“Hiroshima-Scale Ponzi?” Analysts Clash Over Strategy’s Survival Odds as STRC Tanks

After Strategy’s preferred stock STRC tumbled to its lowest level since listing, analysts are now poking holes in its Bitcoin treasury model. 

Criticisms became even louder after a video of Michael Saylor disclosing he used ChatGPT to design STRC resurfaced, with Helius CEO Mert Mumtaz branding Strategy a “Hiroshima-scale ponzi scheme.”

Strategy’s STRC triggers criticisms amid decline

Strategy’s STRC preferred shares are trading well below their $100 target, with prices reaching an all-time low of $83.2 yesterday before recovering to $88.6. The decline sees the preferred stock trading at a steep discount to its $100 target value.

While STRC declined, Strive’s SATA surged to trade closer to its $100 target value. Meanwhile, Strategy’s MSTR stock has also taken a beating, tumbling by nearly 4% over the last day.

Right off the bat, critics have lashed out at Strategy, poking holes at the company and rolling out grim predictions. 

US-based economist Peter Schiff described the stock declines as proof that the “financial house of cards” is collapsing, forecasting future legal troubles for Saylor. “Soon Saylor will trade in his orange tie for an orange jumpsuit,” wrote Schiff on X.

Meanwhile, emerging reports that Saylor leaned on ChatGPT to design STRC have amplified criticism. Mert Mumtaz railed against the Strategy founder for “vibecoding” a ponzi scheme, forecasting a near-term implosion for the company.

“Bro vibe coded a Hiroshima-scale ponzi scheme, and you’re bullish?”, wrote Mumtaz on X in his typical exaggerated and humorous style. “It is over. See you in the afterlife.”

To quell investors’ concerns, Strategy disclosed that it has 32 years of dividend coverage through its BTC Reserve. However, critics quickly pointed out that six months ago, its BTC Reserve provided for 71 years of coverage, noting that market conditions can still deplete its holdings.

Long-term investors will scoop STRC

While hardliners are predicting the bust of the treasury model, a cross-section of analysts say the stock decline is only a minor hiccup in the grand scheme of things. 

Jan3 CEO Samson Mow noted that there is nothing structurally wrong in STRC’s design, describing it as a “brilliant instrument.”

Mow added that it is normal for STRC to trade under $100 while adding that the panic over prices is the typical behaviour of short-term capital. 

He opined that the fall in STRC price is an opportunity for long-term investors to buy at an effective discount and resell for higher prices.“This isn’t a year-long project,” said Mow. “It’s a decades-long initiative that requires a massive balance sheet to shock-absorb.”

Other analysts echoed Mow’s sentiments, noting that opportunistic hedge funds will wade in, describing conditions as a “tremendous entry price for long-term holding STRC shares. Meanwhile, BTC analyst Adam Livingston predicted that Strategy will survive, noting that the company survived worse market conditions in 2022.