Strategy’s Convertible Bonds Rally as Stock and Bitcoin Rebound
Strategy’s (MSTR) convertible bonds are gaining value rapidly as the company’s stock rebounds and Bitcoin holds near its all-time highs. With institutional demand rising and crypto sentiment stabilizing, investors are bidding up the value of Strategy’s debt tied to its equity.
The firm has issued six convertible bond offerings worth a combined $8.2 billion, featuring exceptionally low average interest rates of just 0.421%. As of now, five of those bonds are trading “in the money,” meaning the stock price has exceeded their conversion levels. Only the 2029 bond, with a high conversion threshold of $672.40, remains below that level.
MSTR stock, which dipped to $235 just three months ago, has since rallied to around $450, closing in on its 2024 high of $543. That surge has lifted the market value of the convertibles to $13.4 billion—$5.2 billion above their face value—highlighting strong demand for equity-linked exposure to the company’s Bitcoin strategy.
These convertibles give investors the right to exchange debt for equity if the stock price continues to rise, offering a leveraged bet on MSTR’s performance and Bitcoin’s broader momentum.
Despite favorable market conditions, Strategy hasn’t issued new convertibles recently. Analysts attribute this pause to a drop in speculative activity, especially in the options market.
Implied volatility for MSTR has fallen to 53.1%, down sharply from prior spikes above 200%. While open interest remains high at over 2.4 million contracts, daily trading volume has fallen to just 20% of its 30-day average. Current put-call ratios suggest a neutral stance from investors, reflecting caution rather than conviction.
Given this shift in sentiment, any future convertible issuances by Strategy may come with less favorable terms—such as higher coupons or more aggressive conversion prices—raising the risk of faster equity dilution.
Still, with Bitcoin stable and Strategy’s stock rebounding, existing bondholders are seeing solid gains, reinforcing confidence in the company’s long-term crypto-focused capital strategy.
