Bitwise CIO Matt Hougan says Bitcoin may be closer to a cycle bottom — and that recent turbulence around MicroStrategy’s preferred stock could be part of a healthy market reset rather than a sign of systemic damage.
In his weekly memo, Hougan pointed to volatility in MicroStrategy’s STRC perpetual preferred shares as a “late‑cycle unwind” that is removing excess leverage from the market. STRC, a preferred stock MicroStrategy used to raise roughly $10.5 billion to help finance Bitcoin purchases, slid to the mid‑$70s last week — plunging as low as $73.62, according to Barron’s — and sparked worries about the company’s ability to cover preferred dividends.
MicroStrategy responded with a swift capital management shift: it hiked the STRC dividend to 12% annually, authorized up to $2 billion in common and preferred stock buybacks, and rolled out a framework that allows Bitcoin sales to shore up reserves, fund dividends and debt obligations, and support repurchases. Barron’s also reported the company authorized up to $1.25 billion in Bitcoin sales to strengthen its balance sheet.
Hougan said that combination likely ends MicroStrategy’s role as a one‑way, guaranteed buyer of Bitcoin. “For years, MicroStrategy has been the most dominant Bitcoin buyer in the world and a one way source of Bitcoin demand,” he wrote. “Those days are likely over.” Still, Hougan does not expect MicroStrategy to become a forced seller — he argues the firm has adequate assets to cover its obligations unless Bitcoin falls much further and stays depressed.
Framing the STRC episode in historical context, Hougan compared it to the collapse of the Grayscale Bitcoin Trust (GBTC) premium after the 2019–2021 bull run: both structures had funnelled capital into Bitcoin during frothy conditions, then lost support and required a painful reset.
What comes next? Hougan expects the next cycle to be driven more by traditional institutions — banks, asset managers, pensions, endowments, sovereign wealth funds and advisers — rather than single large corporate buyers. He advises investors to watch a few key signals for a durable bottom: MicroStrategy trading below the value of its Bitcoin holdings, extreme readings on the Crypto Fear & Greed Index, and persistent negative funding rates. He cautions that bottoms are impossible to call in real time, but adds: “I’m convinced the bottom is closer than ever,” and he expects a new Bitcoin bull market to start in the fall.
Macro tailwinds helped Bitcoin briefly trade above $62,000 this week after softer‑than‑expected U.S. jobs data — the U.S. added 57,000 jobs in June — which eased expectations for further Fed tightening and improved risk appetite across markets.
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