Ripple's Garlinghouse Remains Bitcoin Bull but Blasts Saylor's Preferred Stock Strategy
Ripple CEO Brad Garlinghouse has made his position clear: he still believes in bitcoin as an asset, but he has serious reservations about the financial machinery Michael Saylor's Strategy has built around acquiring it. In a Friday interview with CNBC, Garlinghouse took direct aim at Strategy's preferred-share funding model, calling it a form of "financial engineering" that has caused real damage to the broader cryptocurrency market.
At the heart of Garlinghouse's critique is Strategy's STRC preferred stock — a share class designed to trade near $100 and pay holders an 11.5% annual dividend. The instrument was specifically engineered to give Strategy a steady mechanism for raising capital to purchase bitcoin. However, STRC has recently slipped roughly 25% below its target price, hitting a record low on Thursday and falling as much as 26% below par. Strategy's common stock followed suit, dropping to its lowest level since February 2024 and closing around $82 on Friday — all against the backdrop of bitcoin itself sliding below $59,000.
"Financial engineering does not drive long-term value," Garlinghouse stated, emphasizing that sustainable worth in the digital asset space must come from genuine utility. He argued that Saylor's team was "not focused on the right stuff," and that this misdirected focus has harmed the overall market environment for crypto assets. Despite this pointed criticism, Garlinghouse was careful to separate his view of the strategy from his view of the underlying asset, reaffirming his bullish stance on bitcoin itself.
The timing of Garlinghouse's remarks coincides with growing scrutiny of Strategy's accumulation model. Blockchain analytics firm CryptoQuant recently published a report recommending that Strategy pause its bitcoin purchases and focus on rebuilding cash reserves. According to the report, the financial cushion backing STRC's dividend payments has shrunk dramatically — from more than seven years of coverage down to approximately 14 months. When STRC trades below its $100 anchor price, the company's ability to issue new shares and funnel proceeds into bitcoin effectively stalls, which is precisely the situation Strategy is navigating right now.
Not everyone shares Garlinghouse's gloomy assessment of the model's structural integrity. Mark Palmer, an analyst at Benchmark-StoneX, pushed back against the more dire interpretations, arguing that Strategy's funding engine has become "less efficient" rather than fundamentally broken. Palmer also dismissed comparisons between STRC and assets that have collapsed entirely, suggesting the current turbulence does not signal an irreversible failure.
Garlinghouse runs Ripple, the company behind XRP — a digital asset that competes with bitcoin in parts of the crypto ecosystem. While his competitive position is worth noting, his technical critique of Strategy's preferred-stock structure echoes concerns raised independently by analysts and market observers. The broader question now facing the industry is whether Strategy's approach represented a brilliant innovation in corporate bitcoin accumulation or a fragile construct that amplified market risk during a downturn. With bitcoin hovering below $59,000 and STRC at record lows, that debate has taken on renewed urgency.
