Peter Schiff Warns of a Looming ‘Bloodbath’ for MicroStrategy as Its Stock Price Surges 528% Riding Bitcoin’s Wave

Gold investor and Bitcoin critic Peter Schiff labeled MicroStrategy “the most overvalued stock in the MSCI World Index.”

MicroStrategy stock price surged 528% in 2024, riding the wave of Bitcoin’s explosive rally to a new record high of over $94,000. But gold advocate Peter Schiff casts doubt on its sustainability, labeling the company’s strategy a risky feedback loop tied directly to cryptocurrency markets.

Key Points:

• MicroStrategy stock price soared in 2024, fueled by Bitcoin’s rally.

• Gold advocate Peter Schiff raises concerns over the company’s strategy.

• Schiff warns of a potential "bloodbath" if Bitcoin prices drop.

• BitMEX Research highlights the risks of MicroStrategy's debt-driven strategy.

• Institutional investors, including Vanguard and Capital International, are showing strong interest in MicroStrategy.

However, the company’s reliance on Bitcoin for its astronomical gains has sparked concerns among some financial experts. One prominent critic is gold investor and Bitcoin skeptic Peter Schiff, who has labeled MicroStrategy "the most overvalued stock in the MSCI World Index."

According to Schiff, the company’s strategy creates risks for MicroStrategy, especially if Bitcoin prices drop. He explained that the company’s strategy is a "feedback loop" that could lead to a "bloodbath" if Bitcoin's price falls.

Schiff's critique centers on MicroStrategy's debt-fueled strategy, which is closely tied to the cryptocurrency's performance. As Bitcoin's price rises, the value of MicroStrategy's BTC holdings increases, boosting its stock price and enabling it to sell shares and acquire more Bitcoin. This cycle, in turn, artificially inflates both MicroStrategy's stock and Bitcoin's value. According to Schiff, this model cannot continue indefinitely and would collapse if Bitcoin's price fell.

These concerns are further supported by BitMEX Research, which has described MicroStrategy's strategy as an "infinite money glitch." While the company has benefited from Bitcoin's price increase so far, the research highlights that this approach is ultimately unsustainable and could lead to liquidation risks if Bitcoin crashes.

Despite these warnings, institutional investors have shown strong interest in MicroStrategy. According to data, institutional ownership of the company's shares increased over 100% in Nov. 2024. Notably, Vanguard holds 17.45 million shares, valued at $6.71 billion, while Capital International leads with 17.53 million shares.

Moreover, Wall Street giants such as Morgan Stanley and BlackRock have also increased their stakes in the company, collectively owning billions in MicroStrategy shares. However, given MicroStrategy's stock volatility, a downturn in Bitcoin could result in steep losses for institutional investors. As of Nov. 2024, MSTR's volatility stood at 32.65%, compared to Bitcoin's 16.86%, making it riskier than the cryptocurrency itself.

For now, MicroStrategy's fortunes are closely tied to Bitcoin's performance. However, as Schiff pointed out, no system built on endless growth can last forever.