Peter Schiff warns Saylor may sell more Bitcoin, MSTR shares to defend STRC

Peter Schiff, a prominent gold advocate and persistent critic of Bitcoin, has expressed concerns that Michael Saylor, the executive chairman of Strategy, could be compelled to sell additional Bitcoin (BTC) and shares of MSTR in order to support the firm’s STRC preferred stock price.

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Schiff’s Criticism of Strategy’s Approach

Schiff stated on X that despite recent efforts, STRC remains below the $95 mark. “Despite selling Bitcoin and $MSTR to raise cash and buy back $STRC, STRC is still trading below $95,” he wrote, emphasizing the company’s ongoing struggle to bring the preferred stock price closer to its original $100 target.

He argued that Saylor will be forced to sell more Bitcoin and discounted MSTR common shares in an attempt to push STRC back to $100, which, according to Schiff, is negative for holders of both Bitcoin and MSTR shares.

He claims that Saylor is going to have to sell a lot more Bitcoin and discounted common stock to raise the price of STRC to $100. That’s bad news for Bitcoin and MSTR. Sell both!

Schiff has intensified his criticism of Strategy’s capital management in recent weeks, alleging the company’s attempts to boost STRC have weakened shareholder value in its common stock and reduced direct Bitcoin exposure.

Recent Sales and Share Buybacks

Last week, Strategy sold around 1,690 BTC, amounting to roughly $108.6 million. The firm used the proceeds to repurchase about 1.15 million STRC shares, aiming to bolster STRC’s price.

Additionally, the company sold roughly $653 million worth of MSTR common stock to reinforce its dollar reserves. Schiff has argued that these moves come at the cost of current shareholders, creating a cycle where Bitcoin and common shares are sold to defend STRC.

On August 10, Schiff described Strategy’s latest sale as evidence of growing challenges. He commented that Saylor appears to have relinquished the concept of “digital credit,” with MSTR now regularly selling Bitcoin for cash due to decreased lender confidence in Bitcoin as collateral.

Strategy is a technology and business intelligence company known for holding significant Bitcoin reserves. The firm has positioned STRC, a preferred stock product, as a critical pillar of its capital and liquidity management model.

Mini dictionary: STRC — Strategy’s Series C preferred stock, used by the company as part of its corporate financing approach to manage capital and provide liquidity. Preferred stock typically has fewer voting rights but is prioritized for dividends before common shareholders.

Strategy’s Perspective: “Digital Credit” and STRC Liquidity

Michael Saylor has consistently presented STRC as central to Strategy’s so-called “digital credit” vision. He has emphasized the company’s goal of enhancing liquidity and stability in the security, and stated during a July earnings call that they remain “laser focused on Stretch,” the internal name for STRC.

Saylor noted that Strategy is seeking investors open to trading STRC at varying price levels, particularly those willing to buy below $99 to help stabilize and elevate the stock price back toward $100.

During a July earnings call, Saylor explained that the company wants investors willing to trade the security at different price levels, including those prepared to buy at prices below $99 and support a return to the $100 target.

In June, Saylor remarked that having the flexibility to sell Bitcoin assets is essential for Strategy to continue issuing digital credit via STRC.

Ongoing Debate Over Corporate Strategy

Despite Saylor’s reassurances, Schiff remains unconvinced. He views the frequent asset sales as a sign of mounting financial pressure and questions the sustainability of the “digital credit” strategy if Bitcoin sales continue.

Earlier in August, Schiff described STRC as “an albatross around MSTR’s neck,” contending that its presence may force Strategy into recurrent Bitcoin sales and ongoing dilution of its common stock base.

The situation underlines a significant divide between Strategy’s approach to capital management and the concerns raised by external critics such as Schiff.