Gold investor Peter Schiff called Strategy’s business model, which hatched the biggest Bitcoin (BTC) treasury company in the world, a “fraud” on Sunday and challenged the company’s founder, Michael Saylor, to a debate.
Schiff, who is one of crypto and Bitcoin’s harshest critics and a staunch gold advocate, challenged Saylor to a debate at Binance Blockchain Week in Dubai, United Arab Emirates (UAE), in December. In a separate X post, Schiff argued:
“MSTR’s business model relies on income-oriented funds buying its ‘high-yield’ preferred shares. But those published yields will never actually be paid. Once fund managers realize this, they’ll dump the preferreds.”
Source: Peter Schiff
Once this happens, Strategy will no longer be able to issue more debt, sparking a “death spiral,” Schiff continued.
Schiff’s challenge and negative outlook on Bitcoin and the broader crypto industry came amid Bitcoin falling below the $99,000 level and a general downturn in the crypto treasury sector, as gold reclaimed price levels above $4,000.
Bitcoin and Strategy suffer while gold remains above key $4,000 support
The price of BTC is down over 20% from its all-time high above $125,000 reached in October, days before the flash crash on October 10 that wiped away tens of billions in value from the crypto market.
The price action of gold, shown as a blue line, versus Bitcoin, which is displayed as traditional price candles. Source: TradingView
Strategy’s mNAV, its multiple on net asset value, or the monetary premium reflected in the company’s stock price over its underlying BTC holdings, dipped below 1 in November but has rebounded to 1.21 at the time of this writing, according to the company.
Despite the modest rebound, an mNAV of 1.21 is still relatively low; investors consider a healthy mNAV for a treasury company to be 2 or higher. Strategy’s stock is down by over 50% since July and is trading at about $199 at the time of this writing.
Meanwhile, gold has successfully defended the $4,000 per ounce level despite a brief drop below this psychological support level and is trading at about $4,085 per ounce at the time of this writing.
Gold reached an all-time high of about $4,380 per ounce in October, swelling to a market capitalization of over $30 trillion before retracting to current prices.
