Strategy’s Stretch (STRC) is facing notable pressure, but it doesn’t resemble the stablecoin that brought crypto to its knees in 2022, according to Benchmark-StoneX’s Mark Palmer.
Although the Bitcoin-buying firm’s flagship preferred stock evoked painful memories as it drifted to record lows last week, comparisons between it and Terra’s collapsed ecosystem remain “fundamentally misguided,” the investment bank’s analyst shared in a Monday note.
Palmer argued that STRC’s weakness has “fueled alarmist commentary across social media,” overlooking core differences between the dividend-paying product and two tokens, TerraUSD and LUNA, which erased $40 billion in market cap as they plummeted years ago.
“STRC is not a stablecoin,” Palmer underscored. “It is not backed by an algorithmic arbitrage mechanism, and it is not dependent on confidence in a reflexive token structure.”
Most stablecoins are backed by a combination of cash and U.S. Treasuries, but TerraUSD attempted to break that mold without any hard reserves, relying instead on a novel “mint-and-burn” framework with its sister token, LUNA, to artificially maintain its peg.
STRC, conversely, is indirectly backed by Strategy’s Bitcoin holdings. The Tysons Corner, Virginia-based firm signaled on Monday that it now owns 847,363 Bitcoin, a sum valued at $54.5 billion with the digital asset changing hands around $64,400.
As Terra’s ecosystem unwound, TerraUSD “depegged,” losing parity with the U.S. dollar as investors swiftly lost confidence in the protocol’s ability to remain stable. The project’s Anchor Protocol was famously known for offering a 20% annual percentage yield on deposits.
That same language was used in relation to STRC’s weakness on Thursday, as the product, which currently offers an 11.5% annual dividend, fell as low as $82.53. On Monday, the preferred stock closed flat at $88.65, or around 11.3% below its $100 par value, according to Yahoo Finance.
STRC, Palmer noted, is engineered to trade around the $100 mark, but its price has been cyclical since it debuted less…
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