Ripple CEO: Saylor's Bitcoin Playbook Hurt Crypto

The flagship of that effort is STRC. It carries an 11.5 percent annual dividend and was engineered to trade near 100 dollars, the kind of stable, income-style instrument that is supposed to sit quietly and pay out.

It is not sitting quietly. STRC has dropped about 25 percent below that 100 dollar target, and Garlinghouse seized on that gap.

Financial engineering does not drive long-term value, Garlinghouse said, arguing that the lasting value of any digital asset comes from its usefulness. Team Michael Saylor was not focused on the right stuff, and that has hurt the overall market.

He drew a clean line between the asset and the strategy. Bitcoin: still good. The borrowing-and-buying machine wrapped around it: the problem.

How the model is supposed to work, and where it stalls

The logic of Strategy's engine is circular by design. Issue preferred shares to investors who want the dividend, take that cash, buy bitcoin, and let a rising bitcoin price lift the whole structure. As long as the preferred shares trade near par, the company can keep issuing more and keep buying.

The weak point is right there in the price. When STRC trades below 100 dollars, the engine for issuing shares and buying bitcoin stalls. That is exactly what has happened, and Strategy has paused the program.

The numbers underline how quickly the cushion thinned. CryptoQuant said in a report that Strategy should pause its bitcoin buying and rebuild cash reserves, noting that the coverage behind STRC's dividends has shrunk from more than seven years to about 14 months.

That is a steep drop in safety margin. A model built to look like a stable income product now has a much shorter runway behind its payouts.

The week that triggered it

The criticism did not arrive in a vacuum. It landed on a week of mounting pressure on the model.

STRC hit a record low on Thursday, falling as much as 26 percent below par. Strategy's common stock dropped to its lowest level since February 2024 and closed around 82 dollars on Friday. All of it played out as bitcoin fell below 59,000 dollars.

When the preferred stock, the common stock, and bitcoin all move down together, the feedback loop that powered the accumulation runs in reverse.

Not everyone agrees the engine is broken

There is a counterargument, and it comes from a Strategy watcher rather than a rival CEO.

Benchmark-StoneX analyst Mark Palmer argued that Strategy's funding engine has become less efficient rather than broken. He rejected comparisons between STRC and assets that have collapsed outright, drawing a distinction between a model that is straining and one that has failed.

That nuance is worth holding onto. A preferred share trading at a discount is a signal of stress, not automatically a sign of insolvency. The dispute is over how much of this is a temporary squeeze versus a structural flaw, and Garlinghouse and Palmer land on opposite sides of that line.

What happens next over the coming 24 to 72 hours

The near-term story is a waiting game on price. Watch STRC first: it has to climb back toward 100 dollars before Strategy's issue-and-buy engine can restart. As long as it trades at a deep discount, the pause stays in place.

Watch bitcoin alongside it. With the token under 59,000 dollars, any further slide pressures both Strategy's common stock and the perceived safety of those preferred dividends. A bounce would ease the squeeze; another leg down would sharpen it.

Expect more public sparring, too. Garlinghouse has put a marker down, and as a bitcoin rival he has reason to keep the framing alive. Strategy's defenders, like Palmer, will keep pushing back that the model is bending rather than breaking.

For everyone else, the takeaway is simpler. The argument is not really about whether bitcoin has value. It is about whether stacking leverage and engineered preferred shares on top of a volatile asset was ever a stable way to own it, and this week handed the skeptics their loudest evidence yet.

Source: CoinDesk