In recent developments, renowned economist and vocal Bitcoin critic, Peter Schiff, has issued a cautionary note regarding a potential downturn in Bitcoin’s price. This warning is particularly significant for corporate investors, most notably MicroStrategy, which stands as the largest corporate holder of Bitcoin. The context of Schiff’s warning is marked by Bitcoin experiencing a sharp price decline of nearly 7% within a single day, alongside a substantial drop in MicroStrategy’s MSTR stock, which fell by approximately 10%.
Peter Schiff Warns of Potential Crash
Peter Schiff, in a recent social media post, highlighted his concerns about the future trajectory of Bitcoin’s price. He pointed out a critical factor: the assumption by some investors that the U.S. government might purchase Bitcoin, which currently seems unlikely. Many investors bought Bitcoin with the hope of capitalizing on such a government move. Schiff argues that as it becomes evident that this is not going to happen, these investors might rush to sell their Bitcoin holdings, potentially triggering a significant selling pressure that could drive prices further down.
Once it becomes obvious that the U.S. Govt. won’t be buying Bitcoin, those who bought hoping to front-run that buying will sell. Michael Saylor will be forced to accelerate his leveraged Bitcoin purchases to prevent a crash. But this will only delay the crash until MicroStrategy crashes first. — Peter Schiff (@PeterSchiff) January 8, 2025
At the center of this scenario is Michael Saylor, the CEO of MicroStrategy, a staunch advocate for Bitcoin at the corporate level. Saylor has strategically acquired a massive amount of Bitcoin using leverage, banking on the cryptocurrency’s continued appreciation in value. However, Schiff suggests that Saylor’s strategy might backfire, potentially leading to a collapse in both Bitcoin’s price and MicroStrategy’s stock.
Saylor’s Strategy To Backfire
Schiff’s warning is rooted in the notion that Michael Saylor’s approach of purchasing Bitcoin with borrowed funds could have adverse outcomes. Schiff predicts a scenario where a sharp decline in Bitcoin’s price could leave Saylor in a precarious position, unable to maintain his leveraged position without incurring substantial losses. Recently, Saylor announced plans to raise $2 billion by issuing perpetual preferred stock in the first quarter of 2025, a strategy aimed at acquiring more Bitcoin and bolstering the company’s financial standing. However, if Bitcoin’s price were to plummet, Saylor might be compelled to liquidate his assets, potentially at a significant loss.
Bitcoin & MSTR Price Plunge
Currently, Bitcoin’s price has fallen below $95K, marking a nearly 7% decline over the past 24 hours. This drop has brought its market capitalization down to $1.88 trillion. The Relative Strength Index (RSI) stands at 46.88, suggesting that bearish forces are exerting control over Bitcoin’s price movements on the daily chart. Meanwhile, MicroStrategy’s stock (MSTR) closed at $341, representing a decrease of almost 10% from the previous trading session. Additionally, the stock experienced a minor decline of approximately 2.46% in pre-market trading today.
As the cryptocurrency market continues to navigate these turbulent waters, the implications of Schiff’s warnings and the strategic decisions by key players like Saylor remain to be seen. Investors and market participants are advised to stay informed and exercise caution as they respond to these unfolding events.
