Bitwise says STRC selloff signals crypto market bottom is near

Asset manager Bitwise said the sharp decline in Strategy’s (MSTR) perpetual preferred stock, STRC, is a hallmark of a maturing crypto cycle rather than evidence of a looming crisis at the company.

Bitcoin’s recent pullback below $60,000 coincided with STRC breaking from its intended $100 par value, as investors questioned Strategy’s willingness to maintain preferred dividend payments.

While the selloff rattled markets, Bitwise argued Strategy remains fundamentally well-capitalized, with roughly $52 billion in liquid assets against about $7 billion of debt.

"The volatility in STRC is a natural and important part of the crypto cycle. I think we’re nearing the bottom," Bitwise CIO Matt Hougan said in a Wednesday blog post.

Bitcoin was trading around $61,400 at publication time, STRC at $88.

According to Hougan, Strategy’s decision to stop defending STRC’s $100 price through automatic rate hikes, and instead allow the security to trade freely while retaining the option to sell bitcoin or repurchase STRC, was a pragmatic response to deteriorating market conditions.