Schiff Warns Strategy Investors

Prominent analyst and cryptocurrency critic Peter Schiff predicts that Strategy’s Bitcoin Yield will fall below zero later this year.

Bitcoin Yield measures how the amount of BTC held per Strategy share changes over time. The higher the figure, the greater the shareholders’ exposure to Bitcoin without having to purchase the cryptocurrency directly.

Over the past two months, Strategy’s Bitcoin Yield has declined from 13.3% to 4.5%. According to Schiff, the mechanism that previously attracted investors to the company is clearly losing its effectiveness.

Strategy had previously argued that it could raise capital, acquire more Bitcoin and increase the amount of BTC represented by each share.

“If MSTR’s advantage over Bitcoin disappears, why take on the additional company-specific risk? It would be better to buy Bitcoin directly,” Schiff wrote.

Strategy shares rose by as much as 7% in morning trading. The market responded positively to the company’s decision to increase its US dollar reserve. Michael Saylor announced that the reserve had grown by $525 million to $3.75 billion. At the same time, the company did not report any new Bitcoin purchases.

Strategy holds 843,775 BTC, but most of its obligations are settled in US dollars. Its cash reserve therefore serves as a liquidity buffer. The current amount is sufficient to cover more than two years of preferred-share dividend payments and other obligations.

The company also repurchased $25 million worth of STRC preferred shares. They continue to trade well below their $100 stated value.

Andrew Webley, CEO of The Smarter Web Company, said on X that the preferred-share funding model is the most important innovation to date in Bitcoin-related corporate finance.