Ripple CEO Brad Garlinghouse Criticizes Strategy's Preferred Stock Financing Model for Bitcoin Accumulation

News Editor

2026-06-27 13:31:23

In a CNBC interview, Ripple CEO Brad Garlinghouse reiterated his bullish stance on Bitcoin but sharply criticized Strategy's (formerly MicroStrategy) method of raising capital via preferred stock to fund Bitcoin purchases. He argued that financial engineering does not create long-term value and that Strategy's approach has harmed the broader crypto market. At the same time, Strategy's preferred stock (STRC) hit an all-time low, trading at a ~26% discount to its par value, while common stock fell to its lowest since February 2024 and Bitcoin dropped below $59,000. CryptoQuant recommended Strategy halt Bitcoin purchases and rebuild cash reserves, as the dividend coverage period shrank from over 7 years to ~14 months. Benchmark analyst Mark Palmer, however, believes the financing engine is merely less efficient, not broken, rejecting comparisons to collapsing assets.

Garlinghouse's Critique: Financial Engineering Doesn't Create Long-Term Value

Ripple CEO Brad Garlinghouse expressed continued optimism for Bitcoin during a CNBC interview, but took direct aim at Strategy's model of issuing preferred stock to acquire Bitcoin. He stated plainly: 'Financial engineering does not drive long-term value.' In his view, the lasting value of any digital asset stems from its utility, not from complex capital structures. Garlinghouse accused Michael Saylor's team of not focusing on the right priorities and claimed their actions have hurt the overall market.

STRC Price Collapse: Market Sends a Stern Message

The core of Garlinghouse's criticism targets the financing mechanism Strategy has used to accumulate Bitcoin. Over the past year, Strategy raised funds by issuing preferred stock (ticker: STRC) with an annual dividend yield of 11.5%, designed to trade near $100. However, STRC currently trades about 25% below that level, which Garlinghouse called a 'stern rejection' of the strategy. On Thursday, STRC hit an all-time low, falling roughly 26% below par value. Meanwhile, Strategy's common stock dropped to its lowest since February 2024, closing near $82 on Friday, while Bitcoin sank below $59,000, compounding market unease.

Analyst Divergence: Broken Model or Temporary Inefficiency?

Pressure on Strategy's financing model intensified this week. CryptoQuant recommended that the company pause Bitcoin purchases and rebuild its cash reserve. The dividend coverage period for STRC has collapsed from over seven years to approximately 14 months. When STRC falls below $100, the mechanism of issuing shares to buy Bitcoin stalls, prompting Strategy to suspend the process. However, Benchmark-StoneX analyst Mark Palmer sees the situation differently. He argues the financing engine has only become 'less efficient' rather than broken, and warned against comparing STRC to a collapsing asset. The sharp contrast between these views underscores deep market uncertainty about the sustainability of the leveraged strategy.

This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan.

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