Key Takeaways
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Bitcoin has recently fallen under $60,000, and some watchers are wary of buying the dip with the cryptocurrency trading for around half its record highs.
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Strategy’s stock, meanwhile, is trading under $90, a level unseen in two years, while its “Stretch” preferred stock is at its lowest price ever.
Bitcoin’s in the pits.
The price of the world’s most-valuable cryptocurrency earlier today fell to lows last seen in 2024, sliding to around $58,000, according to Messari, before recovering to back above $59,000. Those lows had it off more than 50% from an October peak of $126,000.
That’s spilling into broader crypto markets, with CoinMarketCap’s Crypto Fear and Greed Index reading “extreme fear.” Shares of companies like crypto exchange Coinbase (COIN) and stablecoin issuer Circle (CRCL), the latter which has resisted some other swoons in crypto prices, have had brutal months.
And Strategy (MSTR), the big bitcoin buyer, is now trading below $90—a level it haven’t seen in two years— while the company’s Stretch preferred stock or “STRC,” recently hit an all-time low of $74, roughly 25% below par. (Strategy aims to keep Stretch around $100 by adjusting the dividend it pays.)
WHY THIS MATTERS TO YOU
Bitcoin has managed to stay above $60,000 for much of the year, but its latest move below that level has it trading for less than half last year’s record highs.
What’s next? Sean Farrell, Fundstrat’s digital asset strategy head, says he’s “hesitant to aggressively buy the dip” in bitcoin. His reasoning: Bitcoin’s latest slide wasn’t initially mirrored in other crypto coins, which suggested more than a temporary bout of risk-off sentiment that might have indicated a buying opportunity.
Meanwhile, Farrell said, bitcoin’s slide is pressuring Strategy products broadly. With the stock off almost 80% in the last 12 months and Stretch sliding, some investors are raising questions about the sustainability of the preferred stock’s dividend. The company has said it could lift its dividend rate, currently at 11.5%, to entice buyers into lifting STRC back to par, and said it has the cash reserves to fund those payouts.
But some investors are questioning what the company might do as the stock falls. Nic Carter, a founding partner of crypto VC Castle Island Ventures, on Thursday wondered on social media what rate of return a junk-bond investor—someone who takes on lower-rated debt in exchange for higher yields—would accept to own Stretch, which he considers the “riskiest part” of Strategy’s offering. He estimates a range of 15% to 20%, well above current levels.
Strategy did not respond to Investopedia’s request for comment in time for publication. The company, per its risk disclosures, isn’t obligated to pay any yield: “We may be unsuccessful in achieving, or may abandon, our current intention of adjusting the regular dividend rate” to cause STRC to trade near its stated $100 per share par price.
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