Economist Peter Schiff has raised serious doubts about the 12% yield promised by MicroStrategy's (MSTR.US) STRC income securities, arguing that the payout model relies heavily on continuous Bitcoin appreciation, while Bitcoin has already posted an 18.93% year-to-date decline in 2026 — a reality that directly undermines the foundation of its dividend logic.
This skepticism is not unfounded, but stems from the stark contrast between long-term optimistic forecasts and short-term brutal losses. MicroStrategy founder and Executive Chairman Michael Saylor asserted in a June 2025 CNBC interview that Bitcoin would appreciate at an average annual rate of about 30% over the next 20 years; even in a more recent Bloomberg interview on October 13, 2026, he maintained that Bitcoin's annual growth rate would be between 20% and 30% over the next two decades.
However, market movements have given a completely different answer. Peter Schiff pointed out in a post on X on November 12, 2026, that Bitcoin fell 6.5% in 2025, and has already declined 17% year-to-date in 2026, leaving no reason whatsoever to support a 30% appreciation rate for Bitcoin. As of the time of writing, Bitcoin is trading at around $70,900, with a cumulative decline of 18.93% in 2026, further confirming the downtrend Schiff mentioned.
In terms of short-term volatility, Bitcoin has fallen 3.74% over the past 24 hours, 6.53% over 7 days, and 14.52% over 1 month, with its price even 30.10% lower than a year ago. It is worth noting that MSTR is the common stock ticker for MicroStrategy and is fundamentally different from the STRC preferred stock used to generate yield. Schiff's criticism targets the economic logic behind STRC: namely, the assumption that the Bitcoin held by MSTR can appreciate 30% annually, enabling the company to pay STRC shareholders a 12% annual yield while remaining profitable. When this premise is disproven by the market, the fragility of the entire yield model is fully exposed.
To understand the core of this controversy, one must delve into the operating mechanism of the STRC security. MicroStrategy's STRC security has a dynamically changing dividend rate, calculated on a base of $100 per share, corresponding to an annual dividend rate of 12%, meaning each share can receive $12 in dividends per year. The actual yield is the percentage obtained by dividing the annual dividend income by the purchase price, and the company evaluates this ratio monthly, aiming to keep the share price at around $100. Shareholders approved a daily accrual mechanism for STRC dividends in October, meaning that starting November 1, dividends will accrue daily. This accrual process includes weekends and holidays, but actual dividend payments are only made on business days. More frequent distributions only change the timing of dividend payments, not the annualized yield. Investors holding STRC have the right to receive income distributions from the issuing company, which is fundamentally different from investors who directly hold Bitcoin and own the cryptocurrency itself.
The underlying reason is that while rising Bitcoin prices can increase MicroStrategy's asset value, unrealized gains do not automatically convert into funds available for dividend payments. Dividend payments require corporate cash on hand, which can only come from financing activities or asset sales, not from paper gains. According to data compiled by Woofun AI, this mechanism tightly binds investors' yield expectations to the company's cash flow management capability. Once asset price declines constrain financing capacity, dividend payment pressure will rise sharply.
Tight funding chains and liquidity risks have become a market focal point. MicroStrategy's Q3 2026 financial report shows that during 2026, the company raised approximately $431.8 million by selling Bitcoin, specifically to pay partial preferred stock dividends and repurchase STRC shares. As of October 25, the company's dollar-denominated assets stood at $5.07 billion, which is said to be sufficient to cover approximately 3.4 years of dividend and interest payment needs. Repurchasing means buying back shares from investors, thereby reducing the number of shares on which future dividends must be paid, which to some extent alleviates long-term cash outflow pressure.
However, brokerage and financial services firm Charles Schwab (SCHW.US), in assessing Bitcoin asset risk, pointed out the volatility of financial report data and potential liquidity pressure. So-called liquidity pressure refers to the difficulty companies face in meeting cash payment obligations when Bitcoin asset values decline. Under mark-to-market accounting, changes in these asset values are also reflected in financial reports as unrealized gains or losses, further intensifying financial uncertainty.
Between November 2 and 8, MicroStrategy purchased an additional 1,036 Bitcoins worth $81.9 million, while also repurchasing $188.3 million worth of preferred stock, all funded by common stock sales. At this point, MicroStrategy's total Bitcoin holdings reached 850,364 coins, with a total acquisition cost of $64.16 billion. As of November 8, the company's dollar reserves set aside for paying preferred stock dividends and debt interest stood at $4.77 billion, plus an additional $146.2 million in separate cash reserves. Despite seemingly ample book reserves, maintaining such a massive position and dividend obligations places extremely high demands on cash flow amid persistently depressed Bitcoin prices.
Michael Saylor has attempted to defend this model through a historical perspective, tracing MicroStrategy's approach of financing Bitcoin holdings through income-generating stocks back to four centuries of financial history, implying it has deep financial logic supporting it. However, in the current market environment, such historical analogies can hardly dispel investors' concerns about short-term liquidity.
As Bitcoin prices fall below the $71,000 mark, MicroStrategy's yield model is facing an unprecedented stress test, and market participants need to closely monitor its subsequent funding operations and asset disposal strategies. For more heavyweight Hong Kong stock information, download the Zhitong Finance app. For more Hong Kong stock and overseas wealth management information, please visit www.zhitongcaijing.com (search for "Zhitong Finance"); to join the Zhitong Hong Kong stock investment group, please add Zhitong customer service WeChat (ztcjkf).
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