MicroStrategy's Bitcoin-Buying Power Diminished, Says Peter Schiff
MicroStrategy's Bitcoin-buying power has been significantly diminished, according to Peter Schiff. The company's Stretch (STRC) preferred stock has been pulled back towards its $100 par value, but Schiff argues that this means Strategy no longer has access to the funding channel that previously allowed it to purchase Bitcoin. Despite this, MicroStrategy has continued to buy Bitcoin, funding its latest purchase with proceeds from common stock sales.
Schiff credits the company's weekly STRC buybacks and the recent Bitcoin rally for STRC's recovery to around $99.4. He notes that this rebound may have restored some confidence in the stock or triggered short covering. However, Schiff believes that the company's key funding route remains closed, as it can no longer sell more Stretch to raise money for new Bitcoin purchases.
CEO Phong Le had previously blamed unexpected leverage for STRC's decline to around $75 earlier this year. Executive Chairman Michael Saylor attributed the rebound to calmer trading in the stock, with 30-day historical volatility standing at 9% as of October 2, below the 10% reading for the SPDR S&P 500 ETF (SPY).