MicroStrategy’s Bitcoin Strategy Under Fire: Schiff Predicts Collapse, Dorman Defends Resilience

MicroStrategy (NASDAQ: MSTR), the corporate titan known for its aggressive, leveraged Bitcoin acquisition strategy, finds itself once again at the epicenter of a heated public debate. As market volatility intensifies, questions are mounting about the sustainability of Michael Saylor’s bold bet, particularly whether the company can withstand prolonged market pressures should Bitcoin’s price and MSTR’s stock continue their recent slump. The central query: will MicroStrategy be forced to liquidate its substantial Bitcoin holdings?

Peter Schiff’s Dire Warning: A “Death Spiral” Looms

Leading the charge against MicroStrategy’s strategy is long-time Bitcoin skeptic Peter Schiff. In a series of provocative posts early on the 17th, Schiff launched a scathing critique of MicroStrategy’s business model. He argues that the company’s foundation relies heavily on “income-oriented” investors purchasing its high-yield preferred shares, a structure he claims is unsustainable because MicroStrategy fundamentally lacks the capacity to pay the promised interest on these shares.

Schiff issued a stark warning: if market demand for these preferred shares wanes, the entire structure could unravel into a “death spiral.” He went as far as to declare that MicroStrategy “will eventually go bankrupt” and publicly challenged Michael Saylor to a debate at Binance Blockchain Week in early December.

MSTR’s business model relies on income-oriented funds buying its “high-yield” preferred shares. But those published yields will never actually be paid. Once fund managers realize this they’ll dump the preferreds & $MSTR won’t be able to issue any more, setting off a death spiral.

— Peter Schiff (@PeterSchiff) November 16, 2025

Jeff Dorman’s Robust Defense: Misinterpretations and Resilience

However, the pessimistic narrative is far from universally accepted. Jeff Dorman, Chief Investment Officer at asset management firm Arca, swiftly took to X (formerly Twitter) to vehemently counter what he termed “misinterpretations” circulating online. Dorman asserted that many critics are overlooking MicroStrategy’s actual balance sheet and financial health, thereby misleading the market.

While not directly naming Schiff, Dorman’s arguments clearly aimed to dismantle the critiques from the Bitcoin skeptics. He highlighted several key points underscoring MicroStrategy’s resilience:

• Saylor’s Significant Stake: Michael Saylor’s substantial ownership of approximately 42% of MicroStrategy’s equity creates a formidable barrier against “forced intervention” or any attempts by activist shareholders or external forces to compel the company to sell its Bitcoin.
• Debt Structure Protection: Crucially, Dorman emphasized that none of MicroStrategy’s debt agreements contain clauses that would “force the company to liquidate Bitcoin.” This means that even in the event of a significant Bitcoin price downturn, creditors cannot contractually demand the sale of Bitcoin to repay debt.
• Sustainable Cash Flow: MicroStrategy’s core software business continues to generate positive cash flow, which is more than sufficient to cover its interest expenses. Dorman contended that the company’s financial pressure is far less severe than what is being widely portrayed.
• Debt Management Flexibility: He also noted that borrowers rarely default immediately as debt maturity approaches. Instead, companies typically seek extensions or renegotiate terms with lenders, providing ample flexibility.

Market Performance: A Divergent Path

Despite MicroStrategy’s continually expanding Bitcoin holdings, its stock performance has remained subdued. MSTR closed last Friday at $199.74, marking a 4.22% single-day decline and a year-to-date drop of 33.42%. In contrast, Bitcoin itself experienced a modest gain of approximately 0.4% during the same period, underscoring the divergent paths of the asset and the company stock that holds it.