Strategy (MSTR) Stock Sinks as Critics Call STRC’s BTC Backing the “Largest Ponzi in the World”
Shares of Strategy (MSTR) fell roughly 2.5% in recent trading, trimming earlier gains that saw the price increase by more than 10%. The surge was supported by a rise in Bitcoin (BTC-USD) prices and fresh institutional investment, following Strategy’s latest BTC buy.
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However, the move is also viewed with skepticism as critics push back against the company’s latest announcement regarding its preferred stock, STRC. Notably, MSTR’s price came under increased scrutiny after the firm revealed that its STRC stock is now backed by BTC. The news raised concerns among market watchers who highlight the risks of anchoring a stock to a cryptocurrency as volatile as BTC.
Strategy Stock Slides after Jumping 10% the Day Before
The price of MSTR came under renewed market pressure after skepticism intensified around its preferred security, STRC, and its Bitcoin-linked structure. The downturn also comes after the stock rallied by over 10% as the BTC price surged past $78,000 this week.
Notably, the move follows the company’s announcement on X that its “world’s largest preferred is now backed by bitcoin,” referring to STRC as a landmark instrument tied to its growing crypto treasury strategy.
According to the post, STRC has become the largest exchange-listed preferred security in the world by market capitalization, with a value of approximately $8.5 billion. That figure places it nearly double the size of the next-closest comparable issuance, Wells Fargo (WFC), at $4.7 billion.
Strategy also shared a chart, showing that STRC now sits above a range of preferred shares issued by major financial institutions, including Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C), Power Corp of Canada (PWCDF), and others. Despite the scale emphasized in Strategy’s presentation, the announcement triggered a wave of criticism, as concerns about risk exposure and structural stability resurfaced.
Skeptics Question Strategy’s Bitcoin-Backed Yield Model
Among the most vocal critics was Bitcoin skeptic Peter Schiff, who strongly rejected the idea that STRC offers real Bitcoin-backed safety. He argued that investors are mainly chasing the 11.5% yield and warned that the structure depends on continuous new demand to sustain payouts. He also claimed that if new investors slow down, the system could break under pressure.
Another critic on X also challenged Strategy’s Bitcoin-backed label. They said STRC is a perpetual preferred security that sits above common equity but still moves with Bitcoin’s price. They warned that in a sharp market drop, the protection behind STRC could shrink quickly. They also noted that Strategy may need to issue more shares through at-the-market offerings to maintain dividend payments if conditions weaken.
Is MSTR a Good Stock to Buy?
Strategy (MSTR) stock currently has a Strong Buy consensus rating from 12 Wall Street analysts tracked by TipRanks. Out of 12 analysts, 12 recommend Buy, and none suggest a Hold or Sell. The stock also has a projected 12-month price target of about $281, suggesting roughly 60.9% upside from current levels. Further insights on the stock are available via the TipRanks Stock Comparison Center.
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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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