Michael Saylor‘s (NASDAQ:STRC) dropped below $89.50 Wednesday as crypto analyst DonAlt called Strategy Inc.’s (NASDAQ:MSTR) preferred stock “the worst Ponzi” he has ever seen, with buyers who paid $100 already down over 10%.

DonAlt Lays Out The Death Loop In Plain Terms

DonAlt posted the full breakdown on X: Saylor buys Bitcoin (CRYPTO: BTC), issues STRC, buys more Bitcoin with proceeds, average buy price rises. 

When the market drops, STRC depegs, Saylor sells Bitcoin below his average to repeg it, which pushes Bitcoin lower, forcing more Bitcoin sales.

When the market recovers, he issues more STRC at higher Bitcoin prices and the cycle repeats with a higher cost basis each time.

Peter Schiff added the immediate damage. STRC closed at $89, meaning buyers who paid $100 par value at launch are down 11%. 

New buyers now get a 12.92% yield. If Saylor raises the coupon to 13% to attract demand, he must sell more MSTR at a deeper discount to fund it. If he does not raise the yield, STRC keeps falling.

Saylor’s Counter: Refusing To Sell Bitcoin Would Destroy The Company

At BTC Prague, Saylor laid out why refusing to sell Bitcoin would collapse the entire structure. 

Short sellers would push MSTR to zero knowing there was no defense. Collapsing equity means no capital raises, no preferred dividends, and worthless STRC. The 32 Bitcoin sale was a signal to credit markets that Strategy honors its obligations.

“If we refuse to defend our equity, then the equity will go to zero,” Saylor said. “If the equity goes to zero, I can’t sell equity to pay the dividend.” 

He added that Strategy bought a net 250,000 Bitcoin this year while selling 32, making the systemic risk argument hard to sustain on the numbers alone.

Saylor Says Strategy Is A Shock Absorber, Not A Risk

On the systemic risk question, Saylor pushed back directly. For every Bitcoin Strategy sold, other market participants sold 2,000 times more. 

Without Strategy’s $64 billion in purchases over five years, he argued Bitcoin would be trading near $20,000 today rather than above $60,000.

The STRC situation reaches its next test June 30 when the next preferred dividend payment comes due, with markets watching whether Strategy funds it through equity issuance or reaches into its Bitcoin reserve again

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