Strategy and STRC have no similarity to LUNA and UST at all!

The problem with UST back in the day was that it had a set of automatic mechanisms behind it. After UST fell below 1 dollar, the system would create more LUNA to restore the peg of UST.

When the market was good, the price of LUNA rose, and the market was willing to take over, UST could attract funds with a high interest rate of 20%, so this model appeared to work. When the market was bad, once UST lost its peg, the more the system attempted to fix UST's price, the more LUNA had to be created; the more LUNA was created and sold, the more the price fell, ultimately causing both LUNA and UST to crash.

But STRC is not based on this mechanism at all.

When STRC drops to 80 dollars, it essentially indicates that preferred shares are trading at a discount. 100 dollars is around the par value, which is also the price range that Strategy wants to maintain, but this is not the peg price of a stablecoin. When STRC falls below 100 dollars, it will not trigger Strategy to forcibly sell BTC, nor is there any mechanism mandating Strategy to sell bitcoin:native to bring STRC back up to 100 dollars.

What Strategy can do is to increase the dividend yield of STRC, making the market willing to buy back in when it feels the returns are sufficiently high. But here's the problem: the higher the yield, the more money needs to be paid each year in the future, so the real pressure on STRC is the rising cost of financing, not the algorithmic death spiral like UST.

In fact, the real risk should be that Bitcoin continues to plummet, the premium on MSTR gets compressed, common stock ATMs become difficult, preferred stock ATMs become expensive, and the discount on STRC continues to amplify, causing the market to start worrying whether Strategy can continue to finance, pay interest, and refinance in the future.

Therefore, what I have always wanted to emphasize is that the biggest risk for Strategy is not STRC but Bitcoin.

However, saying that if STRC drops below 100, Strategy must sell BTC, and once BTC crashes, STRC continues to collapse misses the most critical link, which is the forced mechanism.

LUNA and UST are the flaws of algorithmic stablecoins themselves, which is why there are almost no algorithmic stablecoins left now; everyone knows that the pitfalls here are too big. But Strategy and STRC are issues related to the corporate financing structure, not a set of forced mechanisms.

So while Strategy is not without risks, the main risk arises after a deep drop in Bitcoin, as it becomes difficult to sell common stock ATMs for MSTR, the preferred stock ATMs don’t sell either, and convertible bonds cannot refinance—that is the risk of Strategy.

However, it is important to note that preferred shares, including STRC, do not promise interest payments; this is very important. I have found that many friends do not read well enough, it is clearly written in black and white — —

Strategy does not have a debt obligation to pay preferred stock dividends on schedule!!

Strategy does not have a debt obligation to pay preferred stock dividends on schedule!!

Strategy does not have a debt obligation to pay preferred stock dividends on schedule!!

Of course, while not paying may have some consequences, Strategy will be restricted from paying dividends to common stock and lower-tier securities, and the credit and financing ability of STRC will also be harmed. That’s all.

So, there is really no need to spread rumors that STRC can't pay dividends, leading Strategy to have to sell Bitcoin, causing a panic that results in a cascading crash in Bitcoin prices.

This is completely wrong; Bitcoin's price should fall first, then STRC drops, followed by Strategy raising the dividend rate, and finally affecting financing ability. The focus is always on Bitcoin's price leading the way, not on Strategy's preferred shares leading the way!

Moreover, comparing it to LUNA and UST is completely incorrect.

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