Strategy will be ‘less important’ in Bitcoin after STRC incident: Bitwise
Strategy may no longer be the dominant source of Bitcoin demand after turmoil in its STRC preferred stock offering shook confidence in its Bitcoin-buying model and helped drive Bitcoin to a near two-year low. Bitwise’s Matt Hougan said Strategy will likely remain a net buyer in the next bull market, but investors such as banks, asset managers, pensions, endowments, and sovereign wealth funds are expected to become more important demand drivers. The STRC collapse was seen as a sign of “financial engineering” that no longer fits Bitcoin’s risk profile, similar to past market unwind events. Strategy responded by increasing its U.S. dollar reserves and signaling it could sell Bitcoin if needed to fund dividends, easing immediate liquidity fears but reducing its role as the most aggressive buyer. Hougan said Strategy still appears financially secure, with ample liquid assets relative to debt, and would only face serious risk if Bitcoin fell far further. Critics argued the market reaction was overblown relative to Strategy’s share of total Bitcoin supply.
