Crypto World
WLFI May Have Signaled Crypto Crash Hours Before Bitcoin: Study
World Liberty Financial Token (WLFI), a DeFi governance token affiliated with the Trump family, may have signaled a major market breakdown hours before Bitcoin moved, according to a new analysis by data provider Amberdata.
The report examines trading activity on Oct. 10, 2025, when roughly $6.93 billion in leveraged crypto positions were liquidated in under an hour. Bitcoin (BTC) fell about 15% and Ether (ETH) dropped roughly 20%, while smaller tokens lost as much as 70%.
Amberdata found that WLFI began a sharp decline more than five hours before the broader market downturn. At the time, Bitcoin was still trading near $121,000 and showed little immediate stress.
“A five-hour lead time is hard to dismiss as coincidence,” Mike Marshall, who authored the report, told Cointelegraph. “That duration is what separates a genuinely actionable warning from a statistical artefact,” he added.
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WLFI anomalies before the selloff
Researchers analyzed three unusual patterns, including a surge in trading activity, a sharp divergence from Bitcoin and extreme leverage, to determine whether WLFI signaled stress before the broader market selloff.
WLFI’s hourly volume jumped to roughly $474 million, about 21.7 times its normal level, within minutes of tariff-related political news. Meanwhile, funding rates on WLFI perpetual futures reached about 2.87% every eight hours, equivalent to an annualized borrowing cost near 131%.
The study does not claim insider trading occurred. Instead, it argues the way crypto markets are structured can make certain assets matter more than their size suggests.
WLFI’s holder base is concentrated among politically connected participants, the report says, unlike Bitcoin’s widely distributed ownership. Marshall said the trading pattern appeared “instrument-specific,” meaning activity was focused on WLFI rather than across the broader crypto complex.
“If this were superior analysis (sophisticated participants reading the tariff headlines faster and drawing better conclusions) you’d expect to see that reflected more broadly,” he said. “What we actually saw was concentrated activity in WLFI first.”
The timing is notable. Trading volume accelerated roughly three minutes after public tariff news. Marshall said such speed suggests prepared execution rather than retail traders interpreting headlines in real time.
The link between WLFI and the broader market drop comes down to leverage. Many crypto trading platforms let traders use several assets as collateral for borrowed positions. When WLFI fell sharply, the value of that collateral dropped, forcing traders to sell liquid assets like Bitcoin and Ether to cover their positions. Those sales pushed prices lower and triggered further liquidations across the market.
Related: Trump family’s WLFI plans FX and remittance platform: Report
WLFI reacted faster than Bitcoin to stress
Amberdata’s data shows WLFI’s realized volatility reached nearly eight times that of Bitcoin during the episode, making it particularly sensitive to stress. Researchers argue that structurally fragile, highly leveraged assets may move first during market shocks.
Marshall said the findings should not be interpreted as proof that WLFI can reliably predict downturns. The analysis covers a single event, and more data would be needed to establish statistical consistency. Still, he believes the behavior is significant.
“So the useful life of this signal is finite. It’s valuable now because it’s under-monitored,” he said. “The moment it becomes consensus, the alpha gets arbitraged away. That’s how all market signals work. The ones that persist are the ones nobody’s paying attention to.”
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Prediction markets are increasingly being framed not as gambling platforms but as vehicles for monetizing information, though founders acknowledged the line can blur depending on user intent at Consensus Hong Kong 2026.
Ding X, founder of Predict.fun, argued that prediction markets more closely resemble insurance underwriting or poker than roulette. “It’s more information trading and trying to hedge risk, rather than gambling,” he said, distinguishing skill-based forecasting from games where long-term odds guarantee losses.
Farokh Sarmad, co-founder of DASTAN, agreed that speculation exists but described the sector as “a multi-trillion dollar asset class in the making.” In his view, prediction markets are simply “financializing information,” allowing participants to monetize insight rather than leaving value solely with media companies or bookmakers.
