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MicroStrategy (MSTR) is at the center of a heated controversy, with Peter Schiff calling the company’s business model a fraud. Schiff warns that MSTR’s reliance on high-yield blue-chip stocks and income funds is unsustainable, predicting that the company may eventually fail.
Despite this, analysts and traders argue that the MSTR strategy can still offer unique and differentiated exposure to Bitcoin, fueling a split in market sentiment.
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Schiff attacks MSTR as a “scam” but analysts argue that it can surpass Bitcoin
According to Schiff, MicroStrategy’s blue-chip equity funding model can lead to a “death spiral,” as one gold enthusiast describes the model. private Fraudulent company.
Schiff’s sentiment stems from concerns about MicroStrategy’s business model, which relies on income funds to buy its “high-yielding” preferred stocks. According to Schiff, these declared returns can never be paid.
“Once the fund managers realize this, they will sell the preferred stock and MSTR will not be able to issue any more, igniting a death spiral,” Schiff said. He indicated.
MicroStrategy stopped issuing new convertible notes in February 2025, and instead pursued the offering of preferred shares (Series STR), which began in September 2025.
These preferred shares carry significantly higher interest rates, suggesting that investors are now demanding stronger incentives amid tighter market conditions.
Schiff underscores the structural risks inherent in the company’s approach. His point is that even if Bitcoin grows, MSTR’s debt-based model could fail, putting the company at risk of bankruptcy.
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Crypto trader Kela XPT indicated the possibility of … Black swan scenario. According to analysts, a 50-60% decrease in BTC could lead to tightening of lending rules, foreclosure calls, and forced sales of BTC, especially if liquidity dries up.
Kela compared XBT MicroStrategy to a paper tower built on Bitcoin, noting that Leverage increases gains and lossesA major market correction could put pressure on the company’s finances.
Analysts defend MSTR’s leverage model
Despite the warnings, some investors see MSTR as a bet on Bitcoin that outperforms traditional exchange-traded funds (ETFs). Adam Livingstone insisted that MSTR combines 1:1 exposure to Bitcoin with annual increases in BTC per share, a form of concavity that condenses returns without the risk of liquidation.
The most obvious hypothetical scenario of ten: $100,000 in IBIT could increase to $1.38 million, while the same investment in MSTR could reach $3.56 million. This translates into an advantage of 158%.
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Another popular user on This is just the opposite Buy Bitcoin.
He stressed that the MSTR 2025 preferred stock offerings represent a shift toward more sustainable financing, balancing execution risk with long-term potential.
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Market dynamics and funding momentum
MicroStrategy has moved forward gradually Of convertible bonds to higher interest preferred shares (STR Series) from September 2025, reflecting cautious investor sentiment amid tight markets.
As of this writing, the company holds 641,692 BTC at an average cost of $74,085 per coin, and retains about 26% unrealized earnings even if BTC declines sharply.
Analysts note that MSTR operates as a truly leveraged Bitcoin exchange fund, with the value of the shares highly dependent on Bitcoin prices and successful financing.
Despite temporary setbacks, e.g It loses Bitcoin’s MSTR advantage Last week, investors highlighted the company’s strategic positioning in digital credit markets as a long-term value driver. While the MSTR model is risky, it provides double exposure:
- Bitcoin prices are increasing, and
- Gradual increase of BTC per share.
MicroStrategy’s hybrid strategy must adapt to volatility, continue to maintain funding momentum, and overcome Bitcoin exposure to allay skeptical concerns. However, the company remains a prominent example in the corporate strategy towards Bitcoin, reaching a balance between leveraged opportunities and systemic risk.
