Strategy's STRC may be fueling recurring mid-month bitcoin rallies, K33 says

Strategy's perpetual Stretch preferred stock, STRC, is likely driving strong mid-month performance for bitcoin, according to research and brokerage firm K33, creating a supportive short-term demand dynamic for the market.

Bitcoin (BTC) posted strong returns during the middle week of March and April, a pattern that Head of Research Vetle Lunde suggested in a new report could continue this week. "The instrument pays dividends on the last day of each month, while share ownership is determined by the ex-dividend date on the 15th," Lunde explained.

While the analyst warned that Strategy (MSTR) faces increasing dividend obligations over the long term as demand for STRC grows, in the near term, he said the dynamic appears supportive for bitcoin, as Strategy absorbs meaningful BTC supply ahead of each monthly ex-dividend date.

Strategy issues additional STRC shares via its corresponding at-the-market program whenever the stock trades at or above its $100 par value, and uses the proceeds to buy bitcoin. STRC typically trades near par ahead of the ex-dividend date as investors position for payouts, Lunde noted, boosting volumes and allowing Strategy to raise more capital for bitcoin purchases.

"This Friday marks another STRC ex-dividend date, and on Monday, May 11, we already saw early signs of the pattern repeating, with STRC recovering to $100 while trading volumes rose to their highest level since April 15," the analyst said.

Notably, Strategy recently proposed updating STRC's dividend payment schedule to twice per month. The company said the change could "lead to reduced reinvestment lag, enhanced liquidity, market efficiency, and increased price stability."

STRC has increasingly become a primary driver of Strategy's bitcoin acquisitions this year, rising from 4,467 BTC in January to 22,131 BTC in March and nearly 46,872 BTC in April, per K33. Strategy's total bitcoin holdings now stand at 818,869 BTC ($65.7 billion) following its latest acquisition disclosure on Monday. STRC currently offers an annualized rate of 11.5%, helping to drive investor demand for the product.

However, while March and April witnessed two weeks of substantial bitcoin accumulation via STRC, the perpetual preferred stock struggled to trade back to par as quickly this month, with Strategy adding just 1 BTC via the instrument and suggesting that demand may be approaching a plateau, Lunde noted.

"That said, the week is still young, yesterday saw a promising spike in volumes in STRC, and by next Monday we are prepared for yet another massive BTC purchase announcement from Strategy," he added.

Bitcoin positioning remains defensive

Meanwhile, bitcoin perpetual futures traders remain defensively positioned, with both 7-day and 30-day average funding rates still negative. The 30-day funding rate is now nearing a record-long negative streak of 74 consecutive days, according to K33.

"While funding rates briefly normalized higher in recent days, the move appears largely driven by low trading activity rather than renewed bullish positioning, as open interest remained stable and volumes subdued," Lunde wrote.

Although bitcoin remains supported by strong crypto fundamentals, in K33's view, the recent rally has been closely tied to equities, with a 30-day correlation to Nasdaq near record highs. Nevertheless, bitcoin has slightly underperformed against the latest equity surge, challenging the common perception of bitcoin as simply a high-beta version of Nasdaq, Lunde said.