Gold investor Peter Schiff on Sunday called the business model of Strategy, which created the world’s largest Bitcoin (BTC) treasury company, a “fraud” and challenged the company’s founder, Michael Saylor, to a debate.
Schiff, one of the harshest critics of cryptocurrencies and Bitcoin and an ardent defender of gold, challenged Saylor to a debate at Binance Blockchain Week in Dubai, United Arab Emirates (UAE) in December. In another X post, Schiff claimed:
“MSTR’s business model relies on income-focused funds buying the company’s ‘high-yield’ preferred stock. However, the advertised yield is never actually paid. Once fund managers realize this, they will exit the preferred stock.”
sauce: peter schiff
If this happens, Schiff continued, Strategy will be unable to issue any more bonds, setting off a “death spiral.”
Mr. Schiff’s challenge and negative outlook for Bitcoin and the broader crypto industry comes as the overall weakness in the crypto treasury sector continues, with Bitcoin falling below the $99,000 level and gold recovering to price levels above $4,000.
Gold remains above key support at $4,000 while Bitcoin and Strategies struggle
BTC’s price has fallen more than 20% from its all-time high of over $125,000 in October, just days before the October 10 flash crash that wiped tens of billions of dollars of value from the cryptocurrency market.
Gold price movements shown by the blue line and Bitcoin price movements shown by traditional price candlesticks. sauce: TradingView
According to the company, Strategy’s mNAV, multiple to net asset value, or monetary premium over underlying BTC holdings reflected in the company’s stock price, fell below 1 in November, but has recovered to 1.21 at the time of writing.
Despite the modest rebound, mNAV 1.21 is still relatively low. Investors believe that a healthy mNAV for a financial company is 2 or higher. Strategy stock has fallen more than 50% since July, trading at around $199 at the time of writing.
Gold, on the other hand, despite briefly falling below this psychological support level, has managed to defend the $4,000 per ounce level and is trading at around $4,085 per ounce at the time of writing.
Gold reached an all-time high of about $4,380 an ounce in October, and its market capitalization ballooned to more than $30 trillion, before returning to its current price.
