The era in which Strategy served as the dominant Bitcoin buyer appears to be ending following the recent turmoil surrounding its flagship perpetual preferred stock, Stretch (STRC). This event undermined confidence in Strategy’s Bitcoin-buying approach and coincided with Bitcoin’s plunge to a nearly two-year low, according to Bitwise’s chief investment officer, Matt Hougan.

Hougan highlighted that Strategy’s previous role as a consistent and aggressive source of Bitcoin demand has likely diminished. He forecasted that investment banks, asset managers, pensions, endowments, and sovereign wealth funds will assume the primary role in driving Bitcoin demand in the upcoming market cycle, signaling a broadening of the investor base beyond Strategy’s heavy involvement.

The STRC token’s sharp drop from its $100 par value to under $75 stoked fears that Strategy’s dividend payout model was unsustainable. This loss of faith contributed to Bitcoin’s slide to $58,190, its lowest level in almost two years. In response, Strategy pledged to sell Bitcoin if necessary to cover dividend payments and expanded its cash reserves to $2.55 billion. While this move reassured some investors, Hougan noted it also diminished Strategy’s status as the crypto market’s most aggressive buyer.

Despite these setbacks, Strategy remains a net buyer that Hougan expects will continue accumulating Bitcoin during future bull markets, albeit with a less dominant influence.

Hougan described the STRC incident as emblematic of “end-of-cycle dynamics” and likened it to the collapse of Grayscale’s GBTC premium in 2021. He explained that capital seeking high yields and low volatility had fueled Bitcoin purchases, but as Bitcoin inherently lacks these features, that capital was misaligned with the asset’s risk profile and needed to be cleared out for the market to stabilize.

Countering the market panic, Strive CEO Matt Cole argued that Strategy’s impact on Bitcoin price movements has been overstated. He emphasized that while Strategy controls approximately 4% of Bitcoin’s total supply, this stake is not considered material by regulatory standards, which typically mark 5% as the threshold for significant holdings reporting under the US Securities and Exchange Commission rules.

Hougan also reassured that Strategy’s liquidity position remains strong, with $52 billion in liquid assets against $7 billion in debt. This financial cushioning suggests Strategy is not facing immediate solvency issues despite the STRC episode.