Key Takeaways
- • Bitwise CIO Matt Hougan expects Bitcoin to approach a market bottom as deleveraging from Strategy's STRC preferred stock unwinds excess capital, positioning for a new bull market beginning in fall 2026.
- • Strategy's STRC preferred stock, which raised approximately $10.5 billion to finance Bitcoin purchases, fell to roughly $75 from its $100 par value as dividend sustainability concerns emerged amid declining Bitcoin and MSTR prices.
- • Strategy implemented a capital management framework permitting up to $1.25 billion in Bitcoin sales while maintaining a 12-month cash reserve for obligations, and raised STRC's annual dividend rate to 12% while authorizing $2 billion in stock buybacks.
- • Hougan characterizes recent STRC volatility and the decline as classic end-of-cycle dynamics reflecting the unwinding of financial engineering that brought yield-seeking capital into Bitcoin during the previous bull market.
- • Hougan expects institutional investors to drive renewed demand for Bitcoin as regulatory uncertainty diminishes and crypto ETF growth continues, supporting his conviction that the market bottom is imminent.
Summary
Bitwise Chief Investment Officer Matt Hougan has forecasted a new Bitcoin bull market beginning in fall 2026, arguing that current market turmoil surrounding Strategy's STRC preferred stock represents a critical deleveraging phase signaling proximity to a market bottom. In his latest weekly memo, Hougan described the volatility in STRC and decline in Strategy shares as "classic end of cycle dynamics," reflecting the natural unwinding of financial engineering that channeled yield-seeking capital into Bitcoin during the preceding bull market.
STRC, a perpetual preferred stock launched by Strategy to provide high-yield returns while maintaining a $100 par value target, had generated approximately $10.5 billion in capital that Strategy deployed toward additional Bitcoin purchases. The instrument proved initially successful as Strategy incrementally increased STRC's dividend rate to 11.5%. However, the preferred shares recently declined to approximately $75, driven by investor concerns over Strategy's capacity and willingness to continue funding dividend obligations amid falling Bitcoin and MSTR prices.
In response, Strategy introduced a revised capital management framework this week designed to address liquidity pressures. The framework permits the company to generate up to $1.25 billion through Bitcoin sales while preserving cash reserves sufficient to cover at least 12 months of dividend and interest payments. Simultaneously, Strategy increased STRC's annual dividend rate to 12% and authorized up to $2 billion in common and preferred stock buybacks, actions Hougan characterized as signaling a shift in Strategy's role within the Bitcoin market.
Hougan's outlook incorporates expectations that institutional investors will drive a subsequent wave of Bitcoin demand as regulatory uncertainty subsides and cryptocurrency ETF adoption accelerates. His conviction rests on the premise that the current correction, while painful, represents necessary deleveraging that removes destabilizing yield-seeking capital, ultimately establishing a more stable foundation for sustained institutional participation and price appreciation in the emerging bull cycle.
STRC, a perpetual preferred stock launched by Strategy to provide high-yield returns while maintaining a $100 par value target, had generated approximately $10.5 billion in capital that Strategy deployed toward additional Bitcoin purchases. The instrument proved initially successful as Strategy incrementally increased STRC's dividend rate to 11.5%. However, the preferred shares recently declined to approximately $75, driven by investor concerns over Strategy's capacity and willingness to continue funding dividend obligations amid falling Bitcoin and MSTR prices.
In response, Strategy introduced a revised capital management framework this week designed to address liquidity pressures. The framework permits the company to generate up to $1.25 billion through Bitcoin sales while preserving cash reserves sufficient to cover at least 12 months of dividend and interest payments. Simultaneously, Strategy increased STRC's annual dividend rate to 12% and authorized up to $2 billion in common and preferred stock buybacks, actions Hougan characterized as signaling a shift in Strategy's role within the Bitcoin market.
Hougan's outlook incorporates expectations that institutional investors will drive a subsequent wave of Bitcoin demand as regulatory uncertainty subsides and cryptocurrency ETF adoption accelerates. His conviction rests on the premise that the current correction, while painful, represents necessary deleveraging that removes destabilizing yield-seeking capital, ultimately establishing a more stable foundation for sustained institutional participation and price appreciation in the emerging bull cycle.
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