Shares of Strategy ($MSTR) fell roughly 2.5% in recent trading, trimming earlier gains that had pushed the price up 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.
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 call the stock a Ponzi scheme and highlight the risks of anchoring it 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 BTC-backed safety. He called STRC the “largest Ponzi in the world,” arguing that investors are mainly chasing the 11.5% yield and warned that these returns are financed by a pure Ponzi scheme. He also claimed that if the stock runs out of new investors, it could break under pressure and potentially crash to zero.
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 cautioned that in a 40% market drawdown, 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.
