Strategy's Bitcoin Yield Predicted to Turn Negative Amid Weakening Advantage

Strategy's Bitcoin yield has taken a hit according to Peter Schiff, who predicts it will turn negative this year. The company's stock surged by as much as 7% earlier in the day due to its strengthened dollar reserve, which now stands at $3.75 billion.

The mechanism that made Strategy attractive in the first place, allowing shareholders to increase their BTC exposure without buying more of the flagship cryptocurrency, is weakening according to Schiff. The company's Bitcoin yield has collapsed from 13.3% to just 4.5% within two months, leading Schiff to remark 'If MSTR's advantage over Bitcoin disappears, why take the extra corporate risk? Just buy Bitcoin directly.'

Strategy owns a substantial 843,775 BTC, but its obligations are mostly dollar-based, hence the creation of a dollar reserve as a liquidity buffer. The company has increased this reserve by $525 million and repurchased $25 million worth of its preferred stock, which is currently trading below the underlying claim value.