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- Ripple CEO criticizes Strategy’s Bitcoin financing model as STRC shares plunge significantly.
- Garlinghouse says cryptocurrency value depends on utility instead of financial engineering alone.
- STRC decline fuels concerns over Strategy’s preferred share funding approach today.
Ripple CEO Brad Garlinghouse has taken a shot at Strategy’s model for raising money to buy bitcoins (BTC). Digital asset should be valuable not for financial engineering, but for utility, Garlinghouse said, referencing the recent rout in Strategy’s STRC preferred shares.
During an interview with CNBC, Garlinghouse criticized Strategy Chairman Michael Saylor for having the “wrong priorities. He stated that the company’s financing program has established unneeded dangers for investors and also has had a unfavorable influence on the wider cryptocurrency market.
Garlinghouse reiterated his belief in Bitcoin in the long run despite the criticism. He said, however, that his worries are not about the BTC itself but how it’s being funded. He spoke when bitcoin was trading below $60,000 on Friday. Meanwhile, Strategy’s common stock and preferred shares were down as well, in the face of a weak market.
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STRC Decline Draws Attention to Strategy’s Funding Model
But the performance of STRC is proof that investors are asking questions about Strategy’s financing, Garlinghouse said. The preferred shares were sold at about $75, which will serve as a good indicator that the structure is losing the trust of the market, he said.
For almost a year, Strategy has been using preferred securities as a tool to obtain funds to acquire more Bitcoins. Those securities include 11.5% annual dividends on STRC. Besides, analysts are beginning to voice similar concerns. Recently, CryptoQuant recommended that Strategy temporarily refrain from buying any more bitcoins and restore its cash reserves.
Selling pressure increased during the week, with STRC falling to its lowest level since launch and trading as much as 26% below its $100 par value on Thursday. Additionally, Strategy’s common stock declined along with the drop in Bitcoin. Bitcoin briefly dipped to $58,000 to bring MSTR down to its lowest level since February of 2024. The stock’s losses continued on Friday and the price settled around $82.
Bitcoin Outlook Remains Separate From Strategy Debate
Garlinghouse raised a number of points on Strategy’s financing method, but remained bullish on the future of Bitcoin. He stated that cryptocurrencies will generate long-term value rather than through aggressive financial structures, because of adoption and its use in real-world applications. However at the same time, Strategy’s share performance is giving another boost to the corporate Bitcoin treasury discussion. Amid these choppy markets, the debt and preferred equity risks are filtering through to investors, while companies are treading up their exposure to BTC.
Garlinghouse’s comments join the discussion regarding the development of public companies’ digital asset reserves. In his comments, he indicated that the way companies are financing their holdings of Bitcoin may be more significant than the amount of Bitcoin they own. Garlinghouse’s criticism is putting a spotlight on Strategy’s Bitcoin financing model, as STRC remains well off par value. He is bullish on Bitcoin but believes utility can drive sustainable growth that can’t be achieved by financial engineering.
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