As Strategy Inc. (NASDAQ:MSTR) continues to sell Bitcoin (CRYPTO: BTC), the sustainability of its Bitcoin accumulation strategy is under increased scrutiny by critics.
Losses Will Be Greater
Longtime Bitcoin critic Peter Schiff slammed Strategy after the company sold 3,588 Bitcoin over the past two weeks at an average price of $60,196.73.
Based on Strategy’s average acquisition cost, the sale represents an estimated realized loss of roughly $15,000 per Bitcoin, or about $54 million, according to Schiff’s calculations.
Responding to a post by crypto commentator Jeremy asking whether he would turn bullish on Bitcoin once Strategy Executive Chairman Michael Saylor completely exits his position, Schiff replied: “Maybe for a bounce. It also depends on how low the price is when he’s finally flushed out.”
In another post on X, Schiff argued that Strategy has fundamentally changed its operating model.
Schiff wrote, “Instead of selling common and preferred stock and issuing debt to buy Bitcoin, the new strategy is to sell Bitcoin to pay interest and dividends, pay off debt, buy back shares it sold, and hope that Bitcoin’s price goes way up.”
Why It Matters
At the end of June, Schiff took to Strategy’s buying record as proof for Bitcoin’s support being weaker than it looks. He highlighted that despite the company spending $17 billion for BTC purchases, prices dropped 53% during the same period.
“If Bitcoin was that weak with Strategy buying $17 billion, imagine how much weaker it will be with Strategy selling $3.25 billion, plus more to maintain its minimum U.S. dollar reserve,” Schiff wrote.
Michael Saylor had affirmed that Strategy expects to remain disciplined in issuing new common shares, particularly when the company’s stock trades at or near 1x mNAV.
He highlighted the company’s liquidity position, saying Strategy has significant capacity to support preferred dividend payments.
Image: Shutterstock
Recent Comments