An overnight collapse in the price of Bitcoin combined with a hard-to-digest capital raise to send shares of Strategy (MSTR) down 12.5% to their lowest level in nearly 15 months in U.S. morning trading on Monday.
And yet, despite the lack of rebound in the price of Bitcoin – which remained near the session low of around $85,000 for the entire day – MSTR managed to erase almost all of its losses, finishing down “only” 3.25%.
Until proven otherwise, the stock appears to be nothing more than short covering by fully satiated bears. At the strategy’s lowest level Monday, at $155.61, the stock was down nearly 40% in the past month alone and 66% from its 2025 high hit in mid-July. Any bears who don’t cover their shorts at this point are surely in the wrong business.
King Dollar
Facing pressure from critics and investors over Strategy’s ability to fund preferred dividends, Michael Saylor and his team announced Monday that the company had spent the past two weeks selling common stock to raise a $1.44 billion reserve with which to pay preferred dividends for the next 21 months. The company’s goal is to eventually have enough cash in reserve to pay dividends for at least 24 months.
It’s a surprising turnaround for the leading Bitcoin cash company, but falling Bitcoin prices combined with a collapse in the company’s stock valuation relative to its Bitcoin holdings likely left it with no other choice if it didn’t want to start liquidating its massive BTC stack (650,000 coins at last check).
Unhappy with the potential dilutive effects of this new strategy, common stock investors sold heavily following the news, sending the MSTR down about 12.5% during Monday’s action.
Peter Schiff, who has no money and has the gold bug, took advantage of the news to profit.
“So Strategy’s new business model is to sell shares to raise cash and then use that cash to buy Treasury bonds that yield about 4% to fund the issuance of debt and preferred stock at a cost of 8 to 10%,” he said. “How much longer will investors pretend this is a viable business just to bet on Bitcoin?”
“Today is the beginning of the end of the strategy,” Schiff continued. “Saylor was forced to sell stock not to buy Bitcoin, but to buy US dollars simply to fund Strategy’s interest and dividend obligations. The stock is broken. The business model is a fraud, and Michael Saylor is the biggest crook on Wall Street.”
Whether or not today’s turnaround will mark a bottom for Strategy’s struggling stock remains to be seen. Beaten strategy (and bitcoin) bulls, however, might find some solace in the dozens of other times Peter Schiff took a victory lap amid industry woes, only to see the situation completely reverse within a matter of weeks or months.
