Benchmark analyst refutes parallels between STRC Strategy and TerraUSD: "These are different instruments"
In recent days, debates have arisen in the crypto community about the potential risks associated with Strategy's (formerly MicroStrategy) preferred stock under the ticker STRC. Some market participants draw parallels to the collapse of the algorithmic stablecoin TerraUSD (UST) in 2022. However, in my assessment, such a comparison does not hold up to scrutiny.
Benchmark analyst Mark Palmer, commenting on the situation, emphasized that STRC is not a stablecoin but a preferred stock with a fixed dividend of 11.5%. Its target price is around $100, but amid market volatility, quotes have dropped to $82.53. This is a fundamentally different instrument, not involving algorithmic price support or redemption obligations. Unlike UST, which collapsed due to loss of confidence in the arbitrage mechanism with Luna, STRC trades as a classic security, and its value depends on market supply and demand, not on software code.
The key point: as long as STRC's price remains below $100, Strategy does not use this channel to raise funds for purchasing bitcoin. The company has clearly stated that new issuance of preferred stock is only possible when parity with the nominal value is achieved. Thus, the current situation does not create additional pressure on Strategy's balance sheet or its bitcoin reserves.
From my perspective, the market is often prone to excessive analogies, especially when it comes to complex financial instruments. STRC is a high-yield debt instrument, not an algorithmically managed stablecoin. Investors drawing parallels with UST likely underestimate the difference in risk structure. In the long term, if STRC's price returns to $100, it could become an additional source of liquidity for Strategy, but until that happens, concern is premature.