Hogan noted that in the next market cycle, Strategy will no longer be a key driver of Bitcoin demand. That role will likely be taken over by investment banks, asset managers, pension funds, endowment funds, and sovereign wealth funds.
What Happened to STRC
In late June, confidence in Strategy's model wavered: Stretch perpetual preferred shares (STRC) fell from their $100 par value to below $75. This raised concerns that the instrument's dividend model could not withstand the pressure.
The problems coincided with Bitcoin dropping to a 21-month low of $58,190. Amid the panic, Strategy stated it would sell Bitcoin if necessary to cover dividends and increased its dollar reserve to $2.55 billion. These measures stabilized the situation but weakened the company's status as the most aggressive Bitcoin buyer.
STRC — An Example of Unsuccessful Financial Engineering
Hogan compared the situation to the collapse of the GBTC premium in 2021. According to him, money that sought high returns with low volatility flowed into STRC — a poor match for Bitcoin's nature.
Strive CEO Matt Cole believes STRC's market impact is overestimated. Strategy holds 847,363 BTC — about 4% of the total supply. By SEC standards, such a stake is not considered material.
Strategy's Liquidity Remains High
Despite the uproar, Strategy has $52 billion in liquid assets against $7 billion in debt. For the company to be at risk, Bitcoin would need to fall another 70% to $18,500.
Even if Strategy starts selling reserves now, the proceeds would cover dividend payments on STRC and other perpetual instruments for the next 28 years.