Strategy Sells $108.6M Bitcoin to Defend STRC; Solstice Tranches

Strategy sold $108.6 million of Bitcoin in early August and used the proceeds to repurchase 1,152,020 STRC shares as part of an effort to keep the preferred stock near a $99-100 target. The company had earlier repurchased 288,930 shares for about $25 million at an average price near $86.52 between July 20 and July 26. Strategy announced a Digital Credit Capital Framework on June 29 that added a dollar reserve policy, a revised dividend plan and repurchase authorizations. The firm reported a $4.65 billion dollar-denominated reserve as of Aug. 9.

DeFi firm Solstice built a tranched product around Strategy’s Bitcoin-linked preferred stock and split exposure into two tokens, SR-strcUSX for senior holders and JR-strcUSX for junior holders. Under the structure, each $100 of combined exposure represents $50 in senior and $50 in junior, producing a 200% modeled senior coverage ratio. The senior token targets roughly 7% APY, while the junior token takes the residual yield tied to STRC’s stated 12% dividend and any price moves.

Solstice COO David Plisek described $47.66 as a modeled senior-impairment threshold under the protocol’s current coverage structure and assumptions. With STRC trading near $95.32, that threshold sits about 50% below the current market price and roughly 52% below the $100 par value. Solstice’s documentation lists any change to Strategy’s defense policy as a named risk to the tranche.

Solstice modeled the tranche against a prior STRC drawdown that bottomed near $73.62 and concluded senior holders would have remained unimpaired in that episode. The model shows junior holders would also have been unaffected if senior holders stayed invested through the decline. If all senior holders had redeemed during that stress, the model estimates junior holders would have faced about a 50% drawdown.

Realized losses occur only when redemptions force the structure to sell underlying assets. To reduce the chance of forced sales, the protocol can enter a restricted mode once STRC trades below a set threshold; that mode halts junior redemptions and stops new senior minting to preserve the coverage ratio. A deeper decline triggers a liquidation phase in which Solstice seeks to sell STRC collateral before senior balances take losses.

Solstice noted market makers have agreed to buy STRC outside normal Nasdaq trading hours to narrow the gap between continuous DeFi trading and the security’s exchange schedule. The firm also said its other products, including USX and eUSX, operate independently with separate risk controls. Strategy’s preferred securities carry a preferred claim on assets but no collateral claim on Bitcoin holdings, and STRC dividends require board approval each period.

The tranche reallocates who absorbs STRC’s downside without altering the underlying risk tied to Strategy’s preferred stock. The protection implied by the $47.66 threshold depends on the protocol’s mechanics operating as modeled, along with Strategy’s repurchase support, reserve levels, redemption patterns and the execution of liquidation steps.