Bitcoin-Backed STRC Trades 13% Below Fair Value, Ex-Goldman Analyst Says

Crypto News

A former Goldman Sachs credit investor argues that Strategy's STRC preferred stock is undervalued by roughly 13%, worth near $96 against a market price of about $85. Khing Oei, who spent 25 years valuing risky debt at Goldman and hedge funds, published a model that treats STRC like a bond rather than a perpetual yield instrument. The security, backed by Strategy's vast Bitcoin (BTC) holdings, pays a 12% dividend but never matures and never repays its $100 par value. Our reading of the thesis: the discount reflects fear that the payout could stop, not the cash the shares can realistically generate over decades.

The headline attraction — a yield above 14% — is misleading, Oei contends. That figure comes from dividing the 12% coupon by STRC's discounted price after the shares crashed 25% below par during June's Bitcoin selloff. But the math wrongly assumes the dividend flows forever regardless of conditions. STRC pays only while Strategy can afford it, so a simple coupon-over-price yield overstates the return. His instinct, honed across a quarter-century in credit markets, is to never value a cash stream by dividing this year's coupon by today's price. Instead he counts the payments the instrument will realistically deliver — the discipline behind traditional fixed-income valuation.

The backing behind STRC is substantial. Strategy's public dashboard showed 843,775 Bitcoin worth about $54 billion, plus $3 billion in cash. Debt and senior preferred shares claim roughly $8 billion of that first, and STRC's $10.5 billion sits next in the capital stack. Stripping out the senior claims leaves about $50.2 billion supporting the preferred shares against an annual dividend bill of $1.73 billion. That coverage is the crux of the bull case: even with Bitcoin still trading below its all-time-high after June's drawdown, the asset base dwarfs the yearly payout obligation by a wide margin.

The coverage produces two striking figures. Bitcoin needs to appreciate only 3.4% a year for the dividends to continue indefinitely, according to the model. And if Bitcoin's price stayed flat forever, the reserves would still fund payouts for 29 years. Valuing those 29 years of cash flows at a 12% discount rate yields a fair price of $96.30. The market currently pays $85.29 — a level that implicitly buys only 17 years of dividends. The roughly 11-dollar gap between those numbers is the 13% mispricing Oei flags, a discount he views as far too pessimistic given the underlying coverage.

A comparison inside Strategy's own capital structure sharpens the argument. STRF, a preferred share ranked safer than STRC, yields just 10.4%. If the market genuinely believed STRC's dividend was at serious risk, the spread between the two instruments would be wider. Oei reads the current pricing as overly gloomy relative to that internal benchmark. The setup carries a sharp implication for buyers: if his valuation holds, investors collect the elevated yield while the price drifts toward fair value — a return profile that rivals many DeFi lending yields on platforms such as Aave, but with a corporate Bitcoin treasury behind it.

Market behavior suggests some investors already agree. A BitcoinTreasuries survey found that more than half of surveyed STRC holders bought the dip while the shares traded below par. That accumulation pattern lines up with the mispricing thesis — buyers stepping in precisely when the discount to $100 face value was steepest. Whether the move pays off hinges on Strategy sustaining the dividend through Bitcoin's volatility, the same volatility that dragged STRC 25% below par during the June drawdown. For now, the below-par buying signals conviction that the payout survives, not a market pricing in imminent distress.

Reading these threads together, the STRC debate is ultimately a referendum on how durable a Bitcoin-backed dividend can be — and our aggregate market data frames the caution. COINOTAG's proprietary readings show a Fear & Greed Index at 29, squarely in Fear, with Bitcoin dominance at 69.8% and total crypto market capitalization near $1.86 trillion. That risk-off backdrop, which has pressured altcoin valuations broadly, helps explain why STRC still trades below the fair value a bond-style model implies. The primary-source math — Strategy's own dashboard showing 843,775 BTC against a $1.73 billion annual dividend — is what the bull case rests on. As yield-chasing flows, including ai-trading-bot strategies, hunt for coverage-backed returns, the discount may narrow only when fear recedes.