Strategy, the bitcoin-focused formerly-MicroStrategy company, is seeing its bitcoin premium evaporate. Its preferred shares (STRC) briefly tumbled to $71.40 on Friday — about 25% below par value and a record low.
The drop reflects growing skepticism about Strategy’s aggressive bitcoin accumulation strategy. The company has issued multiple rounds of debt and equity to buy BTC, but the gap between its market value and its bitcoin holdings has narrowed significantly.
Ripple CEO Brad Garlinghouse weighed in, saying that “financial engineering does not drive long-term value” and that the value of any digital asset ultimately comes from utility. His comments added to the pressure on Strategy, which has long argued that its premium is justified by giving traditional investors bitcoin exposure.
Whether Strategy can maintain its premium — or even its business model — may depend on bitcoin’s next major move. For now, the market is voting with its feet.
