Strategy to keep STRC Fund Pegged to $100

Strategy, the world’s largest corporate Bitcoin holder, is launching a new kind of stock offering, aiming to raise more funds to invest in the world’s first cryptocurrency.

Michael Saylor’s Strategy announced plans to conduct an initial public offering of 5 million shares of Strategy’s Variable Rate Series A Perpetual Stretch Preferred Stock (STRC).

Strategy will use the net proceeds for “general corporate purposes, including the acquisition of Bitcoin and for working capital,” it announced on Monday.

Unlike previous offerings, the STRC Stock will accumulate cumulative dividends at a variable rate on the stated amount of $100 per share. The initial monthly regular dividend will be 9% annually.

The announcement comes two weeks after Strategy announced a $4.2 billion at-the-market (ATM) offering on July 7, which functions as an equity-raising mechanism designed to enable the firm to sell newly issued shares to buy more Bitcoin (BTC).

The new offering will be available through an initial public offering (IPO) to “select investors,” Saylor said in a Monday X post.

Related: Bitcoin whale’s $9.6B transfer, GENIUS Act spark correction concerns

STRC dividend stock to trade akin to a synthetic stablecoin?

Strategy’s new offering aims to “adjust the monthly regular dividend rate per annum in such manner as Strategy believes is designed to cause the STRC Stock to trade at prices at or close to its stated amount of $100 per share,” the announcement said.

This mechanism makes the STRC stock akin to a “new financial lifeform” optimized to “convert fiat into Bitcoin at velocity,” according to Bitcoin author Adam Livingston.

“Strategy can tweak the rate each month to keep $STRC trading near $100 par like a synthetic stablecoin with yield,” wrote Livingston in a Monday X post, adding:

“You’re not buying stock. You’re buying a yield-targeted Bitcoin conduit.”

This mechanism will enable Strategy to “attract fiat via yield” and “dollar-cost average into Bitcoin,” added the author.

Related: Bitcoin becomes 5th global asset ahead of “Crypto Week,” flips Amazon: Finance Redefined

The new stock offering was announced shortly after Strategy bought $740 million worth of Bitcoin on Monday, at an average price $118,940 per coin, signaling more confidence in Bitcoin’s price trajectory.

Bitcoin-focused treasury companies like Strategy and Metaplanet may drive Bitcoin to become a $100 trillion market opportunity, according to Adam Back, co-founder and CEO of Blockstream and the inventor of Hashcash.

“A sustainable and scalable $100-$200 trillion trade front-running hyperbitcoinization. Scalable enough for most big listed companies to move to BTC treasury,” wrote Back in an April 26 X post.

Magazine: Bitcoin OG Willy Woo has sold most of his Bitcoin — Here’s why