Peter Schiff Highlights the Risks Involved in MicroStrategy's Bitcoin (BTC) Accumulation Spree

While some institutional investors, like MicroStrategy, are taking advantage of the bullish sentiment in the crypto market to boost their Bitcoin (BTC) bags

Institutional investors are making headlines once again for their massive crypto purchases. While some celebrate this trend, others, like Peter Schiff, are quick to point out potential risks.

On November 11, business intelligence and software company MicroStrategy announced the purchase of 27,200 Bitcoin units, valued at approximately $2.03 billion in cash. This news sparked a wave of discussions and differing perspectives.

Schiff, known for his critical stance on Bitcoin, highlighted that MicroStrategy borrows money and issues shares to acquire BTC. According to Schiff, this move may push the price of Bitcoin up, which could then trigger an increase in the price of MSTR stock.

The Bitcoin critic went on to say that this trend will push the company to borrow more money and repeat the cycle, which he described as a "Wash, rinse, repeat" cycle. Schiff ended his X post with a question: "What could possibly go wrong?"

In a follow-up post, Schiff based his negative projection on the imminent fall of Bitcoin. To put this in perspective, he thinks investors buying MSTR convertible senior notes are bound for disgrace when Bitcoin crashes. As usual, many of his audience called his bluff.

One Alex Thorn on X advised Schiff to use some of his Non-fungible token (NFT) money to buy Bitcoin. Notably, the critic once launched an NFT series for which he even collected payment in Bitcoin.

This recent MicroStrategy purchase brings the average price of each BTC acquired by the company to an estimated $74,463, inclusive of fees and expenses. The Michael Saylor-led firm acquired the BTC between October 31, 2024, and November 10, 2024, using proceeds from issuing and selling shares.

As of November 10, MicroStrategy held a total of 279,420 BTC. At the time of writing, the BTC price was $89,429.15, up 2.68% in 24 hours.

Based on MicroStrategy's 2020 BTC purchases, the total value now stands at approximately $11.9 billion, with an average purchase price of around $42,692. At the current price of $86,819.41, MicroStrategy's BTC holding is valued at $24.26 billion, indicating a profit of over 100% from its consistent Bitcoin purchases.

With such a successful track record, MicroStrategy is likely to continue this BTC accumulation spree for the foreseeable future. In fact, this strategy has inspired Metaplanet to invest in the coin.

Now, back to Schiff's question. By asking what could go wrong, Schiff is likely anticipating the day when Bitcoin tanks to $0. Will that day ever come? No one can say for sure, but the BTC critic has also predicted this outcome.

However, the present reality is that Bitcoin is surging and gaining more traction even from institutional investors. This might push some investors to consider Schiff's perception and eventually take their profit out of the market.

If they refuse to sell, the HODLers may be lucky to grab more gains in the coming days. Last week, the "Percentage of Addresses in Profit vs. Loss" chart for BTC showed that nearly all addresses were profitable at the time. This coin outlook is a rare occurrence and is historically associated with local market tops. This may still happen again if Bitcoin sustains its recent rally.