Strategy’s Bitcoin Holdings Under Pressure Amid Market Decline
The ongoing decline in Bitcoin’s price has reignited a familiar question from past bear markets: Could Michael Saylor’s Strategy (MSTR) be forced to liquidate part of its nearly 500,000 BTC holdings?
Strategy’s Stock Faces Extended Downtrend
While Bitcoin’s recent sell-off has grabbed headlines, Strategy’s stock (MSTR) has been in decline for over three months. Trading around $250 on Wednesday, MSTR is down 55% from its November 21 peak of $543.
Leveraged products tied to MSTR have suffered even steeper losses:
- Defiance Daily Target 2x Long MSTR ETF (MSTX) has plummeted 90%
- T-REX ETF (MSTU) is down 85%
Despite this downturn, Strategy’s Bitcoin purchases remain profitable. The company began accumulating BTC in August 2020, with an average cost basis of $66,300 per BTC. At the current price of $87,000 per BTC, its holdings still reflect an unrealized profit of $10.65 billion.
Could Strategy Be Forced to Sell Bitcoin?
A key concern for investors is whether Strategy’s outstanding debt could force it to sell BTC to cover obligations. However, a closer look at the company’s financials suggests no immediate risk of forced liquidations.
- Total BTC Holdings: 499,096 BTC (Unencumbered, not used as collateral)
- Total Outstanding Debt: $8.2 billion
- Current Value of BTC Holdings: $43.4 billion
For a forced sale scenario to arise, Bitcoin’s price would need to drop to around $16,500—an additional 80% decline from current levels.
Examining Strategy’s Debt Structure
Strategy’s convertible bonds provide further insights:
- Two large convertible notes maturing in 2029 and 2030 account for $5 billion of the $8.2 billion total debt.
- Both are currently trading below their offering price but do not mature until 2029, leaving time for a market rebound.
If Bitcoin’s price were to fall below Strategy’s total debt value by the time these bonds mature, and MSTR stock remained below conversion price, the company would likely opt to sell BTC to repay bonds in cash rather than diluting shares through conversion.
Conclusion
While Strategy’s stock is under pressure, its Bitcoin holdings remain profitable, and the risk of a forced BTC liquidation appears low unless Bitcoin collapses by another 80%. With no near-term maturities and potential options to roll over debt, Strategy appears well-positioned to navigate the current downturn—at least for now.
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