GAINS WERE ACCUMULATED - BUT ONLY IN AN ENVIRONMENT WHERE BTC COULD REBOUND WITHIN WEEKS (AUGUST 2025, NOVEMBER 2025, FEBRUARY 2026). IT IS TRULY UNKNOWN WHETHER THE NEXT RETREAT CONTINUES THIS PATTERN OR FORESAW A MORE SUSTAINABLE BEAR MARKET。

Exit signal:In any of the following cases, the sales assessment is initiated: (a) MSTR mNAV falls 1.0 times and lasts more than two weeks; (b) STRC VWAP falls below $95 for four consecutive weeks; (c) BTC drops $55K。

Appendix

Timeline

Consistency — who can break prices

Strive's $50M purchase was mentioned, but there was no discussion of whether STRC had a few large institutional holders - If they rotate out of the game at the same time, will they crush the trade of a daily average of 258 m and press STRC self-realization below the face value? This is the risk of crowding。

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