Author: Allard Peng

Compiled by: AididiaoJP, Foresight News

The Relationship Between STRC and Volatility

The STRC designed by Strategy is a variable interest rate financial instrument aimed at stabilizing the market price at $100. When the trading price of STRC falls below $100, Strategy commits to increasing dividend payments to attract buying pressure to push the price back to the target level. Conversely, when the trading price of STRC exceeds $100, Strategy will reduce its shareholdings through market-price issuance plans or lower dividends, encouraging the price to retreat to $100.

This design essentially substitutes yield volatility for price volatility. Given that market participants generally prefer price stability, Strategy has created a financial instrument that is price-stable but has variable yields. As the market's confidence in Strategy's ability to maintain price anchoring through dividend adjustments strengthens, the frequency of dividend adjustments is expected to gradually decrease. This will create a virtuous cycle: price stability and high trading volume, in turn, enhance Strategy's ability to issue STRC on a large scale.

A stable $100 price along with an active market-price issuance mechanism creates an important effect: it establishes a channel capable of achieving Bitcoin average cost investment to a certain extent independently of Bitcoin spot prices on a global scale. This breakthrough is of profound significance.

Note: STRC (full name Variable Rate Series A Perpetual Stretch Preferred Stock) is a special preferred stock financial instrument launched by Strategy. Its core goal is to attract institutions and funds pursuing stable yields (similar to money market funds and bond investors) through traditional financing methods in the financial markets (fixed par value + high yield + low volatility), ultimately converting these funds into structural buying pressure for Bitcoin, enabling the company to accumulate BTC continuously and at a low cost.

Explanation of Average Cost Investment Method

The average cost investment method is a fundamental concept: it averages out the dollar cost basis of asset purchases through diversified investment. The specific operation is to invest a fixed amount at fixed time intervals, regardless of how asset prices fluctuate. This method allows for purchasing more units when prices are low and fewer units when prices are high. As long as the underlying asset has moderate volatility, this strategy typically gives a marginal advantage to the long-term cost basis.

Strategy's Past Bitcoin Financing Model

Prior to the establishment of the $100 price stabilization mechanism of STRC, Strategy often made acquisitions at local peaks in Bitcoin prices. This is because all its existing financing tools were positively correlated with Bitcoin spot prices. For example, MSTR common stock, as a high-beta alternative investment for Bitcoin, has a price trend that is highly correlated with Bitcoin. Therefore, when Bitcoin rises significantly, selling MSTR shares can raise substantial funds. However, this mechanism means that funding for Bitcoin acquisitions becomes abundant only when prices are at local highs.

Other preferred stock instruments also show similar characteristics. When Bitcoin is strong, credit spreads narrow; when Bitcoin is weak, preferred stocks are generally sold off. Although these are fixed-income instruments, theoretically, the correlation should be low, but in practice, this correlation still exists.

The emergence of STRC changed this situation.

As long as sufficient trading volume is maintained at the $100 price level, Strategy can continuously raise funds through the issuance of STRC. The market's dependence on and strong demand for price stability have created a financing tool that is decoupled from Bitcoin prices.

Specifically, financing activities conducted through STRC are related to its trading volume, rather than to Bitcoin's price trend. This breakthrough is significant, creating a mechanism for "global average cost investment" in Bitcoin.

STRC as a Global Average Cost Investment Tool for Bitcoin

A financial tool offering an 11.5% yield and stable pricing is naturally bound to attract the attention of global investors. Let's track the flow of funds: investors purchase STRC, and Strategy subsequently uses those funds to acquire Bitcoin. Although the funds from investors are not directly designated for Bitcoin investment, they ultimately translate into Bitcoin purchasing power through this channel.

Demand for tools like STRC—independently generated at its marginal level from Bitcoin prices. Therefore, the resulting financing activities and subsequent Bitcoin purchases are not significantly impacted by Bitcoin price fluctuations. This is the core feature of the average cost investment plan.

It is worth emphasizing that the funding source for this average cost investment is the savings pooled by entities seeking the characteristics of STRC products. This group may cover a wide range of investors globally. The main challenge currently faced is the distribution channels. Currently, only investors with U.S. standard brokerage accounts can purchase STRC. The development of Layer 3 "digital currency" products built on the foundation of STRC is expected to significantly expand its distribution range. Additionally, investor education, market promotion, improvement of market maturity, and credit ratings at the product level will also help broaden its reach. These developments will further enlarge the scale of the global average cost investment mechanism.

It is important to consider that Bitcoin itself cannot meet such widespread demand. Bitcoin is clearly seen by most investors as too volatile, too complex, or too uncertain. What the market needs is an enterprise entity capable of bearing the volatility risk of Bitcoin while providing stable returns in the form of credit instruments. Such a tool can gain widespread acceptance and attract various types of investors for normalized investment, allowing the enterprise to act on average cost investment in Bitcoin. This is the core value of STRC.

Limiting Factors to Be Aware Of

The author repeatedly uses the expression "at the marginal level" for good reason. The price stability of STRC is predicated on Bitcoin's ability to continuously provide substantial returns. If Bitcoin's return rate falls below the yield of STRC, shareholders of Strategy's common stock will have to compensate for this gap through equity dilution and valuation multiple compression. The losses that common stock can bear are limited, and exceeding this limit could jeopardize the company's ability to maintain the STRC tool. The function of STRC as a global average cost investment mechanism can only be sustained when the underlying asset (Bitcoin) performs well. This is an important premise to bear in mind.

Moreover, the price stability of STRC is mainly maintained when the market does not experience widespread "panic" against Bitcoin. Looking back at events like February 5, 2026, or mid-November 2025, at which time Bitcoin experienced a sharp and rapid decline leading to a temporary sell-off of STRC. Historical data confirms that during times of extreme market pressure, STRC indeed has a certain degree of downside correlation with Bitcoin. Such market conditions pose challenges to the feasibility of the concept of "global average cost investment" in Bitcoin. At the very least, it can be determined that if enough sellers push the price below $100, this average cost investment mechanism may be temporarily interrupted.

Conclusion

Achieving global average cost investment through STRC is still in its early stages of development. Last week, Strategy raised over $1.1 billion through STRC's market-price issuance plan—an unprecedented scale in the history of preferred stocks in capital markets.

It is worth considering how long Bitcoin prices can maintain below historical highs as more and more entities participate in global Bitcoin average cost investment through STRC.

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