Matt Hougan said Strategy can now sell Bitcoin when needed to help fund STRC dividend obligations. Hougan believes Strategy is becoming a flexible market participant rather than a constant Bi
Bitwise Chief Investment Officer Matt Hougan said Strategy's role in the Bitcoin market has changed after the company introduced a new capital framework. Explaining recent STRC and MSTR volatility, Hougan said the changes give Strategy flexibility to sell Bitcoin when needed, while describing the market moves as part of a broader deleveraging process.
https://twitter.com/WuBlockchain/status/2073016316127257085?s=20According to Matt Hougan, Strategy's latest framework allows the company to sell Bitcoin periodically to fund STRC dividend obligations. The company also said it may repurchase STRC in the open market.
Previously, Strategy raised STRC's dividend yield to keep the preferred shares near their $100 par value. However, STRC later dropped to about $75 as investors questioned future dividend payments. Hougan said increasing the yield further would have required much larger adjustments.
He explained that such a move could have created additional concerns over dividend funding. Instead, Strategy raised the official yield to 12% and stopped targeting a fixed $100 share price. Following the announcement, both STRC and MSTR shares recovered.
Hougan said Strategy holds about $49.6 billion in Bitcoin and $2.6 billion in cash against $6.8 billion in debt. He added that the company also carries roughly $15.5 billion in preferred equity. According to Hougan, Strategy could suspend preferred dividend payments if necessary.
Therefore, he said liquidation concerns do not match the company's current financial position. He also argued Strategy will likely become a flexible market participant instead of a constant Bitcoin buyer. However, he said the framework does not suggest large-scale Bitcoin sales.
Hougan described the recent STRC volatility and MSTR decline as typical end-of-cycle market behavior. He compared the process with the unwinding of the GBTC premium after the previous Bitcoin cycle.
According to Hougan, leveraged positions tied to financial engineering must leave the market before conditions stabilize. He added that investors should monitor MSTR's net asset value discount, leverage funding rates, and the Crypto Fear and Greed Index for signs of changing market conditions.
Finally, Hougan said excess leverage continues leaving the crypto market, adding that he believes the market bottom is drawing closer.
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