Ripple CEO: Still bullish on Bitcoin, but Strategy's preferred stock financing model has harmed the crypto market.

BlockBeats News, June 27 — Ripple CEO Brad Garlinghouse said in a CNBC interview that he remains bullish on Bitcoin, but believes that Strategy's model of buying Bitcoin through preferred stock financing has damaged the crypto market. Garlinghouse said, "Financial engineering doesn't drive long-term value." He argued that the long-term value of any digital asset comes from its utility, and stated, "Michael Saylor's team isn't focused on the right things, which has harmed the overall market."

The focus of Garlinghouse's criticism is the financing mechanism Strategy uses to accumulate Bitcoin. Over the past roughly year, Strategy has raised funds by issuing preferred stock to continue buying Bitcoin. Its STRC stock has an annual dividend yield of 11.5% and is designed to trade near $100. Garlinghouse noted that STRC is currently about 25% below that level, calling it a "harsh rejection" of that strategy. STRC hit an all-time low on Thursday, once trading about 26% below par value. Meanwhile, Strategy's common stock fell to its lowest level since February 2024 and closed around $82 on Friday; Bitcoin also fell below $59,000.

This week, Strategy's financing model faces more pressure. CryptoQuant stated that Strategy should pause Bitcoin purchases and rebuild its cash reserves. STRC's dividend payment coverage period has been shortened from over 7 years to approximately 14 months. When STRC drops below $100, Strategy's mechanism of issuing stock to buy Bitcoin stalls, which is why the company has suspended it. Benchmark-StoneX analyst Mark Palmer, however, believes that Strategy's financing engine has simply become "less efficient" rather than broken, and he opposes comparing STRC to assets that have completely collapsed.