Ripple CEO Brad Garlinghouse told CNBC that while he remains optimistic about Bitcoin, he considers the Strategy model, which funds cryptocurrency purchases through the issuance of preferred shares, to be harmful to the market.
“Financial engineering does not create long-term value,” Garlinghouse said.
He added that the long-term value of any digital asset is determined by its utility.
For about a year, Strategy has been raising funds for new cryptocurrency purchases by issuing preferred shares with a fixed dividend. The STRC paper offers an annual yield of 11.5% and is intended by the company to trade near $100. The Ripple CEO noted that STRC has fallen approximately 25% below this level, calling it a “damning indictment” of the chosen strategy.
On June 26, STRC hit a new low, dropping to 28% below par. The closing price was $74.6. Strategy’s common stock (MSTR) also fell to its lowest level since February 2024, closing at $82.3. At the same time, Bitcoin was trading below $59,000.
The company’s mNAV ratio—market capitalization to BTC assets—fell to 0.99.
Two days earlier, CryptoQuant urged Strategy to halt cryptocurrency purchases and rebuild cash reserves. Analysts estimate that the STRC dividend coverage reserve has decreased from over seven years to about 14 months.
In June, Strategy founder Michael Saylor introduced a five-tier Bitcoin economy model.
