Is Michael Saylor’s Bitcoin Bet on Thin Ice?
After nearly five years of relentless bitcoin buying, Strategy (formerly MicroStrategy), led by Michael Saylor, may be skating closer to risk than ever before.
The firm now holds a staggering 506,137 BTC, valued at about $44 billion based on Bitcoin’s current price of $87,000. While that haul sounds impressive, it’s coming at a cost. Saylor’s recent bitcoin buying spree has pushed the company’s average acquisition cost to $66,000, meaning a further modest dip in price could put the entire stack underwater.
So, is the king of corporate bitcoin exposure facing his first real test?
A High-Stakes Game of Financial Engineering
To fund its enormous BTC position, Strategy has raised capital through a mix of equity sales, convertible debt, and most recently, preferred stock—each with its own risk profile and implications.
The approach has worked so far, but with bitcoin down nearly 20% from its $109,000 peak two months ago, concerns are surfacing about whether Strategy’s capital strategy is sustainable.
Critics argue that if Bitcoin continues to fall, the aggressive pace of accumulation could backfire.
Still, experts like Quinn Thompson of Lekker Capital remain cautiously optimistic. “The risk of a forced bitcoin liquidation is low,” he told CoinDesk. “The debt is mostly refinancable, and the preferred stock is perpetual—it never has to be paid back.”
Importantly, Strategy hasn’t collateralized its bitcoin for loans (save for a repaid Silvergate loan in 2023), limiting the kind of margin call disaster that felled other firms during the 2022 crypto meltdown.
But the Storm Clouds Are There
Strategy’s current challenge isn’t default—it’s cash flow.
The company is now on the hook for 8% dividends on STRK, 10% on STRF, and a blended 0.4% interest on its convertible notes. But Strategy’s original software business doesn’t generate enough income to cover these obligations.
To stay afloat, Saylor may have to keep issuing more MSTR stock, creating dilution and putting downward pressure on share price. “At some point, the market might not absorb it,” Thompson warned.
And if things get worse?
“We could see the stock trading at a discount to its bitcoin holdings, like GBTC before it became an ETF,” Thompson said. “In that scenario, shareholders might push to reverse the playbook—sell bitcoin, buy back stock.”
Notably, Saylor lost his controlling voting power in 2024 due to dilution, meaning activist investors could potentially force that shift.
A Capital Structure on a Seesaw
According to Jeffrey Park of Bitwise, Strategy’s funding tools attract different investor profiles. Equity and convertible debt appeal to those chasing volatility, while preferred shares attract yield-seekers looking for stability.
“Strategy’s structure is like a playground seesaw,” Park explained. “As sentiment shifts, value shifts between these instruments. But the total weight—Strategy’s enterprise value—remains unchanged.”
One More Risk on the Horizon: ETF Demand
ETFs like MSTX and MSTU, offering 2x long exposure to Strategy, have absorbed over $3 billion in MSTR. That’s created persistent buying pressure even as the stock has slid. But the demand may not last forever.
“If these ETFs unwind, it could trigger violent selling,” said Thompson. “They’ve been crushed already. This isn’t a structural demand trend—it’s a temporary tailwind.”
The Verdict?
Michael Saylor’s bold strategy has made Strategy the largest corporate holder of bitcoin. But the playbook of debt-fueled, equity-funded BTC buys is now being tested in real time.
If bitcoin rallies again, Saylor looks like a genius. If not, dilution, debt obligations, and ETF risks may catch up to him—and shareholders might not wait forever to pivot.
