Bitwise Sees STRC Selloff as a Sign Crypto Is Nearing a Bottom

Bitwise says the sharp selloff in Strategy’s STRC preferred stock is a sign that the crypto market may be approaching a bottom, not that Strategy is nearing a breaking point. STRC fell below its intended $100 par value as bitcoin briefly traded below $60,000, raising questions about the company’s approach to preferred dividends.

The episode matters because Strategy has long operated as a major, largely one-way buyer of bitcoin. Bitwise Chief Investment Officer Matt Hougan described STRC’s volatility as part of a late-cycle deleveraging process in which speculative excess is removed from the market, although the timing of any durable bottom remains uncertain.

Bitwise argued that Strategy remains well-capitalized, citing roughly $52 billion in liquid assets against about $7 billion in debt. At the time of the report, bitcoin was trading near $61,400 and STRC around $88.

Strategy recently adopted a more flexible capital framework after stopping automatic dividend-rate increases intended to keep STRC near $100. The company can now selectively sell bitcoin to fund preferred dividends, repurchase preferred or common shares, and adjust its capital allocation according to market conditions. Its $2.55 billion cash balance covers about 17 months of preferred dividends and interest payments, above its 12-month minimum reserve target.

Hougan said the changes could reduce Strategy’s role as bitcoin’s dominant buyer. Bitwise expects asset managers, banks, pension funds, endowments and sovereign funds to provide a larger share of demand in the next cycle. JPMorgan has offered a more cautious view, warning that Strategy’s ability to sell bitcoin for dividend payments introduces additional two-way risk and could increase market uncertainty.