According to U.Today, Peter Schiff, a well-known critic of Bitcoin, has recently criticized Michael Saylor, a Bitcoin enthusiast, for his announcement of a $500 million bond sale intended to increase Bitcoin holdings. Schiff speculated that if Saylor ceased his large-scale leveraged buying, the price of the leading cryptocurrency could plummet. He also suggested that creditors might eventually compel Saylor to liquidate his Bitcoin assets.
MicroStrategy, a Nasdaq-listed company, adopted Bitcoin as its treasury reserve asset in August 2020 and announced its first convertible bond offering in December 2020 to purchase more Bitcoin. This move alarmed some analysts, leading Citi to downgrade MicroStrategy's stock. The latest offering is also expected to enhance the Bitcoin fortune of the company, which already owns an impressive 214,000 coins, with a cost basis of $7.5 billion.
However, Schiff's criticism of MicroStrategy's Bitcoin strategy is not without merit. Earlier this year, JPMorgan's Nikolaos Panigirtzoglou expressed concerns about the company's leveraged Bitcoin purchases, suggesting a risk of 'severe deleveraging' if cryptocurrency prices were to drop significantly. Schiff also warned Bitcoin investors earlier this week that Exchange-Traded Funds (ETFs) would not protect them as their buyers are not long-term holders.