Saylor's Strategy Under Fire as 'Worst Ponzi' Claims Emerge

Strategy Inc.'s (NASDAQ:MSTR) preferred stock has been called 'the worst Ponzi' by crypto analyst DonAlt, who claims it could end badly for investors.

The criticism centers around Michael Saylor's strategy of using STRC to buy Bitcoin (CRYPTO: BTC), which he then uses to issue more STRC at higher prices. This creates a self-reinforcing cycle that drives up the cost basis and increases the risk of losses when the market drops.

When the market falls, Saylor sells his Bitcoin below its average price to repeg it, further pushing down the value of Bitcoin and forcing him to sell even more. Meanwhile, new buyers receive a 12.92% yield on their investment in STRC.

Saylor has pushed back against these claims, arguing that refusing to defend Strategy's equity would collapse the entire structure and leave investors with worthless shares. He also pointed out that for every Bitcoin sold through Strategy, other market participants sold 2,000 times more, suggesting that the systemic risk is overblown.