MarketsBitwise Indicates STRC Decline Reflects Crypto Cycle Bottoming, Not Strategy's Collapse
Bitwise noted that the fluctuations in STRC signify a late-cycle leverage unwinding, with institutions ready to take over as bitcoin's leading buyers.
By Will Canny, AI Boost|Edited by Cheyenne Ligon Jul 2, 2026, 4:51 p.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on
Bitwise CIO Matt Hougan. (Bitwise/Press)SummaryShow- Bitwise stated that STRC's downturn is a typical late-cycle deleveraging event, indicating no immediate liquidation threat at Strategy.
- The new framework for Strategy transitions MSTR from a consistent bitcoin buyer to a more adaptive capital allocator.
- Bitwise anticipates that institutional players, rather than Strategy, will emerge as bitcoin's primary demand source in the upcoming cycle.
According to asset manager Bitwise, the notable drop in Strategy's (MSTR) perpetual preferred stock, STRC, illustrates a maturing crypto cycle rather than signaling an imminent crisis for the firm.
The recent decline of bitcoin below $60,000 aligned with STRC falling from its target $100 par value, as investor confidence in Strategy's commitment to maintain preferred dividend payouts waned.
Despite the market's unease, Bitwise contends that Strategy is still fundamentally robust, holding approximately $52 billion in liquid assets against about $7 billion in liabilities.
"The fluctuations in STRC are a natural and significant aspect of the crypto cycle. I believe we are approaching the bottom," Bitwise CIO Matt Hougan stated in a blog post on Wednesday.
At the time of publication, bitcoin was trading around $61,400, while STRC was priced at $88.
Hougan explained that Strategy's choice to refrain from defending STRC's $100 price through automatic rate increases and to instead allow it to trade freely while retaining the option to sell bitcoin or buy back STRC was a sensible reaction to worsening market conditions.
Earlier this week, Strategy introduced a capital framework that permits selective bitcoin sales to support preferred dividends, alongside authorization for preferred share buybacks and stock repurchases. It also established a minimum cash reserve sufficient to cover 12 months of preferred dividend and interest payments, with its current $2.55 billion cash balance being adequate for approximately 17 months.
Hougan remarked that this situation signifies a broader evolution in Strategy's role within bitcoin markets. Instead of acting as a dominant, one-way buyer, the company is expected to evolve into a more adaptable participant whose bitcoin transactions will be contingent on market dynamics.
Looking to the future, Bitwise believes that institutional investors, such as asset managers, banks, pension funds, endowments, and sovereign wealth funds, are set to take over as the main source of demand for bitcoin, replacing Strategy.
On a larger scale, the volatility of STRC is viewed as part of the leverage unwinding process that often characterizes the latter stages of crypto cycles. As speculative excess is eradicated from the market, it approaches the establishment of a sustainable bottom, although the precise timing remains unpredictable, as the report indicated.
Wall Street bank JPMorgan commented that Strategy's new policy allowing selective bitcoin sales to fund preferred dividends introduces unnecessary two-way risk, heightening uncertainty and market volatility.
Read more: JPMorgan says Strategy's bitcoin sales policy adds 'two-way risk' to crypto markets
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