Bitcoin’s recent surge above $77,000 has been significantly fueled by capital raises from the firm Strategy, according to Bitwise Chief Investment Officer Matt Hougan. Hougan identified purchases funded by Strategy‘s issuance of the STRC financial instrument as the “single biggest factor” in the rally, overshadowing other supportive factors like ETF inflows.
Bitcoin has risen more than 20% from its February lows, trading around $77,000. According to Bitwise Chief Investment Officer Matt Hougan, Strategy’s aggressive BTC purchases have emerged as the “single biggest factor” in the recent price surge.
While other factors have supported Bitcoin’s price, Hougan explained that a significant portion of the gains has been driven by Strategy. The company has added about $7.2 billion worth of Bitcoin over the past eight weeks.
These purchases have been funded through the issuance of STRC, a perpetual preferred equity instrument. STRC trades at a target of $100 per share and currently offers an 11.5% annual dividend yield.
The primary purpose of issuing STRC is to raise capital for additional Bitcoin purchases. Most proceeds are deployed into the asset, with dividend payments largely funded by raising capital from new investors.
Strategy currently holds around $63 billion in Bitcoin against $8 billion in debt and $14 billion in preferred equity. Hougan estimates the company could hypothetically sustain its dividend payments for 42 years at current Bitcoin prices.
However, the company’s ability to meet its obligations depends on Bitcoin’s performance and the scale of future STRC issuance. Hougan stated that investor confidence depends on Strategy maintaining a balance between raising capital and preserving balance sheet strength.
He noted that demand for STRC appears strong, with its 11.5% yield deemed attractive in the current market. Strategy’s current obligations amount to about 33% of its Bitcoin holdings.
