Michael Saylor, co-founder of the strategy, defended the company’s bitcoin-backed equity strategy after its preferred stock STRC fell well below its $100 par value and sparked fresh criticism from market participants.
summary
- Michael Saylor defended Strategy’s Bitcoin strategy as STRC fell below its $100 face value.
- Peter Schiff raised fraud allegations while questioning Strategy’s promotion of STRC stock.
- Jeff Dorman suggested that selling up to $4 billion worth of Bitcoin could ease pressure on the capital structure.
According to a June 20 post by Saylor, Strategy’s bitcoin and cash reserves currently exceed its outstanding debt by about $48 billion. He noted that the company has raised more than $60 billion in additional capital since 2022 and used this money to acquire Bitcoin.
To illustrate the contrast with today, Saylor pointed to where the strategy stood during the cryptocurrency bear market of 2022. At the time, the company held about 130,000 bitcoins worth roughly $2.6 billion while bitcoin was trading near $20,000.
After the cryptocurrency fell below $16,000, Strategy’s debts temporarily exceeded the combined value of bitcoin and cash reserves by about $300 million. During the same period, MSTR stock fell from around $24 to the $13 range on a split-adjusted basis.
“We maintained our focus, strengthened the company, and executed our strategy. Since then, the strategy has raised over $60 billion in additional capital and invested it in Bitcoin, adding over 716,000 BTC,” Saylor said.
The comments came as investors debated the implications of STRC’s recent decline and questioned whether the company’s financing model was still sustainable.
Bitcoin critic Peter Schiff has heightened these concerns by suggesting that investors can Follow up on legal procedures Against Strategy and Saylor. Schiff also argued that Saylor may have violated the SEC’s marketing rules by the way he promoted the preferred stock offering.
Some investors see Bitcoin sales as the simpler solution
Recent pressure on the STRC has also led to alternative proposals from market watchers.
Ditto I mentioned By crypto.news Jeff Dorman, chief investment officer at Arca, suggested that the company may eventually need to sell between $3 billion and $4 billion of bitcoin to relieve pressure on its capital structure and support STRC holders.
While Dorman assigned a 25% probability to this outcome, he said his base case scenario, with a 70% probability, involves the strategy continuing to sell small amounts of MSTR shares. Under this scenario, Bitcoin holdings would remain largely intact, although ordinary shareholders may face further downside.
Supporters reject comparisons to Terra
While the criticism intensified, many Bitcoin advocates publicly defended Saylor and the strategy.
Fox and Sky News contributor David Gochstein Argue On X the current market value of Bitcoin cannot be attributed to a single individual. He criticized efforts to blame Saylor for broader market movements and dismissed comparisons between the strategy and the collapsed Terra ecosystem.
These comparisons gained traction after cryptocurrency analyst Ali Martinez suggested Similarity between STRC and Terra’s LUNA token structure. In response to the discussion, Bitcoin advocate Samson Mo called STRC a “fantastic tool” and stated that he sees no structural flaw in the security unless investors believe Bitcoin will fail to rise in the long term.
Separate concerns about liquidity also emerged. Formerly QCP Market Maker estimated The strategy’s available resources can cover the preferred dividend obligations for approximately seven and a half months.
QCP added that if current financing channels become less attractive, alternative financing options may eventually be needed, with bitcoin sales remaining one possible path.
