Bitcoin-sceptic and gold bug Peter Schiff criticized MicroStrategy CEO Michael Saylor’s decision to publicly announce in advance plans to buy cryptocurrency with $650 million raised by the company.
Since @michael_saylor made the mistake of publicly announcing his $650 million Bitcoin buy in advance, traders can buy first, pushing up the price of #Bitcoin now so they can sell later at a higher price, potentially leaving Mircrostrategy shareholders as the ultimate bagholders.
— Peter Schiff (@PeterSchiff) December 13, 2020
According to Euro Pacific Capital’s global strategist, traders could buy Bitcoin ahead of MicroStrategy to push up the price, and then sell at an even higher price. A potential market reversal would wipe out all of the company’s shareholders’ income.
Schiff noted that the gold market is much larger and more liquid than Bitcoin’s, and a statement similar to what Saylor made would not affect the price of the precious metal. However, buyers of the asset typically keep their plans secret, not announcing them publicly, Schiff emphasized.
MicroStrategy initially announced plans to issue convertible senior notes totaling $400 million with a maturity in 2025. The proceeds were earmarked for investing in Bitcoin.
Then the company increased its target amount to $550 million, and the final size of the debt offering surpassed it by $100 million.
In August MicroStrategy became the first Nasdaq-listed company to convert part of its capital into Bitcoin. The company bought 21 454 BTC — approximately $250 million at the time.
In September the firm increased its investment in the primary cryptocurrency in accordance with the new treasury policy and acquired an additional 16,796 BTC for $175 million.
Already in early December MicroStrategy increased its reserves in Bitcoin by another 2,574 BTC, purchased for $50 million.
Earlier in October Schiff said that the speculative bubble around the leading cryptocurrency surpassed the hype in the dot-com and mortgage markets.
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