coindesk.com
Ripple CEO Brad Garlinghouse said he remains bullish on bitcoin but that Michael Saylor's approach to funding bitcoin purchases has damaged the broader crypto market, in a CNBC interview on Friday, as the preferred stock at the center of Strategy's model fell to a record low.
"Financial engineering does not drive long-term value," Garlinghouse said, arguing that the lasting value of any digital asset comes from its usefulness. "Team Michael Saylor wasn't focused on the right stuff and that has hurt the overall market."
He separated that from his view on the asset itself, saying he is still bullish on bitcoin.
Garlinghouse's target was the machine Strategy has used to accumulate bitcoin. For about a year, the company has issued preferred shares, a class of stock that pays a fixed dividend, to raise cash for more bitcoin.
Its STRC share carries an 11.5% annual dividend and is engineered to trade near $100. Garlinghouse pointed to STRC trading about 25% below that level as a "damning indictment" of the strategy.
The stock hit a record low on Thursday, falling as much as 26% below par, while Strategy's common stock dropped to its lowest since February 2024 and closed around $82 on Friday, all as bitcoin fell below $59,000.
The criticism lands on a week of mounting pressure on the model.
CryptoQuant said in a report that Strategy should pause its bitcoin buying and rebuild its cash reserves, noting the cushion behind STRC's dividends has thinned from more than seven years of coverage to about 14 months. When STRC trades below $100, Strategy's engine for issuing shares and buying bitcoin stalls, which is why the company has paused it.
Benchmark-StoneX analyst Mark Palmer argued that Strategy's funding engine has become "less efficient" rather than broken, and rejected comparisons between STRC and assets that have collapsed outright.