Gerber Slams Saylor's Surprise Bitcoin Sale

Investment advisor Ross Gerber has sharply criticized Michael Saylor following news that Strategy Inc. sold a portion of its Bitcoin holdings. Gerber accused Saylor of executing a "rug pull" on the market, noting that Saylor had previously claimed he would never sell the cryptocurrency. In this industry, "never" tends to age quickly.

Strategy sold 32 Bitcoin worth approximately $2.5 million. This represents a tiny fraction of the company's roughly $54 billion in total Bitcoin holdings, but the move is symbolically significant because it is the firm's first Bitcoin sale since late 2022. Small slice, loud message.

Market backlash and "greed" accusations: Gerber lambasted the move, stating: "Saylor says he'll never sell bitcoin. Then rug pulls the market." Gerber argued that the sale pushed prices lower, "creating the negative cycle of liquidation of all the speculators." He attributed the action to the greed of big players, claiming "they can't seem to steal enough when times are good."

CNBC host Jim Cramer also weighed in on the controversy, calling Saylor's action a "suboptimal move roiling crypto." Cramer added that he is hearing speculation from market observers pondering if Bitcoin was "only up in the 90s because of Saylor," a theory Cramer noted seems extreme but is pervasive.

The "three-body problem": The company's straightforward strategy of raising money to buy Bitcoin and never selling has become far more complicated over time. Strategy now has to satisfy three distinct investor groups: Bitcoin investors, equity traders wanting leveraged token exposure, and preferred shareholders collecting cash dividends. Richard Galvin, founder of DACM, described this dynamic as a "three-body problem," warning that "one of them will have to take the pain to protect the other two."

Bitcoin is currently trading near a four-month low following the latest market selloff. At the same time, Strategy's common stock has plummeted about 70% from its high last year. Raising the dividend rate to defend the $100 par value would increase Strategy's massive $1.7 billion dividend load and signal stress to the market.

However, not all analysts view the situation negatively. StoneX, a firm that sells securities for Strategy, issued a report stating that the 32 Bitcoin sale simply demonstrates the company can meet its financial obligations without materially reducing its core holdings. Strategy shareholders will vote on Monday on a proposal to transition to a twice-a-month dividend payment on STRC.