Economist Peter Schiff has expressed concerns over Strategy’s financial health, citing risks of bankruptcy due to its leveraged Bitcoin strategy.
By Bhushan Akolkar
Edited by Julia Sakovich
Updated
2 mins read
Popular economist Peter Schiff has raised concerns over Michael Saylor’s Strategy, previously known as MicroStrategy, slipping into bankruptcy. His concerns come as the MSTR stock price witnessed sharp corrections after dropping 5.74% on Monday, and another 4.7% in pre-market trading on Tuesday. After a strong rally last year in 2024, the stock faced major selling pressure and is trading 6% down year-to-date.
Economist and Bitcoin critic Peter Schiff has weighed in on Strategy’s Bitcoin-centric strategy. He also forecasted potential challenges for the firm if the MSTR stock starts trading at a discount to the value of its Bitcoin holdings.
In this scenario, Schiff predicted that Michael Saylor’s firm could theoretically sell Bitcoin BTC $84 235 24h volatility: 3.6% Market cap: $1.67 T Vol. 24h: $28.92 B and use the proceeds to buy back shares, thus closing the discount. However, he argues that such a move could trigger a significant decline in Bitcoin’s price and, consequently, in MicroStrategy’s stock value.
“The discount will keep widening until bankruptcy forces the sale,” Schiff claimed, pointing to long-term risks tied to MicroStrategy’s heavily leveraged Bitcoin bet.
Schiff’s criticism comes a day after Strategy (MSTR) expanded its total Bitcoin holdings to 499,096 BTC with a fresh investment of $1.99 billion. The acquisition was funded through proceeds from a $2 billion convertible notes offering, with an additional $300 million option available until February 27.
Strategy (MSTR) has experienced a significant downturn in its stock price, plunging 48% since reaching its all-time high on November 21. The decline has wiped out approximately $70 billion from the company’s market capitalization, signaling mounting challenges for the firm’s aggressive Bitcoin acquisition strategy.
Source: Barchart
Furthermore, at the current price point, market analysts have advised caution as MSTR stock is undergoing a descending triangle breakdown, signaling bearish momentum. The price is now nearing its first test of the 200-day Simple Moving Average (SMA) since September. This critical support level will likely serve as a key indicator of the stock’s near-term trajectory amid broader market pressures.
Source: TrendSpider
Apart from Strategy, several corporate players have started adopting Michael Saylor’s playbook of putting BTC on the balance sheet. Firms including Metaplanet, Semler Scientific, and others have joined the bandwagon over the past year. This has led to a strong appreciation in their respective stock prices.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
