Longtime crypto skeptic Peter Schiff over the weekend claimed Strategy (NASDAQ:MSTR) can no longer fund its Bitcoin (CRYPTO: BTC) purchases.
Why Schiff Says Strategy’s Funding Is Stuck
Schiff said in a podcast update that Strategy’s Stretch preferred stock, STRC (NASDAQ:STRC), has climbed back to about $99.40, close to its $100 par value.
He credited weekly buybacks and Bitcoin’s rebound from around $60,000 to above $80,000, which he said helped “instill some confidence or some short covering.”
In his view, the recovery does not solve the core problem. He argued Strategy cannot sell more STRC, so it cannot raise the money to keep buying Bitcoin at scale.
A bigger cash reserve lets the company pay STRC dividends for longer, Schiff conceded, but “they don’t have that machine to buy more Bitcoin.”
He also warned that Bitcoin could roll over if tech stocks pull back, which would shake confidence in the financing structure.
What Strategy Actually Did Monday
According to a Monday 8-K filing, Strategy bought 334 Bitcoin between Oct. 1 and Oct. 4 at an average of $85,839 per coin. Here is how it paid and what else it spent:
- Bitcoin purchase: $28.7 million
- Funding: $15.7 million from selling 92,894 MSTR shares, plus $13 million in cash
- STRC buybacks: $176.3 million to repurchase 1.77 million shares between Sept. 28 and Oct. 4
The filing gives both sides something to cite. Strategy did buy, but the 334 coins are a fraction of the 1,665 it bought the week before, as Benzinga reported, and it spent more than six times as much retiring STRC as it did on Bitcoin.
Even so, the company ended the period with a $4.88 billion USD reserve and $833.4 million in additional cash, the kind of cushion Schiff said keeps the dividends covered.
Key levels for MSTR:
- $170: resistance above
- $156: first support
- $148: 20-day EMA, deeper support
Photo via Shutterstock
Login to comment