While Strategy (MSTR) shares soared to $137.4 on the wave of a confident bitcoin recovery, the protracted conflict between two giants of financial thought — Peter Schiff and Michael Saylor — has entered a new phase. Schiff, known for his uncompromising stance toward the first cryptocurrency, once again spoke of an imminent catastrophe for the company, but the market, it seems, is still ignoring his warnings.
Schiff's bearish forecast: the mechanics of the "death spiral"
For several months, Schiff has been consistently attacking Strategy's business model, arguing that dividend obligations on preferred shares make the company extremely vulnerable during a BTC correction. This time he went further, explaining MSTR's recent rise not by investors' faith in fundamentals, but solely by a technical factor — the forced covering of short positions. In his logic, traders who had bet on a decline were forced to buy shares back, which triggered the rally, rather than organic capital inflow.
Schiff also reminded of a long-standing issue: part of Strategy's dividends is financed through the issuance of new shares, which dilutes the stake of existing shareholders. In the event of a bitcoin decline, this scheme, in his view, turns into a vicious cycle — a "death spiral," where a drop in the asset's price forces the company to issue even more securities, worsening the situation.
Saylor responds: irony and confidence
Michael Saylor, executive chairman of Strategy, did not engage in a lengthy polemic but responded with a short yet expressive gesture — an AI-generated video of himself riding a bull somewhere in Spain. This image, posted on social network X, is a direct mockery of bearish sentiment and a demonstration of unwavering faith in bitcoin's growth. Earlier, experts had already linked MSTR's recent jump to reduced panic sentiment and the fading of talk about forced BTC sales to cover obligations.
Market analysis: who is right?
The polarity of assessments underscores the fundamental uncertainty surrounding Strategy's model. On one hand, bitcoin's rise above $80,000 once again makes the strategy of accumulating the first cryptocurrency highly profitable. On the other, Schiff's warnings about the fragility of the balance sheet are not without merit, especially given long-term dividend obligations.
My view: The market is currently in a phase where positive news about BTC overshadows structural risks. However, investors should remember: as long as bitcoin's price rises, Strategy's model works flawlessly, but any serious trend reversal will instantly activate the mechanisms Schiff warns about. The question is not whether the "death spiral" will trigger, but whether the bull market has enough strength to ensure it never starts spinning.