Jared Dillinger, CEO of New Prontera Group and a former professional athlete, said the classification depends largely on how platforms are built and used. “It just depends on the eyes of the beholder,” he said, adding that prediction markets function as “an information asset class,” even if some users approach them like bets.
The more pressing challenge is insider trading. High-profile examples—from leaked entertainment setlists to geopolitical developments—have underscored the risk of information asymmetry.
“Insider information is not okay,” Sarmad said, noting that blockchain transparency can make suspicious wallets visible. Still, Dillinger acknowledged enforcement limits. “There’s always going to be some loopholes that people will find.”
As trading volumes rise and regulators take notice, founders agreed that surveillance tools, clearer disclosure norms and stronger platform governance will determine whether prediction markets mature into a recognized financial category—or remain viewed as speculative betting.
Here’s what happened to the Ripple ETFs in the past week.
It was three months ago when the wait was finally over for the XRP Army as the first spot exchange-traded fund tracking the performance of their favorite asset in the US launched.
The initial trading days were more than impressive, and a few more funds joined the Ripple fleet. However, the past week showed a rather worrying trend reversal.
XRP ETFs’ Demand Slows
Canary Capital’s XRPC set a debut-day trading volume record in 2025 on its November 13 launch and remains the market leader despite the launch of four additional funds. It now holds more than $410 million in cumulative net inflows, followed by Bitwise’s XRP ($360 million) and Franklin Templeton’s XRPZ ($328 million).
The products went for over a month without a single red day in terms of net flows, and quickly surpassed the $1 billion mark. However, the green streak broke on January 7, and there were a few more painful days since then, including January 20, and the worst – January 29.
Nevertheless, most full trading weeks ended in the green, with total net inflows stabilizing above $1.20 billion. The past week, though, showed little interest despite three days being in the green. The net inflows were $6.31 million on Monday, $3.26 million on Tuesday, and $4.5 million on Friday, shows data from SoSoValue.
Thursday was a red day, with a net withdrawal of $6.42 million, while Wednesday’s trading volume was absent, with $0.00 in flows. Although the week ended slightly in the green ($7.65 million), the total number and individual daily performance clearly show a declining demand.
But XRP Price Rockets
Despite the lack of interest in the ETFs, the underlying asset’s price went through some intense volatility, especially during the weekend. The token recovered from last week’s plunge to $1.11 but was rejected at $1.55 and spent most of the past several days sitting around $1.40.
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The bulls went on the offensive in the past 48 hours, pushing the cryptocurrency to a multi-week peak of just over $1.65 earlier today. Nevertheless, XRP was rejected once again there and now sits around $1.55 once more.
Despite the retracement, XRP’s market cap remains well above $90 billion, placing it north of BNB for the battle for the fourth place in terms of that metric.
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Crypto hackers are sending physical letters impersonating Trezor and Ledger to steal cryptocurrency wallet recovery phrases.
Summary
- Hackers mail fake Trezor and Ledger letters with phishing QR codes.
- Sites request recovery phrases and grant attackers full wallet control.
- Hardware wallet firms never ask users to share seed phrases.
The phishing campaign claims recipients must complete mandatory “Authentication Check” or “Transaction Check” procedures.
The hackers are also creating urgency through deadlines of February 15, 2026 for Trezor. Letters printed on official-looking letterhead direct users to scan QR codes leading to malicious websites.
The phishing sites request 24-, 20-, or 12-word recovery phrases under the pretense of verifying device ownership.
Once entered, recovery phrases transmit to threat actors through backend API endpoints, granting attackers full control over victims’ wallets and funds.
Both hardware wallet companies suffered data breaches in recent years that exposed customer contact information.
Phishing sites create urgency through functionality warnings
Cybersecurity expert Dmitry Smilyanets received a fake Trezor letter warning that failure to complete authentication would result in lost device functionality.
“To avoid any disruption to your Trezor Suite access, please scan the QR code with your mobile device and follow the instructions on our website,” the letter stated.
The Trezor phishing site displays warnings about limited access, transaction signing errors, and disruption with future updates.
A similar Ledger-themed letter circulated on X, claiming Transaction Check would become mandatory.
