MSTR: Schiff Predicts Strategy's Bitcoin Yield Will Turn Negative

u.today 1 h

Bitcoin

In a recent social media post, Bitcoin nemesis Peter Schiff predicted that Strategy's Bitcoin yield will end up being negative this year.

This comes after the company's stock surged by as much as 7% earlier this morning due to the company strengthening its dollar reserve.

"Extra corporate risk"

Strategy previously claimed that it could raise capital, purchase more Bitcoin, and increase the amount of $BTC backing each share (Bitcoin yield). Shareholders were promised that they could increase their $BTC exposure without actually buying more of the flagship cryptocurrency.

However, as aptly noted by Schiff, the very mechanism that made Strategy attractive in the first place now shows signs of weakening.

Strategy's Bitcoin yield has collapsed from 13.3% to just 4.5% within just two months.

"If MSTR's advantage over Bitcoin disappears, why take the extra corporate risk? Just buy Bitcoin directly," Schiff stated.

Strategy's growing USD reserve

Strategy owns a whopping 843,775 $BTC, but its obligations are mostly dollar obligations. Hence, the company has created a dollar reserve, which acts as the company's liquidity buffer.

Earlier today, Saylor announced that the company had increased the dollar reserve by $525 million to an impressive $3.75 billion. At the same time, it has not announced any new $BTC purchases.

Some MSTR bulls view the company's decision to increase its USD reserve as a sign of financial strength. The cash reserve can now cover dividends on preferred shares and other obligations for more than two years. The idea is that dollars provide liquidity for payments while $BTC remains a long-term conviction bet.

The company has also repurchased $25 million worth of its embattled STRC preferred stock, which is currently sitting well below the underlying claim value of the $100 level.

"What they've built with preferred equity is, in my view, the most significant innovation in Bitcoin corporate finance to date," Andrew Webley, chief executive officer at The Smarter Web Company, recently stated on X.