Ripple CEO Brad Garlinghouse expressed optimism about Bitcoin in an interview with CNBC, but criticized the Strategy model, which funds cryptocurrency purchases through the issuance of preferred shares, calling it detrimental to the market.
“Financial engineering does not create long-term value,” Garlinghouse stated.
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 shares offer an annual return of 11.5% and are intended to trade near $100. Garlinghouse noted that STRC is currently trading about 25% below this level, which he described as a "devastating indictment" of the chosen strategy.
On June 26, STRC hit a new low, dropping to 28% below par value, with a closing price of $74.6. During the same period, Strategy's common stock (MSTR) fell to its lowest level since February 2024, closing at $82.3. Meanwhile, Bitcoin was trading below $59,000.
Source: Yahoo Finance.The company's mNAV ratio—market capitalization relative to BTC assets—has decreased to 0.99.
Two days prior, CryptoQuant urged Strategy to halt cryptocurrency purchases and restore cash reserves. Analysts estimate that the dividend coverage for STRC has shrunk from over seven years to approximately 14 months.
It is worth noting that in June, Strategy founder Michael Saylor introduced a five-tier Bitcoin economy model.