Key Takeaways
Why does he believe the Strategy Model is ‘fraud’?
According to Schiff, the company does not have sufficient operating income to cover its bet on BTC.
Which Line Will Stop BTC’s Plunge?
According to QCP Capital, the next support levels on the charts worth watching are $92k and $80k.
Bitcoins [BTC] The 28% gain for 2025 has been wiped out after the weekend’s extended correction to $95k.
Unsurprisingly, BTC’s underperformance alongside its high beta strategy (Nasdaq: MSTR) has made it a punching bag for Peter Schiff – a longtime critic and pro-gold investor.
In an X-post (formerly Twitter), Schiff called Strategy’s business model, read BTC arbitrage, a ‘fraud’ that will eventually go bankrupt.
Source:
His argument? Strategy does not have operating income to cover the debt it incurred by betting on BTC.
The debt profile of the strategy
Since 2020, Strategy has accumulated a total of 641,692 BTC, which at market prices at the time of writing is worth $61 billion. The stock was purchased through debt and the sale of MSTR and other preferred stock. The holding companies currently have an unrealized profit of $13 billion.
On the debt side, Strategy owes $8.2 billion, with the first maturity expected in the second half of 2028. About half of the total debts expected to be cleared in 2028/2029.
Source: Strategy
So that’s three years later, and it’s not a short-term concern.
Moreover, the argument that Strategy has no operating cash flow is valid, according to Jeff Dorman, CIO of digital investment firm Arca.
Dorman even refuted rumors that Strategy would be forced to sell BTC if the debt matured, citing Saylor’s ownership control. He added,
“There are no covenants in the debt that force a sale. Interest expenses are low and manageable – remember that the core technology business is still cash flow positive.”
Schiff also took a swipe at BTC’s relative underperformance versus gold, which climbed back above $4,100 as crypto fell. He urged his followers to “Sell Bitcoin now and buy gold before you get torn apart.”
Source: BTC/gold ratio, TradingView
He’s right on this point: BTC has lagged gold since August. Zoomed out, however, the BTC/gold ratio consolidates between the 20 and 37 levels, the indicator that tracks the relative performance between the two commodities.
Whether it will be a bearish or bullish (BTC outperformance) breakout remains to be seen.
That said, QCP Capital has done just that declared there is still heavy BTC positioning on the negative side, with a potential reversal expected at $92,000 or $80,000.
“Key support is at $92,000, the same base as last year’s fourth quarter, with an unfilled CME gap likely to attract buyers, although dense supply overhead limits any rebound.”