Bitwise CIO Matt Hougan said on July 2 that the recent decline in Strategy’s perpetual preferred stock (STRC) reflects a late‑stage deleveraging phase of the crypto cycle rather than an imminent liquidation risk for the firm, and suggested the market may be approaching a bottom.

Context: Strategy, the parent of MSTR, announced a new capital framework that allows selective bitcoin sales to fund preferred dividends, while maintaining a cash reserve covering more than a year of dividend and interest payments.

The price of Bitcoin fell below $60,000, and STRC traded around $88, down from its $100 par value, prompting questions about the firm’s commitment to defending the preferred share price. Hougan noted that Strategy holds about $52 billion in liquid assets and roughly $7 billion in debt. He described the volatility as a natural part of the crypto cycle and said the firm may sell bitcoin or repurchase STRC as market conditions evolve. The firm also set a minimum cash reserve equal to 12 months of preferred dividend and interest obligations, with its $2.55 billion cash balance covering about 17 months of those payments. Wall Street bank JPMorgan warned that the new policy could create two‑way risk and increase market uncertainty. Hougan added that institutional investors such as asset managers, banks, pensions, endowments and sovereign funds are likely to become the primary source of bitcoin demand, while Strategy’s role may shift to a more flexible participant.

The timing of a definitive market bottom remains uncertain, and the episode underscores the ongoing adjustment of leverage within the crypto ecosystem.