Crypto Exec warns STRC holders of mispricing perpetual risk

Investors holding perpetual preferred stocks, such as Strategy’s variable rate Series A perpetual preferred stock (STRC), are significantly underestimating the risks associated with liquidity and interest rates, according to Matt Dines, chief investment officer at credit asset manager Build Markets. These stocks, which do not have an expiration date, expose holders to risks that could erode their value in a tight market environment.

“If spreads start to rise and the market demands higher yields from corporate borrowers, we need to attach that to an indefinite duration,” Dines told TFTC Media in a recent interview. “If this dislocation happens with liquidity, it will happen on the fiat side.” Dines emphasized that perpetual bonds are particularly vulnerable because they lack mechanisms to limit exposure over time, such as maturity dates.

STRC’s rapid growth and record trading volume

Dines’ warning coincides with a surge in demand for STRCs. Daily trading volume hit a record $1.5 billion on May 14, indicating growing investor interest in preferred stocks as Strategy relies on this funding vehicle to fuel its Bitcoin purchases. According to official data from Strategy, STRC is currently trading near $99 per share with a variable dividend yield of 11.5%.

The total market value of STRC’s outstanding shares amounts to approximately $8.4 billion, with a nominal par value of $8.5 billion. However, the company’s ability to issue additional STRCs is limited to $28 billion, and if this limit is not raised, Strategy’s Bitcoin accumulation could slow within the next year, according to research by Delphi Digital.

Wider risks of perpetual preference shares

Unlike bonds, perpetual preferred stocks have no redemption date, so their valuation is tied to the dividend yield compared to the market interest rate. Rising interest rates will cause prices to fall because fixed dividends will look less attractive. As of May 11, 2026, the S&P U.S. Preferred Stock Index stood at 656.19, reflecting a moderate decline amid expectations of rising Treasury yields. This dynamic has weighed on preferred stocks overall, with funds like the iShares Preferred and Income Securities ETF (PFF) reporting an SEC yield of 6.34% as of March 30, 2026.

Historically, preferred instruments have thrived in environments where interest rates are stable or falling, but current market conditions, characterized by tightening liquidity and changing Federal Reserve expectations, have increased the risk for permanent holders. Corporate issuers, including FS KKR, have continued to utilize preferred funds, with FS KKR recently announcing the issuance of $150 million perpetual convertible notes due on May 11, 2026.

The road ahead for STRC

Investors eyeing STRC’s high dividend yield should consider trade-offs, especially since liquidity risk remains high. Strategy’s aggressive use of STRC to fund Bitcoin purchases links its performance not only to interest rate conditions but also to cryptocurrency market volatility. With the $28 billion issuance limit on the horizon and growing market concerns about perpetual pricing, the next 12 months could determine whether STRC maintains its momentum or undergoes a rebalancing.

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