Gold investor Peter Schiff called Strategy’s business model, which spawned the world’s largest Bitcoin (BTC) treasury company, a “fraud” and challenged the company’s founder, Michael Saylor, to a debate on Sunday.
Schiff, who is one of the harshest critics of cryptocurrencies and Bitcoin and a staunch supporter of gold, questioned Saylor during a debate at Binance Blockchain Week in Dubai, United Arab Emirates (UAE) in December. In a separate X postSchiff argued:
“MSTR’s business model is based on income-oriented funds purchasing its high-yielding preferred stock. However, the published rates of return will never actually be paid. Once fund managers realize they are doing this, they will abandon the preferred stock.”
When that happens, Strategy will no longer be able to issue more debt, triggering a “death spiral,” Schiff continued.
Schiff’s challenge and negative outlook for Bitcoin and the broader crypto industry comes amid a decline in the price of Bitcoin below $99,000 and a general downturn in the cryptocurrency sector as the price of recovered gold surges above $4,000.
Related: CZ calls Peter Schiff’s tokenized gold a “trust me, bro” asset.
Bitcoin and strategy are suffering while gold remains above the key $4,000 support
BTC’s price has fallen more than 20% from its all-time high above $125,000 reached in October, days before the October 10 flash crash that wiped out tens of billions in value from the cryptocurrency market.
The strategy’s mNAV, its net asset value multiplier or cash premium reflected in a company’s share price over its underlying BTC portfolios, fell below 1 in November but has rebounded to 1.21 at the time of writing. According to to the company.
Despite the moderate rebound, the mNAV of 1.21 is still relatively low; investors believe that the mNAV for a treasury company is 2 or more. Strategy shares have fallen more than 50% since July and are trading at around $199 as of this writing.
Meanwhile, gold has successfully defended the $4,000 per ounce level despite a brief dip below this psychological support level, and is trading around $4,085 per ounce at the time of writing.
In October, gold hit an all-time high of around $4,380 an ounce and then rose to a market capitalization of over $30 trillion before recovering to current prices.
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