Peter Schiff "STRC, siphons Bitcoin demand"

▲ Strategy (MSTR), Bitcoin (BTC)/ChatGPT generated image

Amidst a more than 3% drop in MicroStrategy (MSTR) stock price in a single day, Bitcoin (BTC) critic Peter Schiff claimed that MicroStrategy's preferred stock STRC is siphoning off Bitcoin demand. Unlike the weakness in MSTR's stock price, STRC recorded a trading volume of 5 million shares, marking its fourth-largest trading volume ever.

CoinGape reported on May 14 (local time) that MicroStrategy's stock price closed at $178 on May 13, down 3.4%, and opened on Thursday at $176, 1% lower than the previous day. In contrast, STRC preferred stock showed strong trading volume during the same period. On May 14, 5 million shares of STRC were traded above $100, a volume presented as capable of purchasing 3,094 BTC. STRC's all-time high trading volume was 14.7 million shares recorded on April 14.

Schiff argued that STRC's high-yield structure could weaken direct Bitcoin buying demand. He pointed out that investors are flocking to STRC, which offers an annual return of 11.5%, rather than Bitcoin, which doesn't guarantee returns until prices rise. According to the article, Bitcoin has fallen 2% in the past 7 days, and MSTR's stock price has also dropped 3%.

Schiff criticized MicroStrategy for buying Bitcoin with funds raised from selling STRC, but having to pay an annual 11.5% in return. He previously criticized STRC as a clear Ponzi scheme and reiterated his long-standing argument that raising funds to buy Bitcoin and then paying out returns is not sustainable.

However, STRC continues to set trading volume records, regardless of Schiff's criticism. After raising an additional $240 million on Tuesday for Bitcoin purchases, STRC saw 69,000 shares traded in pre-market trading on May 14, showing its largest pre-market upward trend ever. CoinGape noted that STRC's high trading volume could be a positive factor for MSTR's stock price, as it could increase MicroStrategy's capacity to buy Bitcoin.

On the other hand, warning signs have appeared on the MSTR stock price chart. The stock broke below the lower trendline of an ascending channel that started at $154 on April 17 and rose to $197 on May 11, with analysis suggesting it could fall to $170 if selling pressure continues. The Relative Strength Index (RSI) dropped 13 points in three days, from 69 on May 11 to 56, and the Awesome Oscillator (AO), while remaining in positive territory, showed red bars, signaling a potential for further decline. CoinGape raised the possibility that the MSTR stock's upward trend, which ran from $119 on April 1 to $197 on May 11, might be coming to an end.

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