The phishing pages allow users to enter recovery phrases in multiple formats, falsely claiming the information verifies device ownership and enables authentication features.
Once victims enter recovery phrases, data transmits to the phishing site. Attackers import the wallet onto their own devices and drain funds.
The letters create false urgency by claiming devices purchased after November 30, 2025 come pre-configured, pressuring earlier buyers to act.
Crypto hardware wallet companies never request recovery phrases
Physical mail phishing campaigns targeting hardware wallet users remain relatively rare. Crypto hackers mailed modified Ledger devices in 2021 designed to steal recovery phrases during setup. A similar postal campaign targeting Ledger users was reported in April.
Anyone possessing a wallet’s recovery phrase gains full control over the wallet and all funds. Trezor and Ledger never ask users to enter, scan, upload, or share recovery phrases through any channel.
Recovery phrases should only be entered directly on hardware wallet devices when restoring wallets, never on computers, mobile devices, or websites.
The targeting criteria for the physical letters remains unclear. However, both companies’ past data breaches exposed customer mailing addresses and contact information to potential attackers.
Ethereum co-founder Vitalik Buterin warned that prediction markets are sliding toward “unhealthy product market fit” by focusing on short-term cryptocurrency price bets and sports betting.
Summary
- Vitalik warns prediction markets are becoming short-term gambling tools.
- He urges a pivot toward hedging and real-world risk management uses.
- Proposes personalized prediction baskets replacing fiat stability.
Writing on X, Buterin called the trend “corposlop” and argued platforms feel pressured to embrace dopamine-driven content that lacks long-term societal value.
Buterin proposed redirecting prediction markets toward hedging use cases, including a system where personalized prediction market baskets replace fiat currency entirely.
“We do not need fiat currency at all! People can hold stocks, ETH, or whatever else to grow wealth, and personalized prediction market shares when they want stability,” he wrote.
Current model relies on traders with “dumb opinions”
Buterin identified three types of actors willing to lose money in prediction markets: naive traders with incorrect opinions, info buyers running automated market makers to learn information, and hedgers using markets as insurance to reduce risk.
The industry currently depends on naive traders and creates what Buterin called a “fundamentally cursed” dynamic.
“It gives the platform the incentive to seek out traders with dumb opinions, and create a public brand and community that encourages dumb opinions to get more people to come in. This is the slide to corposlop,” he wrote.
Personalized prediction baskets could replace stablecoins
Buterin questioned whether an “ideal stablecoin” based on decentralized global price indices is the right solution. “What if the real solution is to go a step further, and get rid of the concept of currency altogether?” he asked.
The proposed system creates price indices for all major categories of goods and services, treating physical items in different regions as separate categories.
Each user maintains a local large language model understanding their expenses, offering personalized baskets of prediction market shares representing future spending needs.
Users could hold stocks, ETH, or other assets for wealth growth while holding personalized prediction market shares for stability. The system removes fiat currency dependence while allowing customization for individual expense patterns.
Implementation needs prediction markets denominated in assets people want to hold: interest-bearing fiat, wrapped stocks, or ETH. Non-interest-bearing fiat carries opportunity costs that overwhelm hedging value.
“Both sides of the equation are likely to be long-term happy with the product that they are buying, and very large volumes of sophisticated capital will be willing to participate,” Buterin concluded.
Passing the CLARITY crypto market structure bill could lift sentiment amid a broad downturn, according to United States Treasury Secretary Scott Bessent. In a CNBC interview, he described the bill’s stall as a drag on industry morale, noting that clarity on the framework would provide a much-needed anchor for investors and incumbents alike. He emphasized that moving the legislation forward quickly—ideally by spring, in the window between late March and late June—could set the tone for a more predictable regulatory environment as the political landscape shifts ahead of the 2026 midterm elections. Bessent warned that congressional dynamics, particularly the potential rebalancing of control in the House, will influence the odds of a deal becoming law.
“In a time when we are having one of these historically volatile sell-offs, I think some clarity on the CLARITY bill would give great comfort to the market, and we could move forward from there.”
