Bitwise CIO Matt Hougan is calling the Bitcoin bottom STRC unwind a late-cycle flush rather than structural damage, arguing the deleveraging clears the way for an institutional-led rally before year-end.
What the STRC Stress Actually Tells You
STRC is a perpetual preferred stock Strategy used to raise $10.5 billion, with proceeds recycled into Bitcoin purchases. The instrument was designed to trade close to its $100 par value, with a variable monthly dividend providing the yield incentive.
Last week the trade broke down. Bitcoin fell, MSTR followed, and STRC slid to a record low of $73.62, raising questions about Strategy’s capacity to keep servicing preferred dividends. According to Strategy’s SEC 8-K filing, the IPO on 29 July 2025 placed 28,011,111 shares, with Strategy retaining the right to redeem shares at $101 per share plus any unpaid dividends. That redemption floor now looks more consequential given where STRC has been trading.
Strategy moved quickly to stabilise the structure. Per the company’s press release, the Digital Credit Capital Framework authorises two separate repurchase programmes: $1.0 billion for its Digital Credit Securities and $1.0 billion for Class A common stock, alongside a Bitcoin monetisation programme to raise up to $1.25 billion.
On the dividend side, Investing.com reported, citing Strategy’s SEC filing, that shareholders approved moving from one to two dividend payment dates per month at the annual meeting on 8 June 2026. A transitional dividend of $0.479166667 per share, representing an annualised rate of 11.50%, was declared payable 15 July 2026. The current variable rate for record dates beginning in July 2026 sits at 12% on a $100 stated amount, though Strategy’s own STRC page notes the rate is subject to monthly adjustment and cash dividends are not guaranteed.
Yahoo Finance reported that Strategy’s approximately $2.55 billion cash reserve, dedicated to preferred dividends and interest, is sufficient to cover roughly 17 months of preferred dividend obligations at current rates.
Hougan’s read: ‘The volatility in STRC is a natural and important part of the crypto cycle. I think we’re nearing the bottom.’
From Strategy Demand to Institutional Demand
The more consequential shift, in Hougan’s framing, is what replaces Strategy as the marginal Bitcoin buyer. He wrote plainly: ‘For years, Strategy has been the most dominant Bitcoin buyer in the world and a one way source of Bitcoin demand. Those days are likely over.’
The Bitcoin monetisation programme makes that concrete. Strategy can now sell Bitcoin to service obligations, converting it from a structural accumulator into a potential two-way participant in the market. Hougan does not see forced selling as likely given the reserve runway, but the directional bias has changed.
His comparison point is the Grayscale Bitcoin Trust premium collapse following the 2019 to 2021 bull run. Both structures attracted capital during strong markets and then required a painful reset before the next leg higher could begin. The STRC unwind, in his view, completes that same circuit-clearing function.
The background adds context: CoinTelegraph reported that Strategy posted a $12.4 billion net loss for Q4 2025, sending the share price down roughly 13% to approximately $107 at the time. The leverage built on top of a company already absorbing mark-to-market swings of that scale was always fragile; the STRC selloff is the visible release.
Hougan names the institutions he expects to pick up the demand slack: banks, asset managers, pension funds, endowments, sovereign wealth funds, and financial advisers. Bitcoin briefly cleared $62,000 after Reuters reported the US added 57,000 jobs in June, below consensus, prompting a risk-on move as traders trimmed expectations for Fed tightening.
For timing, Hougan points to three signals worth monitoring: MSTR trading below its Bitcoin net asset value, extreme Crypto Fear and Greed Index readings, and negative funding rates. ‘I’m convinced the bottom is closer than ever,’ he wrote, with a fall bull market as his base case.
If funding rates flip negative and MSTR NAV discount widens materially, that binary will be worth watching closely.
