Peter Schiff has stated that Strategy’s business model, which is based on investing in BTC, is a “fraud”. He invited the company’s founder, Michael Saylor, to a debate.
Peter Schiff attacks Bitcoin again
Schiff is one of the biggest critics of cryptocurrencies and bitcoin. Reason? He has been investing in precious metals for years, so the development of “digital gold” is not in his interest.
Now Schiff has invited Michael Saylor, founder of Strategy, to a debate during Binance Blockchain Week, which will be held in Dubai. In a separate post on X, he wrote that Strategy’s suggested “rates of return will never actually be paid.”
Once fund managers understand this, they will divest themselves of these preferred shares
– he warned.
Once this happens, Strategy will no longer be able to issue any more debt, triggering a “death spiral.”
His criticism comes at a time when the cryptocurrency market is going through a crisis, bitcoin itself has dropped below $100,000, and today it costs around $95,500.
All this affects the Strategy stock market. The mNAV ratio, i.e. the cash premium reflected in a company’s share price over its underlying BTC assets, recently dropped below 1. At the time of writing, it has rebounded to 1.21, which must be considered still a relatively low level. Investors believe that a healthy mNAV for a treasury company is 2 and above.
Strategy stock valuations alone have dropped more than 50% since July and are trading at around $200 at the time of writing.
At that time, the gold rate successfully defended the level of USD 4,000.
Problem Strategy
Saylor’s company strategy has seemed to be a hit in recent years. However, some analysts claim that the company creates the value of its shares only by purchasing BTC, and not necessarily its products.
Everything worked for years because there were no ETFs on the market, so Strategy gave investors a chance to enter the BTC market indirectly – without having to set up their own portfolio. Now the popularity of shares may be declining because it is enough to buy units of spot ETFs. Hence, Strategy’s fate may actually turn out to be uninteresting. In this respect, Shiff is exceptionally right.
