MicroStrategy's liquidation cloud is rising again: How will the big dump in BTC price affect this company?

With the recent drop in the price of BTC, MicroStrategy ( has now been renamed to Strategy, and the stock code $MSTR) has dropped by more than 25% in the past five days. The market is beginning to follow this company, which holds approximately $47.8 billion worth of BTC, to see if it will face the crisis of 'forced dumping'. If the price of BTC is significantly lower than its average holding price in the near future, can Strategy withstand the pressure?

MicroStrategy's BTC strategy: What is the holding cost?

Since 2020, MicroStrategy has been led by then-CEO Michael Saylor, who has massively invested the company's funds in BTC, attempting to build it into a "BTC reserve company". The core of its strategy is to raise funds through the issuance of 0-interest convertible bonds, purchase BTC to push up the price, and then issue new shares at a premium, operating in a cycle to expand the BTC holdings.

( 78 global listed companies are vying to emulate the micro-strategy (Strategy), what is the BTC reserve strategy? )

As of February 23, 2025, the company currently holds about 478,740 BTC, with a total value of approximately 47.8 billion US dollars, and an average purchase cost of 65,100 US dollars per coin.

However, this is not the first time the company has faced a bear market. In 2022, when BTC fell from $70,000 to $15,000, the market also questioned its liquidation risk, but the company safely passed through.

MicroStrategy's purchase time, average price, and total holding cost ( Source: The Kobeissi Letter) Debt structure and liquidation trigger conditions

Currently, MicroStrategy's total debt is about $8.2 billion, compared to its current $47.8 billion BTC holdings, the leverage ratio is about 17.2%.

Most of this debt is convertible, even if the conversion price is lower than the current share price, but most of the debt maturity dates fall between 2028 and 2030, which is a long time.

According to the debt agreement, only when a "fundamental change (fundamental change)" occurs in the company, it may trigger early redemption and lead to the liquidation of its BTC assets. The so-called "fundamental change" usually requires shareholder approval for the liquidation or dissolution of the company, or the occurrence of corporate bankruptcy.

In other words, the likelihood of forced liquidation is quite low unless extreme circumstances arise.

(Leading the trend, a detailed explanation of the BTC reserve strategy company investment guide)

Michael Saylor's confidence and shareholder power

Michael Saylor recently stated in an interview that even if BTC drops to 1 US dollar, the company will not be liquidated, but will instead "buy all BTC".

What makes Saylor speak so loudly?

This courage and confidence clearly stem from his personal ownership of 46.8% of the voting rights in the company, making it nearly impossible for any shareholder resolution to pass without his decision.

In short, the structure of convertible bonds buys the company time, as long as the value of BTC does not significantly fall below its cost after 2027, and the conversion price is not lower than the current stock price, the debt pressure remains manageable.

Capital raising ability remains key

However, MicroStrategy's business model relies on continuous fundraising. If BTC and $MSTR stock prices both plummet, it may still shake investor confidence, thereby affecting its ability to issue bonds or stocks.

It looks like the new $MSTR convertible notes aren’t going over too well. Shares are down 4.5% today, even with Bitcoin up 2.5%. When MSTR trades at a discount to its Bitcoin holdings, the game is over, as selling MSTR shares to buy Bitcoin will produce a negative Bitcoin yield.

— Peter Schiff (@PeterSchiff) February 19, 2025

If the capital market enters a long bear market, the risk of capital chain breaking will become a concern. Gold bull Peter Schiff has pointed out that if the $MSTR stock price remains low for a long time, investors may turn to directly purchase BTC, and MicroStrategy's strategy will be declared a failure.

Low clearing risk but challenges remain

From a financial risk perspective, MicroStrategy's debt structure and Saylor's control make it difficult to be forced liquidation, unless there is a corporate bankruptcy or an unprecedented long-term crash in BTC, such as a "doomsday scenario". However, the current market volatility is causing investors to reassess the sustainability of their strategies once again.

Bitcoin on sale

— Michael Saylor (@saylor) February 24, 2025

In recent years, due to the rise of the BTC craze, MicroStrategy is facing its first major test. Saylor responded to the recent plunge by saying "BTC is on sale", but it is still unknown whether investors are willing to continue buying in a bear market. In the coming years, the trend of BTC prices and the company's financing capability will determine its fate.

(MicroStrategy (Strategy) annual report warns of significant impairment in 2024 due to BTC recognition, and potential large tax payments in 2025 under the new regulations)

This article MicroStrategy's clearing cloud reappears: How will the BTC price crash affect this company? First appeared on Chain News ABMedia.