Bitcoin has lost roughly half its value since Michael Saylor’s Strategy launched Stretch (STRC), its novel capital-raising vehicle for acquiring Bitcoin, in late July 2025. The instrument itself has tumbled even harder—trading as low as $82.53 this week, a 13% discount to its $100 par value and a dramatic reversal from its steady operation near parity over the past year.

The collapse has reignited old debates about whether Strategy’s funding model is sustainable, with Bitcoin critic Peter Schiff calling STRC “a classic centralized Ponzi.” Yet other analysts argue the sell-off reflects a straightforward leverage wipeout rather than fundamental deterioration in the company’s Bitcoin treasury strategy.

As first reported by CoinTelegraph, the widening discount has already slowed Strategy’s Bitcoin accumulation. The company purchased roughly $100 million worth of Bitcoin in each of the past two weeks—a fraction of the $2.5 billion weekly pace seen in April. That slowdown matters because STRC’s mechanics depend on maintaining near-par pricing to efficiently fund fresh Bitcoin purchases.

How STRC Was Supposed to Work

STRC trades as preferred equity, initially designed to hover around $100 through adjustable dividend payments. Strategy uses proceeds from STRC sales to buy Bitcoin, creating what the company describes as a self-reinforcing capital-raising cycle.

The structure promised elegance: investors receive a high dividend yield while Strategy accumulates Bitcoin without diluting common shareholders. The company now holds more than 846,000 BTC, making it by far the largest corporate holder globally.

The current 11.5% annualized dividend remains attractive in absolute terms. Yet the $88.59 closing price this week means buyers are effectively earning closer to 13% on their capital—a gap that signals market distrust.

The Leverage Story

Jesse Myers, head of Bitcoin strategy at The Smarter Web Company, dismissed Ponzi concerns. “Strategy is fine,” he said, arguing that the company could sustain dividend payments for 32 years under current conditions, or indefinitely if Bitcoin appreciates at just 2% annually.

The real culprit, Myers suggested, was straightforward market mechanics. STRC’s long period trading near $99–$100 encouraged leveraged bets from traders assuming the floor held. Once the price slipped, margin calls cascaded, accelerating the decline.

Analyst Scott Melker noted that buyers at current levels are actually earning reasonable yields. At $90, the 11.5% dividend equates to roughly 12.8% of capital. At $85, it climbs to 13.5%. This suggests income-focused investors may eventually stabilize the price.

Bitcoin Purchases Hit Brakes

Strategy’s slowdown in Bitcoin accumulation speaks volumes. In April, the company bought 34,164 BTC in a single week for $2.54 billion. May saw 24,869 BTC added for roughly $2.01 billion.

By June, weekly purchases had collapsed to roughly 1,550 BTC for around $100 million each. The company even sold a small 32 BTC parcel for approximately $2.5 million to cover dividend obligations—the first Bitcoin sale in months.

This slowdown matters because Strategy has built its brand around aggressive Bitcoin accumulation. Any sustained reduction in purchasing power weakens the narrative that drove institutional interest in STRC and the broader Strategy thesis.

What Happens Next

Strategy retains options. The company could announce a new dividend rate as early as June 30, adjust its dividend schedule (it recently moved to semi-monthly payments), or issue traditional MSTR shares instead to fund Bitcoin purchases. Management has also kept cash reserves available as a backstop.

But none of those moves address the core issue: STRC only works as a capital-raising tool if investors believe the price will hold near par. A sustained discount of 10% or more begins to undermine that belief, regardless of underlying Bitcoin holdings or dividend safety.

The coming weeks will reveal whether the recent plunge was simply a leverage squeeze—a painful but temporary correction—or the beginning of a slower deterioration in confidence in Strategy’s funding model.