Strategy, led by Michael Saylor, owns 478,740 Bitcoins, valued at about $43.7 billion at current prices.
But with Bitcoin’s slide from $108,000 to around $88,000, investors are getting nervous a little.
Long term perspective
Strategy’s stock has plummeted over 55% from its highs, which is a pretty big deal. The company spent $27.954 billion on Bitcoin, with an average price of $62,473 per coin.
While they’ve got an unrealized gain of $15.746 billion, the market isn’t exactly celebrating.
The concern is whether Strategy can weather this storm, especially with $8.2 billion in debt hanging over its head.
Strategy’s debt is mostly in convertible notes due in 2028, which gives them some breathing room, because three years is quite a long time. But the deal is that if Bitcoin’s price stays low, raising new capital becomes a challenge.
The Kobeissi Letter notes that this debt structure is important to understanding the risks involved.
The MicroStrategy liquidation:
As MicroStrategy, $MSTR, falls over -55%, many are asking about "forced liquidation."
The company now holds $44 BILLION worth of Bitcoin, could they be forced to sell it?
Is liquidation even possible? Let us explain.
(a thread) pic.twitter.com/GcDZVu2gVa
— The Kobeissi Letter (@KobeissiLetter) February 25, 2025
Michael Saylor holds significant voting power, so any drastic moves, like liquidating Bitcoin, would need his approval.
Liquidation fears
There’s been a lot of chatter about forced liquidation, but it’s really unlikely. Strategy’s debt maturity is far off, and Saylor can block any major changes. So, while the situation is tense, immediate collapse isn’t on the horizon.
Bitcoin’s price has been swinging wildly between $88,000 and $97,000 in the past weeks. While it’s still above Strategy’s entry point, a deeper slide could change that.
If Bitcoin drops to $45,625, Strategy’s holdings could be underwater compared to their debt and purchase costs.
Analysts are divided in this question, some see this as a brilliant bet, while others worry about the downside.
What’s next for Strategy?
Strategy has survived crypto downturns before, but this one is maybe testing its limits. If Bitcoin stays around $91,250, they’re in the green.
The stock’s plunge shows investors are spooked, and while raising capital is key if Bitcoin falls below $62,473 for too long, that lifeline starts to fray.
Strategy needs to prove its model works even when markets are bleeding.
With the 2028 debt deadline offering some time, Strategy must show it can hold on to its massive Bitcoin stash and ride out this dip.
Have you read it yet? Bitcoin could crash to $70K?
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