Bitcoin bear and economist Peter Schiff warned that Strategy's plan to buy bitcoin could fall into a "death spiral".

On April 26, blockchain outlet BeInCrypto reported that Schiff argued Strategy's funding structure through issuing STRC preferred shares could weigh on both the company's share price and the price of bitcoin.

Schiff took issue with the gap between the company's bitcoin holdings and its cash-like payment obligations. Strategy holds a total of 815,061 BTC after a large-scale bitcoin purchase worth $2.54 billion on April 20. Most of the funds for that purchase were raised through stock issuance.

Bitcoin, by itself, does not generate cash flow. STRC pays holders a floating annual dividend of 11.5 percent each month, and Schiff said the structure ultimately leaves only 2 choices. He said the company must either sell bitcoin to fund dividends or keep issuing new STRC to an increasingly narrow pool of demand.

Schiff said, "The claim that Bitcoin only has to rise by 2% per year to cover the 11.5% yield on $STRC indefinitely assumes $MSTR stops issuing STRC," adding, "But Saylor is actually increasing issuance." He argued that the more STRC the company sells, the more the bitcoin price must rise to cover the dividend.

STRC was launched in July 2025 with a 9 percent annual dividend and financed the purchase of about 50,792 BTC. The monthly dividend rate has risen for 7 consecutive months to reach 11.5 percent. Schiff said that upward trend itself shows a model that relies on capital market funding rather than recurring operating cash flow.

Strategy bought an additional 64,948 BTC in 2026 alone, even excluding its most recent purchases. That is a faster pace of purchases than in the past. But the pace rests on the assumption that capital markets remain open and that demand for STRC holds at the current level of yield. Each new STRC issuance also increases the regular cash burden.

Market concerns are focused on what happens if demand cools. Schiff said that if demand for STRC slows, forced bitcoin sales could follow, putting pressure on the bitcoin price and Strategy's net asset value. He also noted that because perpetual preferred dividends have no definite legal floor, the company might be able to stop paying dividends without it immediately becoming a formal default.

Other analysts also raised concerns about how the security would move during periods of credit market stress or rising interest rates. Some also presented a view that such exposure could develop into systemic risk for the broader crypto market.

But Chairman Michael Saylor has not accepted those claims. Saylor maintained his existing stance, citing MSTR's long-term outperformance and the $42 billion at-the-market sale program announced in March. He also made a public proposal to Schiff, saying, "Let's debate the STRC structure."

Ultimately, the key variable over the coming months is whether buying interest in STRC continues to flow at the current level of yield. If investors keep absorbing the product, the existing funding structure can be maintained. If demand weakens, a warning that selling pressure on bitcoin could materialise remains a focal point for the market.

The claim that Bitcoin only has to rise by 2% per year to cover the 11.5% yield on $STRC indefinitely assumes $MSTR stops issuing STRC. But Saylor is actually increasing issuance. The more STRC MSTR sells, the more BTC must rise to cover the yield. Also, if the price of STRC…