Not a Real Business, Says Bitcoin Skeptic

Economist Peter Schiff isn't mincing words when it comes to Strategy Inc. (MSTR). The Bitcoin skeptic took to X on Sunday to argue that the Michael Saylor-founded company has no business being included in global equity benchmarks in the first place.

"It's not a real operating business," Schiff said, dismissing Strategy as nothing more than a "highly leveraged" Bitcoin (BTC) bet. His comments came as he highlighted a recent JPMorgan report warning that the company faces potential delisting from major equity indices like the MSCI World Index and Nasdaq 100 due to ongoing sell-offs.

The crux of Schiff's argument? Passive index funds shouldn't be "compelled" to buy Strategy's stock just because it happens to meet the technical criteria for index inclusion. It's a philosophical question about what belongs in these benchmarks, and whether a company that exists primarily to accumulate cryptocurrency fits the bill.

JPMorgan's Sobering Math

The JPMorgan analysts laid out some eye-opening numbers. According to their estimates, roughly $9 billion of Strategy's $50 billion market value sits in passive funds that track major equity indexes. If Strategy gets booted from the MSCI World Index alone, it could trigger about $2.8 billion in passive outflows as index funds mechanically sell their positions.

That's not exactly pocket change, and it highlights how much Strategy's fate has become intertwined with the mechanics of index inclusion and passive investing flows.

Saylor Fires Back

Michael Saylor, unsurprisingly, isn't buying the doom-and-gloom narrative. In a recent interview, the Bitcoin bull called JPMorgan's report "alarmist" and questioned the firm's calculations.

"I'm not so sure the numbers are nearly that high. I think actually the numbers would be much smaller," Saylor told CoinDesk.

It's worth noting that Schiff and Saylor have been on opposite sides of the Bitcoin debate for years. Schiff has previously pointed out that despite Strategy spending over $48 billion on Bitcoin over the past five years, the company's total paper profits are less than 17%. He's argued the firm would have been better off investing in virtually any other asset.

The Numbers Tell a Tough Story

Bitcoin's recent decline has hit Strategy particularly hard. The stock has plunged over 40% in the past month and is down 62% from the record highs it set earlier this year. When you're the world's largest corporate holder of Bitcoin, that kind of price action hurts.

Strategy currently holds 649,870 BTC at an average purchase price of $74,433. Do the math, and another 14% drop from current levels would push the entire position into the red. That's an uncomfortable proximity to paper losses for a company that's bet its entire strategy on Bitcoin appreciation.

Despite the carnage, Saylor posted on X with the message "I Won't ₿ack Down," suggesting that Strategy plans to keep buying more Bitcoin regardless of market conditions.

Price Action

At the time of writing, Bitcoin was trading at $86,695.76, up 0.21% over the past 24 hours. Strategy shares closed Friday's regular trading session at $170.50, down 3.74%.

The stock maintains a weaker price trend across short, medium, and long-term timeframes as Bitcoin's struggles continue to weigh on the company's valuation.