The strategy’s leveraged bitcoin approach came under fresh scrutiny Sunday as critics questioned whether Michael Saylor’s firm can withstand prolonged market stress.
Among the most vocal was longtime Bitcoin opponent Peter Schiff, who is chairman of Schiff Gold and serves as global chief strategist at Euro Pacific Asset Management.
In a series of posts on X, Schiff argued that Strategy’s model depends on income-focused buyers of its “high-yield” preferred stocks, said the posted returns “will never actually be paid” and warned that the structure could enter a “death spiral” if demand weakens.
He also said he believes the company will “eventually go bankrupt” and challenged Saylor to debate him at Binance Blockchain Week in Dubai in early December. His invitations appeared designed, at least in part, to draw Saylor into a public confrontation over the firm’s approach to holding bitcoin.
Jeff Dorman, Chief Investment Officer at Digital Asset Management firm Arca, offered a markedly different view. In his own post on X, Dorman criticized what he called “stupid, inaccurate recordings” about Strategy’s risk profile, saying concerns that the company could be forced to sell bitcoin overlook the fundamentals of its balance sheet. Dorman did not directly refer to Schiff, but his comments addressed the broader claims circulating among skeptics who argue that Strategy could come under severe pressure if bitcoin prices fall sharply.
Dorman said Saylor’s 42% ownership makes an activist takeover “almost impossible” and noted that none of Strategy’s debt includes agreements that would force the company to liquidate bitcoin. He added that the company’s legacy software business still generates positive cash flows that help support interest expenses, which he described as manageable. Borrowers also rarely default solely because a maturity date is approaching, he said, arguing that lenders often agree to extend terms in what he called a familiar “extend and pretend” dynamic.
Strategy’s stock has been under pressure despite its expanding bitcoin position. Class A shares closed at $199.74 on Friday, down 4.22% on the day and 33.42% year to date. In the same period, bitcoin has given a return of around 0.4 per cent.
According to StrategyTracker, which tracks corporate bitcoin government bonds, Strategy’s diluted market capitalization multiple is close to 1.06x, meaning the shares trade only modestly above a conservative estimate of their bitcoin-backed value after accounting for all potential future equity from options, warrants and convertible debt.
Dorman added that Strategy is no longer a meaningful marginal buyer of bitcoin relative to ETF inflows, but said this does not make the company a systemic risk. “If you follow anyone saying MSTR is a risk to BTC, tell them to call me,” he wrote.
Bitcoin traded around $94,293 at 23:00 UTC, down 1.2% over the past 24 hours.