In a time when we are having one of these historically volatile sell-offs, I think some clarity on the CLARITY bill would give great comfort to the market, and we could move forward from there.
I think if the Democrats were to take the House, which is far from my best case, then the prospects of getting a deal done will just fall apart,” Bessent continued. The Treasury secretary stressed that legislative motion on the bill should come “as soon as possible” and be sent to President Trump for signature within the spring window—an interval spanning roughly late March to late June—given the potential shift in political power during the 2026 midterms.
The broader discourse around the CLARITY Act has intersected with a series of policy conversations and industry concerns. White House officials had previously met with crypto and banking representatives to discuss stablecoins and market structure, signaling continued interest at the intersection of finance and regulation. The ongoing dialogue underscores the sensitivity of policy timing to electoral dynamics and the need for a credible legislative path to reduce uncertainty for participants across the ecosystem.
The 2026 midterm elections could throw a wrench in Trump’s crypto agenda
The balance of power in Washington often shifts during midterm years, a dynamic that former Magic Eden general counsel Joe Doll highlighted to Cointelegraph. The possibility that the House could tilt away from the current alignment injects additional risk into the policy calculus surrounding crypto-friendly reforms. Economic thinker Ray Dalio noted in January that a two-year window of political mandate could be undermined by a midterm verdict and the ensuing renegotiation of policy directions. If crypto-friendly principles are not codified into law, such political shifts could reverse the policy trajectories pursued during the administration. In the current landscape, the Republican Party holds a slim four-seat majority in the House (218-214), a distribution that means even narrow election outcomes could alter the calculus for reform.
Market watchers have also looked to prediction markets for a sense of how the midterms might unfold. Polymarket’s odds for the balance of power in 2026 project a split Congress as a plausible outcome (about 47%), with a Democratic sweep ranking at roughly 37% at the time of analysis. Those probabilities reflect the high degree of uncertainty that markets assign to policy continuity in crypto regulations, particularly if control of Congress remains contested. The numbers serve as a reminder that political risk remains a material variable for investors and firms navigating the regulatory landscape.
Sources and official references linked in coverage show that the policy conversation around the CLARITY Act is not happening in a vacuum. Reporting on the legislative posture, and the broader market implications, has drawn on remarks and analyses across major outlets and industry analyses, including coverage of the CLARITY Act’s political and market ramifications. The conversation also touches on the regulatory reception to stablecoins and market structure reforms, as seen in related reporting on White House discussions between regulators and industry participants.
As the discourse evolves, the question for market participants is how swiftly a clarified framework could be translated into enforceable rules and practical risk-management practices—without stifling innovation. A sooner movement toward clarity could reduce the anxiety that accompanies regulatory ambiguity, potentially supporting liquidity and risk appetite in a sector that has faced repeated bouts of volatility. But even with a clearer path to law, the degree to which the legislation aligns with the broader political project, and whether it endures through midterm shifts, will influence its effectiveness as a stabilizing force.
In this environment, the CLARITY bill stands out as a focal point where regulatory ambition meets political reality. The coming weeks and months will reveal whether the administration and lawmakers can reach a compromise that satisfies both investor protections and innovation-friendly constraints. The timing is tight: spring is traditionally the window for signature opportunities ahead of the new political cycle, and any delay could heighten the uncertainty that currently weighs on market sentiment.
The broader takeaway is that policy clarity matters more than ever when markets confront major volatility, and the next steps on the CLARITY Act could influence how the crypto sector allocates capital, builds infrastructure, and negotiates with traditional financial regulators. As the discussion continues, observers will be watching whether the administration can translate political will into a durable framework that supports both consumer protection and industry growth, while also accommodating the diverse interests that shape crypto policy in the United States.
What to watch next
- Progress of the CLARITY Act through congressional committees, with a focus on timing for floor action in the 2026 session.
- Any new White House statements or regulatory signals related to stablecoins and market structure reforms.
- Updates from key political actors as the 2026 midterms approach, including potential shifts in House control.
