Ripple CEO: Still Bullish on Bitcoin, but Strategy of Prioritizing Preferred Stock Financing Has Hurt the Crypto Market

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

Garlinghouse's criticism focuses on the financing mechanism Strategy used to accumulate Bitcoin. Over the past year, Strategy has raised funds by issuing preferred stock to continue purchasing Bitcoin. Its STRC stock has an annual dividend rate of 11.5%, designed to trade near $100. Garlinghouse pointed out that STRC is currently trading about 25% below that level, which is a "stark rebuke" of the strategy. STRC hit an all-time low on Thursday, briefly trading about 26% below face value. Meanwhile, Strategy's common stock fell to its lowest level since February 2024, closing near $82 on Friday; Bitcoin, on the other hand, dropped below $59,000.

This week, Strategy's financing model faced more pressure. CryptoQuant stated that Strategy should pause the purchase of Bitcoin and rebuild its cash reserves. The coverage period for STRC dividend payments has shortened from over 7 years to about 14 months. When STRC falls below $100, the mechanism of issuing stock and buying Bitcoin through Strategy will stall, which is also why the company has paused the mechanism. Benchmark-StoneX analyst Mark Palmer believes that Strategy's financing engine has only become "less efficient" rather than being defunct, and he opposes comparing STRC to assets that have completely collapsed.