Michael Saylor, co-founder of Strategy, has defended the company’s Bitcoin-backed capital approach following a significant decline in its STRC preferred stock, which has dipped below its $100 par value, prompting renewed criticism from market observers.
Summary
- Saylor has supported Strategy’s Bitcoin strategy despite the STRC falling below its $100 par value.
- Peter Schiff has expressed concerns about potential fraud while questioning Strategy’s promotion of STRC shares.
- Jeff Dorman proposed that selling up to $4 billion in Bitcoin could ease pressure on the capital structure.
In a post on June 20 on X, Saylor highlighted that Strategy’s Bitcoin and cash reserves currently exceed its outstanding debt by approximately $48 billion. He noted that since 2022, the company has raised over $60 billion in additional capital to acquire more Bitcoin.
To illustrate a comparison with the current situation, Saylor referred to Strategy’s position during the 2022 crypto bear market, when the company held about 130,000 Bitcoin valued at approximately $2.6 billion while Bitcoin traded near $20,000.
After Bitcoin fell below $16,000, Strategy’s debt briefly exceeded the combined value of its Bitcoin and cash reserves by roughly $300 million. During that time, MSTR shares dropped from approximately $24 to about $13 on a split-adjusted basis.
“We stayed focused, reinforced the company, and executed our strategy. Since then, Strategy has secured over $60 billion in additional capital and invested it in Bitcoin, acquiring more than 716,000 BTC,” Saylor remarked.
These comments arrive as investors are considering the ramifications of STRC’s recent decline and questioning the viability of the company’s financing model.
Critic of Bitcoin, Peter Schiff, has intensified these concerns by suggesting that investors might explore legal action against Strategy and Saylor. Schiff also claimed that Saylor may have breached SEC marketing regulations in his promotion of the preferred stock offering.
Some investors see Bitcoin sales as the most straightforward solution
The drop in STRC has also given rise to alternative suggestions from market analysts.
Previously noted by crypto.news, Jeff Dorman, Chief Investment Officer at Arca, suggested that the company may ultimately need to offload between $3 billion and $4 billion worth of Bitcoin to alleviate pressure on its capital structure and support STRC shareholders.
While Dorman assigned a 25% probability to this scenario, his preferred outcome—given a 70% likelihood—involves Strategy continuing to sell small portions of MSTR stock. In this situation, Bitcoin holdings would largely remain intact, though common shareholders could still face further downside.
Supporters counter claims of comparison to Terra
Despite growing criticism, several Bitcoin advocates have openly supported Saylor and Strategy.
David Gokhshtein, a contributor for Fox and Sky News, asserted on X that Bitcoin’s current market valuation cannot be blamed on one individual. He criticized efforts to hold Saylor accountable for broader market trends and dismissed comparisons between Strategy and the fallen Terra ecosystem.
These comparisons intensified following crypto analyst Ali Martinez’s observations regarding similarities between STRC and the structure of Terra’s LUNA token. In response, Bitcoin supporter Samson Mow described STRC as a “brilliant instrument,” arguing that no structural flaw exists unless investors doubt Bitcoin’s long-term growth.
Concerns regarding liquidity have also emerged. Market maker QCP previously estimated that Strategy’s available resources could cover preferred dividend obligations for about seven and a half months.
QCP cautioned that if current financing avenues become less favorable, alternative funding options may eventually be required, with Bitcoin sales remaining one possible route.
