Peter Schiff Warns Of STRC ‘Death Spiral’ Could Crash Strategy But CEO Phong Le Clears The Air

• Peter Schiff warned that Strategy’s preferred stock model could face a “death spiral” if market conditions weakened
• He said sustaining the roughly 11.5% yield may require stronger Bitcoin performance, as additional preferred stock sales increase payout commitments without guaranteed returns.
• Strategy executives pushed back on the criticism, while the firm continues to raise capital to support its Bitcoin accumulation strategy.

Strategy Inc’s (MSTR) preferred stock structure (STRC) could be at structural risk if market conditions deteriorate, warned Bitcoin (BTC) critic Peter Schiff on Saturday.

In an X post, Schiff said the assumptions around the sustainability of the roughly 11.5% yield on STRC may depend on limited issuance going forward. As Strategy raises more funds through the issuance of preferred shares, the total dividend obligation would rise, he said, potentially requiring stronger Bitcoin price performance to support the payouts.

Schiff pointed to several potential pressure points, such as higher issuance, dependence on Bitcoin, and price sensitivity, to make his case. Sciff’s argument is that more STRC sales may increase overall dividend obligations, and if Bitcoin does not appreciate enough to make payouts, Strategy may require other sources of funding. He also added that if the market price of STRC declines, yields will have to rise to attract buyers, thereby increasing financing costs.

His solution to what he called “the only way to stop the death spiral” would be funding dividends, which could put downward pressure on the asset and could mean selling off Bitcoin holdings under certain circumstances. 

MSTR’s stock closed in red on Friday. On Stocktwits, MSTR was one of the top trending tickers. Retail sentiment around it remained in the ‘bullish’ zone, while chatter stayed in ‘high’ levels over the past day.

Phong Le Clears The Air

Strategy has continued to raise capital through such instruments in 2026 as part of its broader Bitcoin accumulation strategy. The company has not indicated any changes to its current approach. 

Strategy CEO Phong Le defended the company’s model against Schiff’s criticism, including accusations that the structure is similar to a Ponzi scheme, and pointed to the transparency and funding mechanism.

He said that dividends are funded separately, mostly by issuing more common equity at a premium to the company's net asset value. He argued that this is what distinguishes the model from a Ponzi scheme, in which returns are generally paid out of investor funds without any underlying asset allocation.

Le acknowledged the product’s double-digit yield may seem unusually high, but said it reflected both Bitcoin’s past performance and the evolution of financial structures rather than any unsustainable practices.

"Then we're turning around and very simply, issuing additional equity at a premium of asset value to pay the dividend, right? And so we're not, not, we're not taking stretch equity. We're taking common equity to pay the dividend. So, I don't know which part of that sounds like a Ponzi scheme. None of it does." 
– Phong Le, President and CEO of Strategy.

Proponents like Strive (ASST) have introduced their own digital credit and said that STRC’s yield method gives investors a way to gain yield exposure to Bitcoin. Last month, Strive also planned to launch its Bitcoin Credit ETF tied to Strategy’s Class A common stock and Strive’s own SATA preferred shares. 

Read also: Galaxy CEO Mike Novogratz Warns Saylor’s Bitcoin Buying Spree Could Trigger Supply Shock

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