Michael Saylor’s Bitcoin strategy has been in focus since the recent BTC crash. There has been speculation about what might happen to Saylor Company, Strategy (MSTR) and its BTC holdings if the flagship crypto continues to collapse.
Schiff Predicts Saylor Strategy Failing Amid Bitcoin Crash
In a Messagerenowned economist Pierre Schiff said Strategy’s entire business model is a fraud. He then challenged Saylor to debate this proposition with him. He added that no matter what happens to Bitcoin, he believes Strategy will eventually go bankrupt. Notably, MSTR’s mNAV recently fell below the value of its Bitcoin holdings, putting Saylor’s strategy at risk.
Saylor’s strategy has historically benefited from trading at a premium to its Bitcoin holdings. However, with mNAV now trading below 1, concerns exist about what could happen to the company if the Bitcoin bear market persists. Last week, Arkham suggested that Saylor and his company were offloading BTC. However, Saylor quickly fired these rumors, claiming that they were false.
Saylor further said that Strategy had been buying Bitcoin every day for the past week despite the BTC crash, which the company confirmed this week by announcing a $835 million purchase. This is its biggest purchase since July, when it bought $2.46 billion worth of BTC. However, the company purchased these coins at an average price of $102,171, which is much higher than the current price of BTC.
This latest purchase further resulted in a significant loss to Strategy’s Bitcoin supply. CryptoQuant Data shows that 43% of Saylor’s BTC holdings are held at a loss, while 57% are profitable. This is based on the average purchase price per purchase rather than the total. Notably, the average purchase for the company’s total BTC holdings is $74,433.
BTC could still fall below the strategy’s average purchase price
Seasoned trader Peter Brandt predicted that Bitcoin could fall below $50,000, putting Strategy’s BTC holdings underwater. Brandt noted that BTC could test Saylor “severely” as it falls below its average purchase price. The trader explained that a fall below $50,000 could occur if the recent violation of the parabolic advance is similar to past events.
A decline in Bitcoin below Strategy’s average purchase price could put the company at risk of having to shed its holdings to repay its debts. Cryptography expert Dom Kwok said that Saylor’s company will be forced to sell its BTC to pay the interest. He added that treasury companies cannot operate when mNAV drops below 1, forcing them to sell their BTC or go bankrupt.
Cryptography expert Mana warned that the market is about to witness a collapse of the strategy. He claimed investors were pulling out as the company’s profits bled. As such, he advised market participants to dump their MSTR stocks.
At the time of writing, the price of Bitcoin is trading at around $91,400, up over the past 24 hours, according to data from CoinMarketCap.
Featured image from Pixabay, chart from Tradingview.com
Editorial process as Bitcoinist focuses on providing thoroughly researched, accurate and unbiased content. We follow strict sourcing standards and every page undergoes careful review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance and value of our content to our readers.
