Peter Schiff, known for his critical stance on Bitcoin, recently forecasted that MicroStrategy's Bitcoin yield could turn negative before the end of 2026. This prediction comes despite earlier gains in the company's stock, fueled by a significant boost in its US dollar reserve.
MicroStrategy's shares climbed nearly 7% this Monday morning after the company increased its dollar holdings by $525 million, bringing the total reserve up to $3.75 billion. However, the firm did not report any additional Bitcoin acquisitions during this period.
The company currently holds approximately 843,775 BTC but is heavily exposed to dollar-denominated obligations. To manage this risk, MicroStrategy has built a substantial cash buffer intended to cover dividends on preferred shares and other financial responsibilities for over two years. Some investors view this move as a display of the company's financial resilience, maintaining Bitcoin as a long-term investment while relying on liquid dollars for operational needs.
Concerns Over Declining Bitcoin Yield
Schiff pointed out that MicroStrategy’s Bitcoin yield has sharply dropped from 13.3% to 4.5% within just two months. The yield represents how much Bitcoin backs each share of the company, a metric that once attracted investors hoping to gain Bitcoin exposure without directly purchasing the cryptocurrency. Schiff argued that if MicroStrategy’s advantage over buying Bitcoin outright disappears, then taking on the extra corporate risk may no longer be justified.
Meanwhile, MicroStrategy has also repurchased $25 million of its preferred stock, which currently trades well below its $100 nominal value. Andrew Webley, CEO of The Smarter Web Company, recently praised this preferred equity structure as a significant innovation in the space of Bitcoin corporate finance.
Despite these developments, Schiff remains skeptical about MicroStrategy's strategy, hinting that the model which once provided attractive yields is now faltering amid increasing challenges.
