MicroStrategy’s Bitcoin Strategy Under Pressure: Can the Company Weather a Price Crash?

·

The recent downturn in Bitcoin’s price has reignited concerns about MicroStrategy—now rebranded as Strategy (NASDAQ: $MSTR)—and its aggressive Bitcoin treasury strategy. With its stock losing over 25% in just five days, investors are once again questioning whether the company could face forced liquidation if Bitcoin continues to fall below its average acquisition cost.

As one of the most prominent corporate holders of Bitcoin, Strategy’s fate is increasingly tied to the world’s leading cryptocurrency. But how resilient is its financial structure? And what would it take for the company to start selling its massive Bitcoin stash?

Strategy’s Bitcoin Acquisition Strategy: How Much Did It Pay?

Since 2020, under the leadership of former CEO Michael Saylor, Strategy has transformed from a business intelligence firm into what many now call a “Bitcoin reserve company.” The core of its strategy revolves around raising capital through zero-interest convertible bonds, using those funds to purchase Bitcoin, and then leveraging the appreciation in Bitcoin’s price to issue new shares at a premium—creating a self-reinforcing cycle of accumulation.

As of February 23, 2025, Strategy holds approximately 478,740 BTC, valued at around $42.4 billion**, with an average purchase price of **$65,100 per Bitcoin.

👉 Discover how companies can capitalize on digital asset trends with smart financial tools.

This isn’t the first time Strategy has faced market turbulence. During the 2022 bear market, when Bitcoin dropped from nearly $69,000 to below $16,000, similar fears emerged. Yet, the company not only survived but continued buying during the dip—a move that reinforced confidence in its long-term conviction.

Despite current volatility, Strategy’s balance sheet remains anchored by a clear strategy: hold, accumulate, and avoid short-term panic.

Debt Structure and Liquidation Triggers: Is Forced Selling Likely?

Strategy currently carries about $8.2 billion in debt**, primarily in the form of **convertible notes** maturing between 2028 and 2030. Compared to its **$47.8 billion in Bitcoin assets, this results in a leverage ratio of just 17.2%, suggesting a relatively conservative capital structure.

Importantly, these convertible bonds do not require immediate repayment or collateral calls based on Bitcoin’s price alone. Instead, early redemption clauses are only triggered by a “fundamental change”—such as corporate dissolution, bankruptcy, or a shareholder-approved merger or sale of assets.

In other words, there is no automatic liquidation mechanism tied to Bitcoin’s market price. Even if Bitcoin drops sharply, Strategy isn’t forced to sell unless the company itself undergoes structural dissolution—a scenario far removed from current realities.

This structural protection gives Strategy breathing room to endure prolonged downturns, provided it maintains operational stability and avoids insolvency triggers.

Michael Saylor’s Control and Strategic Conviction

A key pillar of Strategy’s resilience lies in the outsized influence of Michael Saylor, who controls 46.8% of voting power despite owning a smaller percentage of shares. This level of control makes it nearly impossible for any major corporate decision—especially one involving asset liquidation—to pass without his approval.

Saylor has repeatedly emphasized his unwavering belief in Bitcoin. In a recent interview, he stated that even if Bitcoin dropped to $1, Strategy would not sell—but instead would “buy every Bitcoin available.”

“Bitcoin is digital energy, digital property, and digital scarcity. It’s the best monetary asset ever created.”
— Michael Saylor

His confidence isn’t just ideological; it’s baked into the company’s financial engineering. By securing long-dated debt and maintaining tight control over governance, Saylor has effectively insulated Strategy from external pressure—at least for now.

Can Strategy Keep Raising Capital?

While forced liquidation appears unlikely, the sustainability of Strategy’s model hinges on its ability to continue raising capital through equity or debt offerings. This depends heavily on investor sentiment, which in turn is influenced by both Bitcoin’s performance and $MSTR stock valuation.

If $MSTR trades at a discount to its net Bitcoin value, the economics of issuing new shares to buy more Bitcoin break down. As economist Peter Schiff noted:

“When MSTR trades at a discount to its Bitcoin holdings, the game is over… selling MSTR shares to buy Bitcoin will produce a negative Bitcoin yield.”
— Peter Schiff, February 19, 2025

👉 Explore platforms where you can monitor real-time asset valuations and market sentiment.

In a prolonged bear market, dwindling investor appetite could limit Strategy’s ability to fund further purchases. While it doesn’t need to sell now, stagnation in accumulation might signal a shift in momentum—and potentially weaken market confidence.

Core Risks Beyond Liquidation

Although outright bankruptcy or forced selling remains a low-probability event, several challenges persist:

Moreover, Strategy’s 2024 financial report highlighted significant impairment losses due to prior dips in Bitcoin’s price—a reminder that accounting realities can affect investor perception even when long-term strategy remains unchanged.

Frequently Asked Questions (FAQ)

❓ Could MicroStrategy be forced to sell Bitcoin if the price drops below $30,000?

No. There are no margin calls or price-based liquidation clauses tied to its debt. Sales would only occur voluntarily or after a fundamental corporate change like bankruptcy or dissolution.

❓ How does Strategy finance its Bitcoin purchases?

Primarily through issuing zero-interest convertible bonds and secondary stock offerings. These funds are then used exclusively to acquire more Bitcoin.

❓ Who controls decision-making at Strategy?

Michael Saylor holds 46.8% of voting power, giving him decisive control over major corporate actions, including asset sales or strategic pivots.

❓ What happens if $MSTR stock trades below its Bitcoin net asset value?

It becomes harder to raise capital via share issuance, as each new share sold would effectively lose Bitcoin value. This could slow or pause future accumulation but doesn’t trigger forced selling.

❓ Are other companies following Strategy’s model?

Yes. Over 78 public companies have adopted some form of Bitcoin treasury policy, inspired by Strategy’s early success. However, none hold positions as large or operate with such singular focus.

❓ Is Strategy still buying Bitcoin during price dips?

Based on public disclosures and Saylor’s statements, yes—Strategy views market downturns as opportunities to accumulate at lower prices.

The Road Ahead: Accumulation vs. Sustainability

Strategy stands at a crossroads. Its bold bet on Bitcoin has paid off handsomely during bull markets, but now faces its toughest test yet: maintaining credibility during prolonged volatility.

While liquidation risk remains minimal, the real challenge lies in sustaining investor confidence and preserving its capital-raising engine. If Bitcoin rebounds, Strategy could resume aggressive accumulation. If not, it may enter a holding phase—still bullish in belief, but constrained by market realities.

Ultimately, the company’s future depends not just on Bitcoin’s price action, but on its ability to prove that a publicly traded firm can thrive with a digital asset-centric balance sheet.

👉 Stay ahead of market shifts with tools designed for tracking macro trends and asset performance.

Keywords:

Disclaimer: Cryptocurrency investments are subject to high market risk. Prices can fluctuate significantly, and you may lose your entire principal. Please conduct thorough research and assess your risk tolerance before investing.