Bitwise Says Strategy’s Lead in Bitcoin Buying Is Set to Fade as Institutional Demand Broadens

Bitwise Asset Management said Strategy’s dominance as the leading buyer of Bitcoin has effectively run its course.

Matt Hougan, Bitwise’s chief investment officer, told Cointelegraph on July 3 that Strategy had for years been the world’s most dominant Bitcoin buyer and a one-sided source of demand, but that era has likely ended.

In the next cycle, Strategy will be less important to the Bitcoin market than it was in the last one, Hougan said. He added that investment banks, asset managers, pension funds, university endowments and sovereign wealth funds will emerge as the main sources of Bitcoin demand in its place.

The view follows the late-June turmoil surrounding Strategy’s perpetual preferred stock product, Stretch, or STRC. The security dropped from its $100 par value to below $75, fueling doubts about the sustainability of its dividend model. The episode coincided with Bitcoin’s slide to $58,190 on June 25, its lowest level in 21 months, rattling confidence across the broader market.

Hougan called the STRC episode a typical late-cycle event. He compared it to the collapse of Grayscale’s GBTC premium in 2021, describing both as failures of financial engineering. Capital chasing high yields and low volatility was funneled into Bitcoin purchases even though the asset offered neither, he said. That money was mismatched with Bitcoin from the outset and must be cleared out before the market can find a bottom, he added.

After the STRC episode, Strategy said it may sell Bitcoin if needed to fund dividend payments and raised its dollar reserves to $2.55 billion. Hougan said the move eased immediate concerns but weakened Strategy’s standing as an aggressive buyer. Even so, he said the company is likely to remain a net buyer in the next bull market.

Matt Cole, chief executive officer of Strive, pushed back, saying the episode had received outsized attention. Strategy’s 847,363 Bitcoin represent only 4% of total supply, he said, adding that under US Securities and Exchange Commission standards, a stake of less than 5% is not considered a significant holding.

Hougan also dismissed the possibility of a liquidity crisis. Strategy holds $52 billion of liquid assets against about $7 billion of debt, he said. By his estimate, Bitcoin would have to fall another 70% from current levels to about $18,500 before the company would face meaningful risk.