Critical
What Are the Risks?
4 min read
Why the yield is high
Yield spread
The spread between STRC's yield and a Treasury tells you the market's assessment of the additional risk. That spread is real, and the risks below explain what it compensates for. STRC yields approximately 7-8% more than 1-year U.S. Treasuries. In financial markets, yield spreads of this magnitude reflect the market's assessment of additional risk. The spread is not a gift. It is compensation for the risks listed below.
Principal Risk
Your investment amount is not guaranteed. STRC's share price can fluctuate, and there is no FDIC insurance.
STRC is not FDIC insured. Unlike a bank savings account, your money is not protected by federal deposit insurance. If Strategy were to become insolvent, you could lose part or all of your investment.
Your principal is not guaranteed. The share price can and does fluctuate. STRC has traded below its $100 par value on multiple occasions. If you need to sell when the price is below what you paid, you will realize a loss.
Short track record. STRC has only existed since July 2025. Less than a year of history is not enough to evaluate how the instrument behaves through a full market cycle, including a crypto winter or a broader financial crisis.
Income Risk
The dividend rate changes monthly and depends on Strategy's ability to continue raising capital.
The dividend rate can change. Strategy sets the rate monthly. While the rate has only gone up since launch, there is no guarantee it will continue to do so. The rate could be reduced if market conditions change.
Dividend sustainability depends on continued capital raises. Strategy pays more in dividends across all its preferred series than it earns from operating revenue. The dividends are funded by selling new shares (both common and preferred) and from a $2.25 billion USD reserve established in December 2025. If investor demand for new issuance slows and the USD reserve is depleted, dividend payments could come under pressure.
For a detailed breakdown of how the ATM program funds dividends, see our ATM program guide.
Q4 2025 financial results. Strategy reported a net loss of $12.4 billion for the fourth quarter of 2025, driven largely by bitcoin writedowns. While the company's revenue increased 1.9% year-over-year to approximately $123 million, the loss highlights how significantly bitcoin price movements affect Strategy's financial statements.
Concentration Risk
STRC is a single instrument tied to one company's bitcoin strategy. That concentration creates unique dependencies.
Bitcoin concentration risk. Strategy's financial health is heavily tied to bitcoin's price. The company reported a net loss of $12.4 billion in Q4 2025, primarily due to bitcoin writedowns. A prolonged bitcoin bear market (similar to 2022's 70%+ decline) could severely stress the company's ability to maintain STRC dividends and keep shares trading near par.
STRC is not collateralized by bitcoin. Strategy's preferred securities (STRC, STRF, STRD, STRK, STRE) are explicitly not collateralized by the company's bitcoin holdings. If Strategy faces financial distress, STRC holders have a preferred claim on residual assets but no direct claim on the bitcoin. This is stated in Strategy's SEC filings and on strategy.com.
Circular dependencies. Other bitcoin treasury companies have begun purchasing STRC for their own treasuries (for example, Strive allocated $50 million to STRC in March 2026). While this demonstrates institutional demand, it also creates interconnections where multiple companies' financial health depends on the same underlying asset (bitcoin). If bitcoin declines significantly, it could stress multiple companies simultaneously.
Make sure you understand and accept these risks before investing.
Part 3 of 7 in the STRC investor guide