Bitwise: Strategy's Bitcoin dominance ending after STRC collapse
In brief
- Bitwise CIO Matt Hougan: Strategy will be 'less important' in Bitcoin's next cycle after STRC turmoil.
- Strategy's STRC perpetual preferred stock fell below $75 from $100 par value last month.
- Hougan: high-yield, low-volatility capital was never proper fit for Bitcoin.
- Investment banks, asset managers, pensions, endowments likely to replace Strategy as primary Bitcoin demand driver.
- Strategy holds 847,363 Bitcoin (4% of supply) and $52 billion in liquid assets.
Strategy's reign as Bitcoin's primary buyer is waning
For years, Strategy has been the most dominant Bitcoin buyer in the world and a one-way source of Bitcoin demand. But that dynamic is shifting. Hougan expects Strategy to be a less important figure in Bitcoin in the next cycle than it was in the last.
The STRC incident hit hard. Strategy's Stretch perpetual preferred stock offering broke sharply from its $100 par value to below $75 late last month, coinciding with Bitcoin falling to a 21-month low of $58,190 on June 25. In response, Strategy committed to sell Bitcoin where necessary to fund dividends and expanded its US dollar reserve to $2.55 billion.
Hougan doesn't see this as existential. Strategy has $52 billion worth of liquid assets marked against $7 billion of debt, and Bitcoin would need to drop another 70% (about $18,500) for the company to be put at risk. He also noted that if Strategy were to start selling its Bitcoin today, it could cover dividends for the next 28 years.
The real problem: wrong money, wrong fit
The deeper issue, Hougan argued, is the type of capital that flowed into Strategy's STRC offering.
"Money searching for high yields and low volatility was used to buy Bitcoin, which offers neither. This money never really fit Bitcoin. And so, it needs to be cleared out before we can find a bottom." — Matt Hougan, Bitwise chief investment officer
Hougan described the STRC incident as classic end-of-cycle dynamics and likened it to Grayscale's GBTC premium collapse in 2021. That mismatch between product structure and investor expectations tends to unwind violently when sentiment shifts.
Who replaces Strategy?
Investment banks, asset managers, pensions, endowments and sovereign wealth funds will likely replace Strategy as Bitcoin's primary demand driver. These are longer-duration capital sources with different return expectations. They don't need 4–5% yields; they're buying Bitcoin for portfolio diversification and inflation hedging.
That said, Hougan still expects Strategy to be a net buyer in the next bull run. Strategy's 847,363 Bitcoin represents 4% of the total supply, so it remains a meaningful player. But its role is shifting from a one-way demand machine to one participant among many in a more mature institutional market.
