Grayscale warns preferred stocks like Strategy's are CCC-rated risks

Digital asset management firm Grayscale has issued a warning about the trend of digital asset companies issuing preferred stock. The firm pointed out that these instruments, such as Strategy's STRC, are structured as a bet on Bitcoin's price direction. Grayscale noted that since Bitcoin itself does not generate interest, paying dividends ultimately requires an increase in Bitcoin's price. It emphasized that such preferred stocks are risky assets equivalent to a CCC rating, with an implied annual volatility of 50%. For comparison, Grayscale explained that a Bitcoin covered call strategy at the same price has an expected return of around 33% and would be more profitable if Bitcoin's price moves sideways or rises. The firm concluded that for investors seeking pure Bitcoin exposure in brokerage or retirement accounts, the prevailing view is that a spot Exchange-Traded Product (ETP) remains the best choice.