Ripple CEO: Still bullish on Bitcoin, but Strategy's preferred stock financing model has harmed the crypto market.

Ripple CEO Brad Garlinghouse told CNBC in an interview that he remains bullish on Bitcoin, but believes Strategy’s model of buying Bitcoin via preferred stock financing has harmed the crypto market. “Financial engineering does not drive long-term value,” Garlinghouse said, adding that the long-term value of any digital asset comes from its utility. He also noted, “Michael Saylor’s team hasn’t focused on the right things, which is hurting the overall market.” Garlinghouse’s criticism centers on the financing mechanism Strategy uses to accumulate Bitcoin. Over the past year, Strategy has raised funds by issuing preferred stock to continue purchasing Bitcoin. Its STRC stock carries an 11.5% annual dividend yield and was designed to trade near $100. Garlinghouse pointed out that STRC is currently about 25% below that level, calling it a “harsh rejection” of the strategy. STRC hit an all-time low on Thursday, dipping roughly 26% below its face value at one point. Meanwhile, Strategy’s common shares fell to their lowest since February 2024, closing at around $82 on Friday; Bitcoin, meanwhile, dropped below $59,000. This week, Strategy’s financing model has faced more pressure. CryptoQuant advised Strategy to pause Bitcoin purchases and rebuild cash reserves. STRC’s dividend coverage period has shrunk from over 7 years to roughly 14 months. When STRC falls below $100, the mechanism where the company issues stock to buy Bitcoin stalls, which is why the firm suspended that mechanism. Mark Palmer, an analyst at Benchmark-StoneX, argued that Strategy’s financing engine has merely become “less efficient” rather than failed entirely, and pushed back against comparing STRC to assets that have collapsed completely.