- Public commentary from major industry leaders and economists on the bill’s potential impact on liquidity and investor confidence.
- New polling or market-implied probabilities from prediction markets reflecting policy trajectory and election outcomes.
Sources & verification
- CNBC interview with Treasury Secretary Scott Bessent discussing the CLARITY bill and its potential impact (video, February 13, 2026).
- Crypto industry policy discussions and market structure debates referenced in Cointelegraph coverage on the CLARITY Act (Crypto industry split over clarity act).
- Cointelegraph reporting on White House discussions with crypto and banking reps about stablecoins and market structure (White House officials meeting market structure bill).
- Discussion of the 2026 US midterm balance of power and its implications for crypto policy (The balance of power typically shifts).
- Polymarket odds for the 2026 midterms and the likelihood of a split government (Polymarket: Balance of power 2026 midterms).
- US House data detailing party breakdown in the 118th Congress (data: pressgallery.house.gov).
Policy clarity could steer crypto markets through volatility ahead of 2026 midterms
The latest commentary from Treasury leadership underscores how regulatory clarity on the CLARITY Act is seen as a potential antidote to a period of heightened volatility in crypto markets. By framing a clear regulatory path, advocates argue it could ease caution among traders, reduce some of the overhang created by policy ambiguity, and possibly encourage more risk-taking in regulated venues. The argument is not merely about speed; it is about providing a stable, predictable framework that can accompany innovation rather than constrain it.
From a market dynamics standpoint, the timing is delicate. If the bill is advanced and signed into law ahead of the 2026 elections, industry participants hope for a period of relative policy continuity that could support capital formation and advanced product development. Conversely, a drawn-out process or a policy reversal in the wake of a midterm shift could reintroduce uncertainty, complicating executives’ investment theses and potentially altering capital flows across crypto markets and related financial instruments.
Ultimately, the CLARITY Act sits at the intersection of market structure discussions, consumer protection considerations, and the political calendar. The next steps will be telling: will policymakers align on a pragmatic framework that reduces risk without stifling innovation, or will partisan dynamics push reform onto a longer timeline? As observers weigh the odds of a spring signature, the industry remains focused on the broader trajectory of regulation, and on how that trajectory could influence liquidity, product development, and the appetite for regulated crypto ventures in a market that continues to grapple with volatility and regulatory ambiguity.
Hedera price has surged in recent sessions, positioning HBAR for a breakout from a bullish chart pattern.
The recent move reflects improving sentiment across select altcoins. However, breakouts require follow-through buying.
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HBAR Investors Are Buying
The Money Flow Index indicates rising buying pressure for HBAR. The indicator has trended upward, signaling that capital is flowing back into the asset. Strengthening MFI readings often reflect growing demand during early recovery phases.
Investors appear to be accumulating as the price begins to climb. Increased participation provides liquidity support and reinforces bullish structure. If buying pressure continues building, HBAR could maintain upward momentum beyond near-term resistance.
The liquidation heatmap highlights $0.1084 as a critical level. Around that range, approximately $1 million worth of short positions could face forced liquidation. A move through this zone would likely accelerate upside volatility.
Short liquidations often create rapid price spikes. When bearish traders are forced to cover positions, buying pressure intensifies. For HBAR, clearing $0.1084 could serve as a catalyst for extended gains.
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However, investors must sustain bullish momentum until that level is reached. Without steady accumulation, the market may struggle to generate the necessary pressure. Breakout durability depends on consistent inflows and reduced profit-taking.
HBAR Price Needs To Secure Support
HBAR price is trading at $0.1025, pressing against the $0.1030 resistance. Securing this level as support would confirm a breakout. However, a decisive close above resistance could shift sentiment toward sustained recovery.
The token has been moving within a descending broadening wedge. This formation projects a potential 57% rally upon confirmation. While that projection signals strong upside potential, a more realistic target lies near $0.1234, which would recover recent losses.
