Bitcoin (BTC) Critic Peter Schiff Acknowledges the 'First Real Use Case' for Bitcoin

Known for supporting gold over digital assets, Peter Schiff has repeatedly said that Bitcoin has no utility.

Bitcoin critic Peter Schiff acknowledged what he described as the “first real use case” for Bitcoin. Known for supporting gold over digital assets, Peter Schiff has repeatedly stated that Bitcoin has no utility.

However, in a recent post on X, he pointed to a situation involving investment manager Jim Chanos as an example where Bitcoin may serve a practical role.

According to an X post, Bitcoin critic Peter Schiff remarked that Bitcoin might finally have a use — though not the one Bitcoin advocates promote. He referred to investor Jim Chanos, who recently disclosed that he purchased Bitcoin to hedge against his short position in MicroStrategy stock (MSTR).

Strategy, led by Executive Chairman Michael Saylor, has continued to increase its Bitcoin holdings. The company now owns nearly 570,000 BTC. This has led some market watchers to view MSTR as a proxy for Bitcoin with added corporate risk. Schiff mocked this strategy, stating that Saylor has “accidentally created a real use case for Bitcoin,” where investors use BTC to protect themselves from the risks tied to Saylor’s own firm.

Investment manager Chanos is known for shorting stocks of companies he considers to be overvalued or structurally weak. Like Peter Schiff, he reportedly sees MSTR as overleveraged due to its Bitcoin strategy. By owning Bitcoin while shorting MSTR, Chanos aims to limit his losses in case MicroStrategy's stock price surges.

In an X post, Chanos explained that investors are paying too much for each dollar of Bitcoin exposure through Strategy. According to his statement, MSTR stock is currently trading at a premium that far exceeds the actual value of its Bitcoin holdings.

“Investors are paying $3 of stock price to gain $1 of Bitcoin exposure,” argued Chanos.

Chanos’s hedge strategy implies that while MSTR’s stock may fall due to overvaluation, the Bitcoin he holds could cushion those Ben Simmons limited his losses in case the stock price goes down further.

Strategy has also faced criticism for borrowing funds to buy Bitcoin. The company recently added 13,390 BTC for approximately $1.34 billion. Bitcoin critic Peter Schiff has voiced these concerns, saying that large BTC price drops could turn paper profits into real financial stress for Strategy.

Schiff argued that Strategy is no longer operating as a software company but as a Bitcoin-holding entity. He questioned the logic behind buying shares of a company whose main business activity is acquiring Bitcoin, rather than investing directly in Bitcoin or in companies with actual operating revenues.

"If you want to buy Bitcoin, then buy Bitcoin. If you want to invest in the stock market, buy a company with an actual business," said Schiff.

However, Pro-XRP lawyer John E. Denton, III has praised Michael Saylor comparing his long-term Bitcoin strategy to that of Warren Buffett’s investment approach with Berkshire Hathaway. He stated that Saylor may be aiming to control up to 5% of the total Bitcoin supply in circulation despite the mockery.

"They mock Michael Saylor for buying more Bitcoin & how he’s going to fund it. But no one can find fault with his goal: To become the largest Bitcoin holder & a top shareholder in the company.

They’ll be saying ‘I wish I had 1% of Saylor’s Bitcoin's when Saylor hits 5%.”

MicroStrategy (MSTR) stock has gained nearly 40% in 2023, which may reflect Bitcoin’s upward trend. However, Peter Schiff argues that this growth is more linked to Bitcoin price movements than to the company’s core business performance. This sparks concerns about the stock’s sustainability if Bitcoin enters a correction phase.

Recently, Metaplanet and Twenty One Shares, a company backed by Tether, have reportedly placed significant orders for more units of MicroStrategy stock. These fresh purchases are part of a broader strategy by several firms to capitalize on what they see as an undervalued opportunity in the market.

News data source: kdj.com

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