- An expert believes Strategy poses a huge risk for MSTR and Bitcoin holders, likening its business model to a Ponzi scam.
Michael Saylor, Executive Chairman of Strategy (MSTR), doubled down on his statement that their company’s Bitcoin (BTC) holdings only require a conservative price appreciation to sustain dividend obligations. In this case, he claimed that their BTC portfolio only has to appreciate faster than 3.3% over time to ensure payments to shareholders.
However, Anton Golub, Chief Business Officer of Freedx, called out Saylor for misleading people. He pointed out that he is leaving out a crucial factor in his bold projection.
Saylor and Strategy Misleading the Public
According to Golub, it’s getting so ridiculous how Strategy promotes itself. Its recent moves are clearly endangering retail or unsophisticated investors who have little grasp of the pros and cons of investing in high-risk products.
The Freedx CBO stated that Strategy and Saylor are duping the public into believing that their continuous Bitcoin sales will not impact the crypto market, particularly BTC’s price.
Strategy’s Recent Bitcoin Sales
Considering that Strategy is the world’s largest public Bitcoin treasury, it can easily sway market sentiment. One example was the major correction the company caused in Bitcoin prices when it sold a measly 32 BTC for roughly $2 million in early June.
Despite the virtually tiny fraction of Strategy’s sale compared to its remaining 843,706 BTC at that time, it still triggered a cascade of crypto liquidations. It also resulted in an irreparable loss of confidence in the company and Saylor from the crypto community after they had convinced them over the years that they weren’t selling any of their Bitcoin holdings.
Over the past week, Strategy did it again, selling 3,588 BTC for around $216 million. The latest was in line with its new BTC monetization program under the business’s board-approved Digital Credit Capital Framework.
Unfortunately, these are only the first among Strategy’s many coming BTC sales, as the board gave its powers-that-be free rein to do so at their discretion.
A Dilemma for the Company
Golub highlighted that Strategy needs to raise $500 million per month to fund obligations, which could only come from MSTR conversions and preferred offerings. It translates to $15 billion over the next 2.5 years.
The expert didn’t mince words, describing Strategy as a Ponzi scheme disguised as an infinite-wealth Bitcoin strategy. He said the model now leaves the company in a dilemma over time.
Strategy can either continue to dilute its MSTR shares to fund dividend payments or sell BTC for the same purpose. But then again, it’s likely that the company will destroy MSTR holders first rather than dump BTC at a discount, which will devalue its Bitcoin treasury.
To date, Strategy maintains 843,775 BTC, controlling 4.02% of the asset’s 21 million maximum supply.
