Arca CIO Jeff Dorman Rejects Claims That Michael Saylor's Strategy Faces Forced Bitcoin Sale Risk
Arca CIO Jeff Dorman has argued that Strategy is unlikely to be forced to sell bitcoin, despite Michael Saylor's 42% ownership of the company. Dorman cites Strategy's governance structure and debt terms, noting there are no debt covenants that would compel liquidation of its bitcoin holdings.
Strategy's legacy software business continues to provide positive cash flow, which covers interest expenses and reduces liquidity pressure. Lenders are expected to extend terms rather than force defaults in the near term, further limiting the risk of forced asset sales.
However, critic Peter Schiff warned that Strategy could face bankruptcy and challenged Saylor to a public debate during Binance Blockchain Week in Dubai in early December. Schiff criticized the company's reliance on high-yield preferred shares and suggested a potential death spiral could occur if demand falls.
Despite these concerns, Strategy's stock has fallen 33.42% year-to-date, with Class A shares closing at $199.74. Meanwhile, bitcoin has increased by about 0.4% year-to-date. StrategyTracker data indicates that Strategy's shares trade modestly above bitcoin-backed value, with a diluted market NAV multiple close to 1.06x after accounting for future share dilution.
Dorman further stated that Strategy is no longer a meaningful marginal buyer of bitcoin relative to ETF inflows and does not represent a systemic risk to bitcoin. As of 11 p.m. UTC, bitcoin traded around $94,293.
