CIO says institutions will eclipse Strategy in crypto market

The dominant role of corporate giant Strategy in driving Bitcoin demand is likely to diminish in the cryptocurrency's next market cycle, according to Bitwise Chief Investment Officer Matt Hougan. He argues that a broader base of institutional investors will become the primary source of buying pressure, marking a significant shift in the market's structure.

Hougan's assessment follows a period of market stress in late June, when Strategy's principal perpetual preferred stock product, Stretch (STRC), broke sharply from its $100 par value to below $75. This move raised questions about the sustainability of the company's dividend model and coincided with Bitcoin's price falling to a 21-month low of $58,190 on June 25. Hougan characterized the STRC episode as "classic end-of-cycle dynamics," comparing it to the collapse of Grayscale's GBTC premium in 2021. He suggested that capital attracted to high-yield, low-volatility products was an awkward fit for Bitcoin, which offers neither, and that such capital needs to exit before a durable market bottom can form.

In response to the STRC disruption, Strategy announced it would sell Bitcoin when necessary to fund dividends and expanded its...