In a bold and alarming statement, on-chain analyst OxChain highlighted the potential for a catastrophic collapse related to Strategy (formerly MicroStrategy), the Bitcoin-licensed company co-founded by Michael Saylor. According to OxChain, this potential collapse could surpass the notorious failure of FTX.

'Strategy's Bitcoin tactics resemble a Ponzi scheme.'

In a recent post on X (formerly Twitter), OxChain expressed concerns about Strategy's robust Bitcoin accumulation formula, suggesting that the company's operations resemble a Ponzi scheme.

OxChain points out that since 2020, MicroStrategy has transformed from a traditional software company into a key player in the Bitcoin market, currently holding approximately 582,000 BTC, worth nearly $61 billion.

However, OxChain asserts that this impressive figure is supported by leverage, debt, and shareholder dilution, rather than genuine confidence in cryptocurrency.

The analyst outlined Strategy's approach as a 'cyclical financial loop': the company raises capital through stocks or bonds, buys Bitcoin, announces these purchases to drive up stock prices, and then raises more capital.

Analysts assert that this cycle remains effective as long as Bitcoin prices continue to rise. However, with a new $1 billion stock sale plan, OxChain believes that Strategy is increasing its risk level.

Analysts predict significant liquidation risks.

OxChain warns that the average cost of Strategy for each Bitcoin is about $70,000, creating a precarious situation. The analyst further stated that if Bitcoin prices drop significantly below this level, the company's treasury, currently valued at around $25 billion, could quickly begin to incur losses.

According to the analyst, although Saylor publicly commits to never selling Bitcoin, the realities of accounting and risk management may force the company to act if market conditions worsen.

In the first quarter of 2025, Strategy revealed an unrealized Bitcoin loss of $5.9 billion, reflecting the asset's volatility. Under the new accounting standard ASC 350-60, the company is required to report fair value, eliminating the possibility of hiding behind book value.

This transparency has led to legal consequences as shareholders filed a class action lawsuit alleging that Strategy concealed risks associated with Bitcoin's volatility while actively raising capital.

OxChain continues to claim in its series of social media posts that Strategy's role as a Bitcoin access point is diminishing, especially as institutional capital flows into 'more transparent and tightly regulated options,' such as BlackRock's iShares Bitcoin Trust (IBIT), which has accumulated around $70 billion in assets under management.

The analyst emphasizes that unlike Strategy, which is said to face dilution risks and operates with limited protective measures, IBIT offers 'a more stable investment' for those seeking exposure to Bitcoin.

OxChain added that if Strategy fails, the consequences will be severe. The company holds about 2.77% of the total Bitcoin supply, and a significant liquidation could shake the market.

The analyst warns that a mere 22% drop in Bitcoin prices from the average purchase price could also trigger corporate liquidation, potentially leading to one of the largest liquidation events in history.

Ultimately, OxChain warns that Strategy is neither a hero nor a villain in the cryptocurrency ecosystem; rather, it represents a 'risk vector highly dependent on leverage and market sentiment.'