Bitcoin Slumps, but Saylor Touts STRC Dividends - Cointribune

Bitcoin was trading at $64,428 on Saturday, marking a 21.2% decrease over one month. Despite this downturn, Michael Saylor emphasized the performance of STRC, Strategy's preferred dividend stock, as evidence of its resilience against the crypto market crash.

According to market data, Bitcoin has lost 21.2% over one month and 32.2% over one year. In contrast, STRC showed a 1% return over one month (including dividends) and 13.4% over one year, compared to Bitcoin's 29.8% loss. However, over a three-month period, Bitcoin performed better with an 8.7% gain versus STRC's 7.5%.

STRC's Performance

Saylor defended STRC's performance on X, stating that Bitcoin represents digital capital while Strategy transforms it into digital credit. He noted that STRC's price remained nearly stable over one month, with dividends contributing to its total return of 1%.

The comparison includes four time periods. Over one week, STRC returned 0.3% while Bitcoin fell 9.1%. Over one month, the preferred stock yielded 1% against Bitcoin's 17.3% decline. The gap widened over one year with STRC at +13.4% and Bitcoin at -29.8%. However, over three months, Bitcoin gained 8.7% while STRC only gained 7.5%.

Dividend Sustainability

STRC displays an annualized dividend rate of 12%, though this remains variable. According to Strategy, a share was worth $99.91 at the close on November 13. At this rate, it represents approximately $12 in annual dividends for every $100 of nominal value.

The critical question concerns the source of these dividends. As of November 8, Strategy held a dollar reserve of $4.77 billion intended to cover dividends on preferred shares and interest on debt, plus $146.2 million in cash. Between November 2-8, the company drew $21.1 million from this reserve to pay dividends.

STRC's return doesn't directly depend on Bitcoin's price increase. Strategy relies on a cash reserve funded partly by common share sales, raising sustainability concerns. On November 12, economist Peter Schiff questioned the long-term viability of this model.

Strategy's Bitcoin Holdings

Strategy holds 850,364 bitcoins acquired for $64.16 billion. At Bitcoin's current price of $64,428, this reserve is worth approximately $54.79 billion, representing a latent loss of $9.37 billion. While unrealized, this illustrates the company's balance sheet exposure to market fluctuations.

Despite these pressures, Saylor continues his accumulation strategy. Between November 2-8, Strategy purchased 1,036 bitcoins for $81.9 million while simultaneously repurchasing 1,887,464 STRC shares for $188.3 million through common share sales.

Adding to concerns, MSCI announced plans to exclude Strategy from its global stock indices on November 12, which could reduce institutional demand for the company's shares.