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Strategy’s STRC preferred plan seen easing near-term liquidity worries
Schwab’s Jim Ferraioli said Strategy has used preferred equity funding, dividend hikes, and $2 billion in buybacks to buy time as Bitcoin sits around $60,000.
Schwab Center for Financial Research director of crypto research and strategy Jim Ferraioli said Strategy has eased near-term liquidity concerns through its STRC preferred stock actions, even as Bitcoin has fallen. Speaking on Morning Trade Live at the New York Stock Exchange, Ferraioli said Strategy remains under pressure while Bitcoin trades near $60,000, roughly 50% below its peak. Ferraioli pointed to Strategy’s preferred equity structure, describing the variable-rate Stretch preferred stock, STRC, which is tied to how much capital the firm can raise. He said STRC had dropped toward about $70 from its $100 par value before rebounding, and that Strategy responded by raising the STRC dividend to 12% and authorizing $2 billion in buybacks, while also unlocking additional Bitcoin sales to defend the preferred stock’s peg. The Schwab executive said the stock has started climbing back toward par and characterized the market reaction as a check on fears of cascading liquidations, noting the firm had shifted from a prior approach of never selling Bitcoin to a more strategic sales plan. He also cautioned that a lower valuation multiple could limit Strategy’s ability to issue shares and buy more Bitcoin in the second half of the year. Ferraioli added that correlations in the crypto market have been shifting, calling Bitcoin a low-correlation asset and linking that behavior to the four-year halving that reduces new supply. He said Bitcoin’s prior ties to tech stocks have weakened and that the asset has rallied during periods of dollar strength, citing moves seen during the Iran conflict while the dollar strengthened.
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