On the other hand, if investors begin booking profits prematurely, downside risk increases. A pullback toward $0.0901 support would invalidate the bullish thesis. Going forward, maintaining buying pressure remains essential for Hedera’s price to extend gains and sustain breakout momentum.
Can XRP spike to $2 or beyond as early as next week?
While Ripple’s cross-border token crashed to almost $1.10 on February 6, bulls have since stepped in to stabilize the valuation, which currently trades around $1.55.
The question now is whether next week can deliver further gains and how high the price could go. Here’s what four of the most widely used AI-powered chatbots said on the matter.
The Bulls
ChatGPT estimated that the most probable outcome for the week ahead is for XRP to rise to roughly $1.60, which it did on Sunday, but has yet to reclaim that level. It claimed that a move north is much more plausible than a renewed crash, based on recent investor behavior.
“At the moment, XRP looks more like it’s in a stabilization phase rather than the beginning of a major breakout. The bounce from around $1.10 to $1.50 shows that buyers stepped in aggressively at lower levels, which is constructive. However, sharp rebounds are often followed by consolidation before any serious continuation higher,” its analysis reads.
The chatbot projected that an explosion to as high as $2 next week is also possible, but it would depend heavily on a major catalyst, such as a solid revival of the broader crypto market or huge news concerning Ripple and its ecosystem.
Grok – the chatbot integrated within X – agreed with ChatGPT’s assumption that XPR is most likely to surge and maintain $1.60 next week. Nonetheless, it projected that such a scenario will only be possible if the price reclaims decisively the important zone of $1.40. Grok also envisioned a jump to as high as $1.80 but expects the rally to occur toward the end of February rather than in the following seven days.
Several indicators, including the declining amount of XRP held on the largest crypto exchange, Binance, and the formation of certain technical setups, reinforce the bullish thesis.
The Bears
Unlike the aforementioned chatbots, Perplexity is pessimistic about XRP’s performance next week and expects the price to decline. It outlined that investor sentiment has been quite depressing lately, predicting that the price may drop to as low as $1.24 in the coming days.
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Google’s Gemini also envisioned a bearish tilt in the week ahead. It noted that February has historically been a challenging month for XRP, characterizing the $1.35 – $1.40 range as “the line in the sand.”
“This level isn’t just a number – it’s the technical floor that has been holding the ‘February slide’ together. XRP is hovering right on that edge, and if it plummets below this, it could open the door to a further plunge to as low as $1,” it concluded.
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TLDR:
- Large-cap tech stocks have dumped back to September 2025 levels despite new highs in defensive sectors.
- Energy, utilities, and consumer staples pump to record levels as massive capital rotates from technology.
- Market concentration in tech means non-tech rallies cannot lift the S&P 500 without leadership change.
- Emerging markets see the highest inflows in a decade as capital rotates away from US large-cap technology.
Markets are witnessing a Great Rotation as capital flows out of technology stocks and into defensive sectors. Some stocks pump to new highs while former leaders dump to new lows.
Leadership has shifted dramatically from high-flying tech names to old economy sectors. The S&P 500 has barely moved since late October 2025 despite this massive reallocation. This pump, dump, and rotate dynamic raises questions about market direction.
Capital Reallocation Drives Historic Sector Divergence
Energy through XLE has absorbed massive capital inflows as investors rotate away from technology. Utilities experienced historic call volume on Friday during the rotation.
Industrials, materials, and consumer staples have all pumped to fresh highs. Even semiconductors have participated in gains alongside traditional sectors.
The rotation has created extreme bifurcation across markets. Large-cap tech stocks measured by MAGS have dumped back to September 2025 levels.
Software stocks tracked by IGV have declined sharply from previous peaks. This selling pressure has weighed heavily on the broader index.
Technology heavyweights act as anchors preventing the S&P 500 from advancing. Financials have also stagnated since December 2024 during this rotation phase.
The combination keeps the index flat despite pumping sectors elsewhere. Many individual names have dumped hard while others pump enough to offset losses.
Market concentration in technology remains at multi-decade highs heading into this rotation. Non-tech stocks can pump without moving market-cap weighted indexes meaningfully higher.
