About 7,000 bitcoin are estimated to have been bought this week through Strategy’s ( MSTR ) perennial favorite Stretch ( STRC ), underscoring how quickly the high-yield instrument has become a key driver of the company’s bitcoin accumulation.
But the structure carries risks, according to Alexander Blume, CEO of Two Prime, an SEC-registered investment adviser focused on institutional bitcoin return strategies and bitcoin-backed lending.
“There is no free lunch,” Blume said. “A product that pays more than 6% relative to government bonds must carry additional risk.”
Demand for the preferred shares has increased as investors search for higher returns. STRC currently yields 11.5% and pays monthly cash distributions. The strategy has described the instrument as similar to a short-term, high-yield savings instrument, with the dividend rate adjusted to help keep shares trading close to their $100 par value while limiting price volatility.
The structure has helped accelerate Strategy’s bitcoin purchases. Market estimates suggest that the company has purchased more than 11,000 BTC over the past two weeks, bringing the total accumulation through the product to around 34,000 BTC since it went live, according to STRC.live.
Corporate interest is also starting to emerge. Asset manager Strive (ASST) recently disclosed a $50 million allocation to STRC, while digital credit firm Apyx said it recently bought an additional 200,000 STRC shares, bringing its total holdings to 255,000 shares.
Blume said STRC was a big focus at the recent Strategy World conference, highlighting how central the product has become to the company’s capital strategy.
“We’ve seen a smattering of companies buying STRC,” Blume said, adding that some of the activity appears tokenistic or partnership-driven for now.
Blume also pointed to early efforts to build decentralized finance products on top of STRC, sometimes marketing them as savings instruments despite volatility in the underlying asset.
STRC is designed to trade close to its par value of $100, but Blume said that is not guaranteed. A loss of confidence in the company, bitcoin or the preferred stock itself could push the price below par and cause significant damage, he said.
STRC has traded below its $100 par value on several occasions, prompting the company to raise dividends to help push the stock back toward par.
Blume added that strong momentum, available funding for interest payments and demand for high yields mean the structure is unlikely to face immediate problems.
