Strategy's $1.45 billion preferred-share buyback program is supporting a substantial portion of trading activity in STRC, its variable-rate preferred stock used to finance Bitcoin accumulation.
According to Keyrock research, Strategy's repurchases accounted for more than 20% of weekly trading volume in STRC during nearly every week of September, reaching approximately 28% the week of September 8 before declining to just under 20% in early October.
Market Liquidity Concerns
The findings raise questions about how much of STRC's market liquidity depends on independent investors and how trading conditions might change if Strategy reduces its purchases. The concern is particularly relevant as Strategy approaches the limit of its repurchase authorization.
As of October 4, Strategy had spent approximately $1.45 billion of its $2 billion authorization, leaving $547.2 million available. The repurchases are discretionary, and Strategy can modify, suspend, or terminate the program at any time.
STRC Trading Activity and Depth
STRC is among the most actively traded preferred securities in the market, averaging approximately $150 million in daily volume. Keyrock found that the instrument can typically absorb about $28 million in trading before its price moves 10 basis points.
This depth significantly exceeds competing preferred benchmarks such as Strive's SATA, which has less than $3 million in comparable market depth. Using an execution rate equivalent to 20% of daily trading volume, Keyrock estimated that a $50 million STRC position could be liquidated in less than two trading days, compared with five days for SATA and six to eight weeks for Strategy's fixed-rate preferred instruments.
However, when Strategy's repurchase activity is removed from calculations, estimated trading capacity falls to approximately 80% of reported volume, suggesting that exit timelines could extend significantly without the company's buying support.
Price Sensitivity and Liquidity Deterioration
STRC's market depth deteriorates sharply when the security moves away from its $100 reference price. On the worst 10% of trading days, estimated depth within a 10-basis-point price move falls from about $28 million to $6.5 million.
STRC becomes approximately four times less liquid when trading 1% to 3% away from par and roughly eight times less liquid when the deviation exceeds 6%. The relationship between STRC's distance from par and market illiquidity had a correlation of 0.43, compared with 0.10 for the magnitude of Bitcoin's daily price movements.
Keyrock noted that a typical decline from par represented approximately seven months of dividend income, while STRC's June drop toward the mid-$70s amounted to roughly two years of coupon payments.
Capital Allocation Pressures
Between September 28 and October 4, Strategy repurchased approximately $176.3 million of STRC while acquiring 334 Bitcoin for approximately $28.7 million. Of the preferred repurchases, $154.1 million came from the company's cash reserves, compared with $13 million used for Bitcoin purchases.
If Strategy maintained its recent weekly repurchase pace, its remaining $547.2 million authorization would last approximately three weeks, though the company could adjust the program again if needed. Strategy previously doubled the authorization in September.
Proposed Dividend Changes
Shareholders are scheduled to vote on October 28 on amendments that would introduce daily dividends across Strategy's US-listed preferred stocks. If approved and implemented, STRC would begin making payments under the new schedule on November 2.
Strategy argues that more frequent distributions could improve price stability, reduce trading disruptions around dividend dates, and broaden institutional interest without increasing total regular dividend obligations. However, the experience of Strive's SATA, which already uses a near-continuous payment structure, suggests that dividend frequency alone may not guarantee deeper liquidity.
Keyrock identified family offices, private-bank discretionary accounts, and specialist credit funds as the most promising sources of larger allocations to support independent demand for STRC.