The dominance of large-cap tech means their performance drives overall index direction. This structure makes rotations particularly visible when leadership shifts.
Two Possible Outcomes for the Pump, Dump, Rotate Cycle
The current rotation mirrors aspects of the 2000 period when defensive sectors pumped. Risk-on technology faces pressure as capital rotates into consumer staples and utilities.
However, important structural differences exist between market environments across decades. Past patterns rarely repeat exactly despite surface similarities.
This rotation could resolve through two distinct scenarios. Technology weakness could spread and dump the broader market lower, like in 2000-2001.
Alternatively, tech could rebound from oversold levels and pump back into leadership. The second scenario appears more probable based on current conditions.
Sentiment on technology has rotated sharply in recent months. Investors previously applauded aggressive artificial intelligence spending across the sector.
Markets now question whether AI investments justify valuations as names dump. The selling has been indiscriminate across software and large-cap technology.
Capital has rotated heavily into emerging markets during this shift. EEM recorded its highest inflows in nearly a decade as money pumps international exposure.
Ex-US equity funds across all capitalizations have seen substantial increases. VEU has pumped for eight consecutive weeks during the rotation.
Put/call ratios spiked recently, suggesting elevated hedging activity. This rotation back into US tech could spark meaningful rallies if leadership shifts again.
Crypto World
Strategy Preferred Stocks Dominate US Market with $7B Issuance and Unique Tiered Structure
TLDR:
- Strategy’s $7 billion preferred issuance represented one-third of total US preferred stock market in 2025
- STRC trades $150 million daily, offering 4.5% daily liquidity versus typical illiquid preferred markets
- Yield spreads between STRF and STRD range from 2% to 5%, functioning as investor fear index for securities
- $2.25 billion USD reserve stabilized STRC near par value despite recent Bitcoin price volatility and declines
Strategy preferred stocks have emerged as a dominant force in the preferred equity market. The company issued $7 billion in preferred securities during 2025.
This volume represented one-third of all preferred stock issuances in the United States. The firm launched five distinct preferred instruments over the past year. Each security offers different risk profiles and yield characteristics for investors.
Structural Differences Drive Yield Variations Across Securities
Strategy has created a tiered preferred stock structure with notable distinctions. STRF stands as the senior-most preferred security with enhanced protective provisions.
The instrument includes dividend step-up penalties and MSTR board seat provisions. STRD shares the same 10% fixed dividend rate but ranks junior to STRF. The subordination results in fewer governance protections for STRD holders.
Market pricing reflects these structural differences through yield spreads. STRF consistently trades at 2% to 5% lower effective yield compared to STRD.
This spread serves as a fear index for Strategy’s preferred complex. When the yield difference widens to 5%, investor concern increases relative to narrower 2% spreads.
Crypto analyst Cern Basher highlighted the relationship between Strategy’s equity issuances on X. The common equity and preferred stocks work together in the capital structure.
Strategy issued $16.3 billion in common equity during 2025. This represented 6% of all US common equity issuance for the year.
STRC Brings Variable Rates and Enhanced Liquidity
STRC functions as a perpetual non-convertible preferred stock with monthly dividend resets. The initial dividend rate started at 9% upon issuance.
Strategy has increased the rate six times to reach the current 11.25% level. The security represents the largest preferred issuance with $3.37 billion outstanding.
Liquidity distinguishes Strategy’s preferred stocks from typical market offerings. STRC trades approximately $150 million daily, equating to 4.5% of total market value.
Other Strategy preferreds collectively trade between $100 million and $200 million per day. Most preferred stocks in the broader market require invitations to trade.
The variable rate structure creates different risk characteristics versus fixed-rate securities. STRD carries long duration and interest rate sensitivity.
STRC maintains short duration with minimal interest rate exposure. Market data shows STRD trades with a volatility risk premium ranging from 1.5% to 4%.
USD Reserve Reduces Volatility and Tightens Spreads
Strategy established a $1.44 billion USD reserve on December 1, 2025. The company subsequently expanded this reserve to $2.25 billion.
