Strategy Faces Mounting Pressure as Bitcoin Correction Triggers Ponzi Scheme Accusations

Growing Criticism of Strategy's Bitcoin Model

Strategy, the world's largest corporate Bitcoin holder, is facing renewed scrutiny as Bitcoin's ongoing price correction puts pressure on its aggressive accumulation strategy. Long-time Bitcoin critic Peter Schiff has escalated his attacks on the company, calling its business model a "Ponzi scheme" in a weekend post on X^[1].

Schiff's criticism centers on Strategy's use of preferred stock offerings to fund Bitcoin purchases. "Since Strategy has no income, it can only pay dividends by selling more preferred shares, unless they sell Bitcoin. In other words, it's a Ponzi scheme," Schiff wrote^[1]. The company has issued multiple series of preferred shares in recent months, with regulatory filings showing proceeds primarily used to acquire additional Bitcoin^[1].

Stock Price Collapse and Critical Threshold

Strategy's stock has experienced significant volatility, losing over 40% of its value since the beginning of the year^[1]. The decline has been even more severe in recent months, with shares down more than 52% over the past six months and 33% in the last month alone^[2].

More concerning for investors is that the company's multiple to net asset value (mNAV) has fallen to 0.905, according to Bitcoin Treasuries data^[1]. This figure is now below the critical threshold of 1.0 that Strategy CEO Phong Le previously identified as a potential trigger point for asset sales.

CEO Acknowledges Potential for Bitcoin Sales

In a recent interview on the "What Bitcoin Did" show, Le outlined a scenario in which Strategy might be forced to sell Bitcoin. If the mNAV ratio falls below 1.0 and the company simultaneously loses access to fresh capital markets, a sale would be "mathematically justified," Le said^[1].

However, Le emphasized that Bitcoin sales would be an absolute last resort. "I would not want to be the company that sells Bitcoin," he stated^[2]. The CEO also defended Strategy's financial position, noting that "our capital stack is very strong" and that the company has deliberately structured its balance sheet to avoid liquidity stress^[2].

Pause in Acquisition Activity

Strategy, which holds 649,870 BTC on its balance sheet^[2], has notably paused its Bitcoin buying spree. The company had purchased Bitcoin every week between September 11 and November 17, with its largest purchase during that period occurring on November 17 when it acquired 8,178 BTC for $836 million^[2]. However, accumulation has ceased since then, fueling speculation about the company's future plans^[2].

Le revealed that the first debt maturity for Strategy's various debt instruments is scheduled for sometime this month^[2], adding another layer of complexity to the company's financial situation.

Mixed Reactions from Market Observers

While many X users criticized Schiff's characterization, some acknowledged concerns about Strategy's highly leveraged position^[1]. Several commentators noted that while the company may not be a Ponzi scheme, it is an extremely leveraged entity that could face forced liquidations if market liquidity dries up^[1].

Analysts have also pointed to fears of exclusion from major reference indices as a contributing factor to the stock's poor performance^[1], adding to the multiple pressures facing the company as it navigates the current market environment.