Bitcoin News Today: MSTR Adds 1,229 BTC in $108.8M Stock Sale Amid Criticism from Peter Schiff

Strategy Inc. (NASDAQ:MSTR) has announced another major bitcoin purchase, acquiring 1,229 BTC for $108.8 million at an average price of $88,568 per coin. This brings the company's total bitcoin holdings to 672,497 BTC, acquired for $50.44 billion at an average cost of $74,997 per bitcoin. The purchase was funded through the sale of $108.8 million in Class A common stock under the company's at-the-market (ATM) program as reported in its SEC filing.

The acquisition follows a brief pause in bitcoin buying earlier this week, as Strategy built its USD reserve to $2.19 billion. This reserve is designed to support dividend payments on preferred shares and interest on outstanding debt. Despite the new purchase, MSTR shares remain under pressure, having fallen 47% year-to-date as of Friday's close.

The company's latest move has drawn criticism from Peter Schiff, a well-known critic of Bitcoin and gold advocate. Schiff argues that Strategy's five-year investment in Bitcoin has yielded an average annual return of just over 3%, which he claims is far below the potential of other assets.

Why the Standoff Happened

Schiff has taken to social media to challenge the financial logic behind Strategy's Bitcoin buying spree. He calculates that with an average cost basis of $75,000, the company has a "paper profit" of just 16%. This, he argues, translates to an annualized return of 3.2% over five years. In contrast, he suggests that the company would have performed better had it invested in more traditional assets.

The debate highlights a broader discussion in financial markets about the role of Bitcoin as an investment. While proponents argue that it is a digital store of value and hedge against inflation, critics like Schiff remain unconvinced and point to its volatility and lack of intrinsic value.

How Markets Reacted

Strategy's latest purchase coincides with a difficult year for its stock, which has dropped over 50% since October. The company's equity has long been viewed as a proxy for Bitcoin, often mirroring its price movements. However, this has also exposed the stock to the same volatility.

Bitcoin itself has fallen below $88,000 in recent trading, adding to the pressure on MSTR's valuation. The cryptocurrency, currently trading around $87,300, is down about 30% from its October peak. This has contributed to a valuation disconnect, with MSTR's market cap at $45 billion compared to the $59–60 billion value of its Bitcoin holdings.

Schiff has also taken issue with Strategy's capital-raising strategy, particularly its use of preferred shares. He argues that dividends on these shares are only paid if the company declares them and do not accumulate if not paid. This, he says, makes the preferred shares a risky proposition for investors.

What Analysts Are Watching

The latest purchase has not gone unnoticed by market analysts. Some have praised Strategy's continued commitment to Bitcoin, viewing it as a sign of confidence in the long-term outlook for the cryptocurrency. TD Securities, for instance, maintains a Buy rating on MSTR with a $500 price target. The firm sees the company's large USD reserve as a strength that could help it weather an extended downturn in crypto markets.

However, others remain cautious. Onchain analytics firm CryptoQuant has suggested that Strategy's decision to build a significant USD reserve indicates it is preparing for a potential deep or extended Bitcoin drawdown. JPMorgan analysts have also weighed in, arguing that Strategy's ability to hold Bitcoin through volatility could have implications for the cryptocurrency's near-term price.

Risks to the Outlook

The ongoing debate over MSTR's strategy is taking place against the backdrop of broader market uncertainty. One key issue is the potential exclusion of Strategy from major equity indexes. MSCI has proposed removing companies whose digital asset holdings exceed 50% of total assets from its global benchmarks. Strategy has written to the MSCI Equity Index Committee urging it to drop the proposal, warning of potential instability and conflict with U.S. policy goals.

In the short term, investors are also watching for any developments in the Nasdaq 100 annual reshuffle. The company has been included in the index so far, but its classification as a Bitcoin treasury firm could complicate future eligibility. This could impact demand for MSTR shares and influence investor sentiment.

What This Means for Investors

For investors, the latest move by Strategy underscores the continued divergence between its stock price and the value of its Bitcoin holdings. While the company's Bitcoin stash is worth around $59–60 billion, its market capitalization is significantly lower. This discount reflects investor concerns about leverage, dilution, and the company's capital-raising strategy.

The situation also highlights the broader challenges facing Bitcoin as an investment. While Strategy's aggressive accumulation strategy is seen as a vote of confidence, it also exposes the company-and its shareholders-to the inherent volatility of the cryptocurrency.

As the year comes to a close, the debate over MSTR's strategy is likely to continue. With Bitcoin still far from its peak and the stock under pressure, the outcome of this debate will be closely watched by both proponents and critics of Bitcoin as an investment asset.