Strategy CEO Reveals Mistake Behind STRC's 25% Price Collapse

Strategy CEO Phong Le has revealed that his company underestimated the amount of borrowed money flowing into STRC, its $9.3 billion preferred stock, which lost a quarter of its value in late June.

The stock pays a 12% annual dividend and is designed to trade near its $100 face value, but it sank to around $75 at one point before recovering to $99 today.

Le explained that the selloff was caused by investors borrowing Bitcoin against their holdings at about 6% interest to collect STRC's 12% yield. When Bitcoin fell in price, these loans came under pressure and holders had to post more Bitcoin or sell STRC, forcing down its price further.

Le acknowledged that Strategy did not expect the 'amount of leverage that came into the system', but noted that traders later bought STRC between $75 and $90, and that he personally bought some as well.