Peter Schiff criticizes Saylor's Bitcoin strategy as "a complete fraud"

Peter Schiff has returned to social media, continuing to criticize Michael Saylor's Bitcoin strategy. This time, the renowned expert called it a "total scam," which he claims will lead to bankruptcy. This action comes after Strategy announced that they currently hold up to 582,000 BTC, after purchasing an additional $110 million worth of Bitcoin.

The current Bitcoin reserve of Strategy is estimated to be worth over $62.6 billion, with an average cost basis just above $70,000. This means the company is experiencing an unrealized profit of up to 53.65% — at least at this moment.

Schiff, who has always been skeptical about Bitcoin, asserts that mathematics does not lie: if the price of BTC falls below the cost price of the Strategy, losses can escalate quickly. Furthermore, with a large portion of the Bitcoin holdings purchased with borrowed capital, any price drop could quickly lead to a "death spiral."

Is Strategy's Bitcoin bet a ticking time bomb?

According to Schiff, the issue is not just about the price of Bitcoin. It all depends on how this strategy is set up. With the current market capitalization of around $108.1 billion — and more than half of that directly tied to Bitcoin holdings — a drop in the price of BTC or MSTR stock could put pressure on the company's balance sheet.

If the collateral for the debt of Strategy weakens enough, the company may face forced liquidation — something that Saylor has repeatedly committed to avoiding.

For Saylor, Bitcoin is still "forever," but the more you buy, the higher the cost basis and the narrower the margin of error. According to Schiff, such a strategy can only work in a bull market that never ends, and when applied to an unpredictable asset like Bitcoin, it is a fundamental mistake.

Meanwhile, Saylor remains steadfast in his belief and confidence in Bitcoin. However, for critics like Schiff, the company's steadfastness looks more like a leveraged bet than a visionary strategy.

Mr. Teacher