XRP Lawyer John Deaton Sounds Alarm On This Bitcoin Investment Strategy

XRP lawyer John Deaton has voiced concerns about recent developments in Bitcoin investment strategies.

Deaton, who disclosed that 80% of his net worth is in Bitcoin, cautioned against the growing trend of using loans and home equity to acquire Bitcoin.

This comes as the industry faces new proposals that involve leveraging home equity to finance Bitcoin purchases. Simultaneously, Michael Saylor’s Strategy launches a new perpetual preferred stock offering to fund more BTC acquisitions.

XRP Lawyer John Deaton Reveals Bitcoin Investment Risks

Pro XRP lawyer John Deaton raised alarms about the increasingly aggressive tactics used by some investors to acquire Bitcoin, particularly the strategy of leveraging home equity.

He noted that such tactics could lead to dangerous financial consequences.

Deaton expressed his concern about people borrowing money to purchase Bitcoin. He emphasized that this strategy could set them up for financial hardship. He mentioned,

“MicroStrategy did it with cash. You can do it with your house.”

While Deaton acknowledged his significant investments in Bitcoin, he cautioned that such risky moves could eventually lead to severe losses for individuals, even though these consequences might take several years to unfold.

The alert was issued as peer-to-peer mortgage platforms like Horizon became more popular, making it possible for individuals to get BTC by borrowing against their home equity with no regular interest or fees.

While both approaches have supporters, Deaton is concerned about the greater financial dangers of holding Bitcoin should its value fall.

Strategy’s Perpetual Preferred Stock Offering

Furthermore, Michael Saylor’s firm, Strategy, recently announced a new offering of perpetual preferred stock.

The firm intends to raise $250 million through the issuance of 2.5 million shares of 10% Series A Perpetual Stride Preferred Stock, priced at $100 per share.

The proceeds from this offering will be used to further increase Strategy’s Bitcoin holdings. Strategy, the largest corporate holder of Bitcoin in the world, already holds over 580,000 Bitcoin worth approximately $61.7 billion.

The firm’s new perpetual preferred stock offering allows institutional and selective non-institutional investors to participate in its Bitcoin accumulation strategy.

Investors in the perpetual stock are eligible for annual dividends. The same will be paid if declared by the board, starting September 2025.

Saylor’s firm continued to expand its BTC holdings. The goal being to leverage the monetary premium in real estate and funneling it into Bitcoin.

As more companies and individual investors follow suit, the risk of financial instability increases, according to critics who argue that such moves could destabilize markets in the future.

Risks of Perpetual Preferred Stock for Individual Investors

The perpetual preferred stock offering by Strategy also raises questions about its long-term feasibility for individual investors.

Although the stock helps investors connect to Bitcoin, there are still many serious risks involved. With perpetual preferred stock, no regular dividends are made unless the board declares them.

Non-cumulative dividends, as the term implies, guarantee payments in the period they are due and can’t be collected later.

The likelihood of Strategy facing financial issues or changing its dividend policies could make investors sensitive to changes in the market.

In addition, if Strategy goes through a “fundamental change,” those who own the perpetual stock can decide to ask Strategy to buy back their shares for cash.

However, the actual terms depend on the quantity of outstanding stock there is. Experts are worried that this strategy could lead to major losses in case Bitcoin price drops dramatically.

Amid the growing concern over Bitcoin investment strategies, Pro-XRP lawyer John Deaton made an interesting prediction about Elon Musk and Tesla’s involvement in Bitcoin.

Deaton’s prediction suggests that Tesla and Musk’s position on BTC could shift, given the current political and economic climate.

Musk has been a vocal supporter of Bitcoin in the past, especially with Tesla’s investment in the digital currency. The current regulatory environment could lead to new decisions about their BTC holdings.