Bitcoin’s 2025 gains no more as Peter Schiff slams Strategy’s ‘fraud’ model
BTC has underperformed gold by 37% since August.
Key Takeaways
Why does he believe Strategy’s model is a ‘fraud’?
According to Schiff, it lacks sufficient operating earnings to cover its leveraged bet on BTC.
Which line will hold BTC’s plunge?
Per QCP Capital, the next support levels on the charts worth tracking are $92k and $80k.
Bitcoin’s [BTC] 2025 gains of 28% have been erased after the weekend’s extended correction to $95k.
Unsurprisingly, with the underperformance, BTC, alongside its high-beta Strategy (Nasdaq: MSTR), has become a punching bag for Peter Schiff – A long-time 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.
His argument? Strategy has no operating earnings to cover the debt it has taken on by betting on BTC.
Strategy’s debt profile
Since 2020, Strategy has accumulated a total of 641,692 BTC, worth $61 billion at press time market prices. The stash has been bought via debt and the sale of MSTR and other preferred stocks. The holdings currently have an unrealized profit of $13 billion.
On the debt side, Strategy owes $8.2 billion with the first maturity expected in H2 2028. Approximately half of the total debt is expected to be cleared by 2028/2029.
So, that’s three years out, and it’s not a near-term concern.
Besides, the argument that Strategy has no operating cash flow is flawed, according to Jeff Dorman, CIO of digital investment firm Arca.
Dorman rebuffed even the rumors that Strategy would be forced to sell BTC if the debt maturity were hit, citing Saylor’s ownership control. He added,
“There are no covenants in the debt that force a sale. Interest expense is low and manageable – don’t forget the core tech business still has positive cash flow.”
Schiff also took a swipe at BTC’s relative underperformance to gold, which climbed above $4,100 again as crypto slipped lower. He urged his followers to “sell Bitcoin now and buy gold before you get mauled.”
On this point, he is right – BTC has lagged behind gold since August. However, when zoomed out, it has been consolidating between 20-37 levels of the BTC/gold ratio, the indicator that tracks relative performance between the two commodities.
Whether it will be a bearish or bullish (BTC outperformance) breakout remains to be seen.
That being said, QCP Capital has stated there is still heavy BTC positioning for the downside, eyeing a potential reversal at $92k or $80k.
“Key support sits at $92k, the same base from Q4 last year, with an unfilled CME gap likely to attract buyers, though dense overhead supply limits any bounce.”
