Peter Schiff: "Strategy's Bitcoin Buying Strategy, the End is a Death Spiral"

▲ Michael Saylor, Bitcoin (BTC)/AI generated image

Peter Schiff, Chairman of Euro Pacific Capital, warned that Strategy's Bitcoin buying strategy would lead to a death spiral. He pointed out that the structural flaw of making corporate value excessively dependent on Bitcoin could become a fatal poison during a market downturn.

According to U.Today on April 26 (local time), Chairman Schiff strongly criticized Strategy's actions. He argued that Strategy's method of issuing debt or additional shares to buy Bitcoin (BTC) is only effective in a bull market. This is because during a price decline, falling collateral value and a sharp drop in stock prices combine to intensify debt repayment pressure.

Schiff raised concerns that Strategy is absorbing market liquidity and propping up prices. If the Bitcoin price falls below a certain level, Strategy will be forced to dump its holdings on the market to repay its debt. He expressed concern, stating, "If a large amount of Bitcoin is dumped all at once, the entire virtual asset ecosystem could collapse."

Strategy currently holds approximately 214,400 BTC. Chairman Michael Saylor has not wavered in his intention to make additional purchases, but market opinions are divided. As Bitcoin hovers around the $77,000 mark, the risks of investment strategies utilizing leverage are being highlighted. Investors are keeping a close watch on the possibility of a chain liquidation if a downward correction begins.

Schiff characterized Bitcoin as a mirage with no real value and likened Strategy's approach to gambling. He criticized, "If the Bitcoin bubble bursts, Strategy will be recorded as one of the largest corporate bankruptcies in history." This reiterates his philosophy that only physical assets like gold are true safe havens.

As Bitcoin market volatility expands, a reevaluation of aggressive corporate investment approaches has begun. Strategy's financial structure has now become an inseparable community of fate with the Bitcoin price. Market participants are analyzing the impact of changes in interest rate policy and geopolitical risks in the second half of the year on Strategy's debt management capabilities.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*