- Peter Schiff called the business model of the largest Bitcoin treasury company a “fraud” and challenged founder Michael Saylor to a debate for December.
- Schiff criticized MicroStrategy’s reliance on income funds buying preferred shares with yields he claims will never be paid, risking a debt “death spiral.”li>
- Bitcoin recently dropped below $99,000, down more than 20% from an October peak, while Gold traded above $4,000 per ounce.
- MicroStrategy’s stock valuation multiple on net asset value (mNAV) remains low around 1.21, compared to a healthy benchmark of 2 or higher.
Peter Schiff, a well-known gold advocate and critic of Bitcoin, labeled the business model behind the world’s largest Bitcoin treasury company, MicroStrategy, as a “fraud.” On December’s Binance Blockchain Week in Dubai, United Arab Emirates, Schiff challenged MicroStrategy founder Michael Saylor to a public debate, according to his post on X.
Schiff argued that MicroStrategy’s business depends on income-oriented funds purchasing its “high-yield” preferred shares. He stated, “MSTR’s business model relies on income-oriented funds buying its ‘high-yield’ preferred shares. But those published yields will never actually be paid. Once fund managers realize this, they’ll dump the preferreds.” He warned that this could trigger a “death spiral” when the company can no longer issue more debt.
Bitcoin has recently fallen below $99,000, which is more than a 20% decline from its all-time high exceeding $125,000 seen in October. This high preceded a flash crash on October 10 that erased tens of billions of dollars from the cryptocurrency market. During the same period, gold prices reclaimed support above $4,000 per ounce, trading around $4,085 at present. Gold hit a record high near $4,380 per ounce in October, reaching a market cap of over $30 trillion.
MicroStrategy’s multiple on net asset value (mNAV), reflecting its stock price premium over its underlying Bitcoin holdings, fell below 1 in November but has rebounded to approximately 1.21, according to the company’s data. Despite the recovery, this figure remains below a healthy mNAV level, generally considered 2 or higher by investors. The company’s stock price has dropped over 50% since July and currently trades near $199 per share.
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