This cash position complements the approximately $50 billion Bitcoin treasury. The reserve creation dramatically reduced STRC volatility in the marketplace.
Recent Bitcoin price declines tested the preferred stock complex. STRC maintained trading levels near its $100 par value throughout the downturn.
The spread between STRC and STRF narrowed following the reserve announcement. Current yield differences range from nearly zero to almost 2% between these securities.
The reserve backing changed investor perception of stress risk across the preferred stack. Tighter spreads emerged as confidence in liquidity support increased.
Strategy continues issuing additional STRC securities despite Bitcoin market volatility. The seasoning process demonstrates how structural features influence relative pricing dynamics.
Bitcoin’s massive slump from a record price above $126,000 last October has darkened sentiment across the crypto landscape. Faith has been shaken in a trade that was viewed as a digital rival to gold as a store of value, and as a risk-on asset that would continue to boom alongside a crypto-friendly Trump administration.
Since the all-time high price last October, bitcoin has lost almost half its value and its inability to bounce back in trading is increasing fears about another “crypto winter” — a prolonged slump similar to the time of the FTX crash in 2022 when bitcoin fell from near $50,000 to as low as $15,000. In the past month alone, bitcoin is down over 25%.
But crypto investing experts on the latest CNBC “ETF Edge” say a look at the recent flows into and out of bitcoin and crypto exchange-trade funds suggests that long-term investors are not abandoning the asset class. Money has certainly moved out, but they say not to a level that suggests long-term investor panic.
Over the past three months, the iShares Bitcoin Trust (IBIT) has seen approximately $2.8 billion in net outflows. That is substantial, but over the past year, the BlackRock ETF has attracted near $21 billion in net inflows, according to VettaFi.
The broader spot bitcoin ETF category shows a similar pattern. Over the past three months, the ETF asset class has experienced roughly $5.8 billion in net outflows. Over the past year however, spot bitcoin ETFs have brought in around $14.2 billion in net inflows. Money is exiting, but the majority of assets have remained in placed, and some say the money being pulled isn’t from the long-term investor or financial advisor that have begun allocating assets to crypto.
“It’s not the ETF investors who are driving the sell off,” said Matt Hougan, Bitwise Asset Management CIO, on “ETF Edge.”
He says much of the broader pressure in bitcoin may be coming from crypto investors who accumulated positions over many years and are now trimming exposure. “It’s really a tale of two sides,” Hougan said. There are hedge funds and short-term traders who use the most liquid ETFs as tools and may pull capital quickly when momentum turns negative.
At CNBC’s Digital Finance Forum last week, Galaxy CEO Mike Novogratz said the crypto market’s “era of speculation” may be ending, and returns going forward will be more like a long-term investment holding. “It’s going to be real world assets with much lower returns,” he said at the CNBC event in New York City last Tuesday. “Retail people don’t get into crypto because they want to make 11% annualized,” he said. “They get in because they want to make 30 to one, eight to one, 10 to one.”
Financial advisors at Wall Street banks are among those adding bitcoin to investor portfolios, and adding their own branded crypto ETFs. And longer horizon investors who hold crypto as a small allocation within diversified portfolios may be willing to ride out volatility, Hougan said. If investors were capitulating across the board, the outflows over the past three months would likely approach the scale of the prior 12 months inflows.
Not that the ETF asset flow analysis makes it any easy of a period to stomach for a recent crypto investor. “It’s tough to be a bitcoin investor right now,” said Will Rhind, founder & CEO of ETF company GraniteShares on “ETF Edge.” He added that the performance of other “hard” assets, like gold, has added to the bitcoin distress. For investors who have supported the “digital gold” concept, the bitcoin price crash has been unsettling. “This is not supposed to happen,” he said of a period of time when other safe haven assets perform strongly and bitcoin continues to drop. When bitcoin is going down nearly 50%, “gold’s not supposed to go to all time highs,” he said.
Performance of the iShares Bitcoin Trust versus the SPDR Gold Shares Trust over the past year.
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