Analyst Kaleo has warned that selling a significant portion of bitcoin holdings may soon become Strategy’s most practical option.
Michael Saylor’s bitcoin focused software company has faced growing scrutiny in recent weeks. The firm’s small sale of 32 BTC at the end of May did little to ease concerns, especially as its Stretch Preferred Stock (STRC), which is used to raise capital for additional bitcoin purchases through continuous share issuance, has dropped well below its $100 par value.
Although Strategy and its executives continue to reassure investors that dividend payments remain secure and that the situation is manageable, skepticism in the market is increasing. Critics, including Peter Schiff, have openly questioned the sustainability of the model, with Schiff even describing STRC as a Ponzi scheme.
Pressure Mounts on Strategy
Market concerns intensified this week after STRC experienced a sharp selloff. According to Matt Cole, the decline was mainly driven by leveraged investors exiting positions rather than any direct weakness in Strategy’s financial health.
In a recent interview, Kaleo, who has more than 700,000 followers on X, suggested that Strategy may ultimately need to sell at least 50,000 BTC over the next two years.
He questioned whether the company’s aggressive focus on increasing its bitcoin holdings genuinely creates value for MSTR shareholders.
Kaleo also criticized how MSTR and similar products are being marketed, calling the current messaging reckless. Strategy has long described MSTR as “amplified bitcoin,” but Kaleo argued that this is simply another way of saying the investment carries significant leverage.
He explained that leverage can generate outsized gains during rising markets, allowing investors to profit substantially as asset prices climb. However, the downside can be equally severe, with losses accelerating just as quickly when markets decline.
Comparisons to FTX Collapse
Kaleo and the interviewer also compared the current situation to the rapid collapse of FTX in 2022.
While acknowledging key differences, such as Sam Bankman-Fried using customer funds for trading, they noted similarities in the broader risk structure. In both cases, investor capital was tied to highly concentrated exposure in crypto assets, with the expectation that prices would continue rising.
Kaleo pointed out that very few expected FTX, once one of the largest crypto exchanges, to collapse within days. Likewise, many did not anticipate bitcoin falling toward $16,000 during the last major downturn.
He believes that if Strategy is forced to liquidate a large portion of its bitcoin reserves to meet expenses or dividend obligations, the selling pressure could push bitcoin to multi year lows.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic
