With Bitcoin prices dropping, there may be a shift in the foundation of Michael Saylor’s Bitcoin empire, leading some to question the company’s ability to maintain its foothold in the cryptocurrency market.
Saylor has transformed his company, Strategy – founded as a business intelligence and data analytics software company – into Wall Street’s biggest corporate holder of Bitcoins. Strategy has been relentlessly buying the cryptocurrency, with Saylor’s vision of turning it into a Bitcoin treasury.
But now a leading Wall Street veteran has publicly challenged the vision of Saylor’s Bitcoin empire. Ross Gerber, who runs Gerber Kawasaki Wealth and Investment Management, recently openly questioned Saylor’s vision.
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He questioned the whole approach, saying piling leverage on top of risk is asking for trouble. His blunt question—whether they’re tough enough to make it through—hits at fears investors have been whispering about for months.
A House Built on Loans
Strategy keeps buying Bitcoin by selling stocks and taking on debt whenever prices go up. They’re sitting on 650,000 coins that cost them $74,433 each on average. If Bitcoin drops another 14% from where it is now, those holdings may go red.
Gerber’s not alone in his doubts. Economist Peter Schiff has been critiquing Strategy’s unsustainable situation, asserting that they must sell shares to cover their expenses. Strategy fired back by setting aside $1.44 billion for dividends and interest. In a barrage of X posts on Monday, among other things, Schiff stated that Saylor is “the biggest con man on Wall Street” and mocked the Strategy stock as “broken” after a recent dip.
Despite such criticism, Saylor insists his company can handle Bitcoin crashing 80% or more. With Bitcoin at $86,462 and Strategy shares closing on Monday at $171.42, investors will soon find out if he is right.
