Peter Schiff Explains Why Michael Saylor Sold 3,588 BTC Instead of More Stock to Fund Dividend Payments

Bitcoin prices held over $63,375 per token during premarket hours on Tuesday as trading volume surged 73.3% to $37.44 billion with market cap rising 0.9% to $1.27 trillion, according to CoinMarketCap data.

Investors are focusing on the rising Bitcoin trading volume and muted price action after Michael Saylor said in a Monday X post that his company Strategy sold 3,588 bitcoins for $215 million to pay the Q2 quarterly dividends on preferred stocks like $STRF, $STRE, $STRK, and $STRD, and the full monthly dividend for June on $STRC.

Saylor had pledged earlier to never sell Bitcoin, but ensures his company keeps buying the token every quarter. However, the latest move has the potential to impact crypto market sentiment, which has been wavering since Saylor sold 32 BTCs weeks ago.

Gold bull Peter Schiff highlighted on the social media platform X that Strategy has been selling Bitcoin for the past two weeks, and the average price on the latest sale was $60,196.73 per token. Considering Strategy's average BTC acquisition cost, selling Bitcoin at $60,196.73 implies a realised loss of around $15,000 per token, or $54 million, according to the economist.

Schiff sarcastically added that with over 840,000 tokens left to sell, Strategy is facing much higher total losses.

Strategy finances BTC purchases through preferred shares such as STRC and STRF, which convert Bitcoin's projected growth into a perpetual capital base for further accumulation. The STRC preferred stocks pay a variable monthly dividend of 11.5% on an annualised basis.

Note that STRC's price is meant to be anchored at $100. When the preferred stock trades above that level, Strategy could issue more STRC and use the net proceeds to buy additional bitcoin. As of now, Strategy has issued over $3.8 billion worth of the dividend-paying instrument. The company has relied on STRC as an alternative funding source for a while now.

Schiff Mocks Saylor's New 'Business Model'

Schiff added in a separate X post yesterday that Strategy has a 'completely different business model' that involves selling Bitcoin to pay dividends, clear debt, and repurchase shares, hoping that BTC prices go up.

He added that Saylor's new strategy is completely different to its usual practice of selling common and preferred stock and issuing debt to buy Bitcoin.

In response to an X user asking why Saylor did not sell more stock instead of Bitcoin to cover the dividend payments, Schiff explained that it is because the common stock trades at a large discount to the Bitcoin per share. 'So, selling Bitcoin is much better for common stock owners,' he added.

The economist had earlier described Saylor's Bitcoin accumulation and dividend strategy as a ponzi scheme, and even criticised him for allegedly promoting the STRC preferred stock to risk-averse retirees, claiming he assured them that all volatility had been eliminated.

'STRC is down over 5% today, more than 17% below what many retirees paid last month. Almost two years of dividends gone. @Saylor clearly made material misrepresentations,' Schiff wrote in a late June X post.

The economist had also explained that Bitcoin prices didn't rise will gold, but are surely falling with it. He said that people expected a gold selloff to rotate money back into Bitcoin., but that didn't happen because BTC and gold dynamics are different even if the price corrections look similar.

'Gold's selloff is a buying opportunity. Bitcoin's selloff is a bubble deflating,' Schiff had added in a separate social media post.

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