On June 26, during an appearance on CNBC, Ripple CEO Brad Garlinghouse sharply criticized Strategy and its chairman, Michael Saylor, accusing the company of relying on a financial model that, in his view, is damaging the broader cryptocurrency market.
"Saylor and his team focused on financial engineering instead of building real-world utility for bitcoin, and that has hurt the entire market," Garlinghouse said.
As his main piece of evidence, the Ripple chief pointed to STRC preferred shares trading roughly 25% below their $100 par value.
"That is clear evidence that Strategy's financial model is fundamentally unsound," Garlinghouse said.
How Strategy's Model Works
About a year ago, Strategy began issuing preferred shares to finance additional bitcoin purchases. These securities carry cumulative dividend obligations — STRC, for example, pays an annual dividend of 11.5%.
On June 25, STRC shares fell to a record low, trading 26% below par. The company's common stock, MSTR, dropped the same day to its lowest level since February 2024, when bitcoin fell to $58,000, before closing around $82 on Friday.
Why Investors Reassessed Strategy
Analyst Laura Shin argued that the problem is not bitcoin itself, which, despite recent declines, continues to trade above its recent lows.
"The market has stopped treating Strategy as a bitcoin proxy and started pricing it as a leveraged bet on one man's decisions," she wrote.
Shin noted that Strategy's common shares (MSTR) have fallen 78% since the beginning of the year, while every U.S. dollar-denominated preferred security issued by the company now trades below par.
She also highlighted a major disconnect in Strategy's own financial disclosures: the company claims to have enough bitcoin to cover dividend obligations for nearly 30 years, while holding less than 10 months' worth of cash reserves.
"But that 30-year calculation only holds if Saylor sells the bitcoin he previously vowed never to sell — and if bitcoin's price doesn't fall any further," Shin said.
What Analysts Expect Next
CryptoQuant this week called on Strategy to halt further BTC purchases and rebuild its cash reserves.
Analyst Zach Pandl believes the company could raise the dividend on STRC within the coming week, adding roughly $100 million in additional obligations over the next two years. However, he argues that such a move is unlikely to restore investor confidence.
According to Pandl, rebuilding that confidence would likely require Strategy to sell at least $3 billion worth of bitcoin, enough to cover nearly all of its cash obligations over the same period.