With Strategy Down 50%, What’s the Fate of Its $43B Bitcoin Holdings?

Strategy’s Bitcoin Holdings Under Scrutiny as Stock Plunges 55%

With Bitcoin’s sharp decline, an old question from previous bear markets has resurfaced: Could Michael Saylor’s Strategy (MSTR) be forced to sell part of its nearly 500,000 BTC stash?

MSTR Stock in Extended Downtrend

While Bitcoin’s price drop has dominated headlines, Strategy’s stock (MSTR) has been falling for over three months. Currently trading around $250, MSTR has tumbled 55% from its November 21 high of $543.

The downturn has been even more severe for leveraged MSTR-related products:

• Defiance Daily Target 2x Long MSTR ETF (MSTX) has crashed 90%
• T-REX ETF (MSTU) has dropped 85%

Despite this, Strategy’s Bitcoin investment remains in profit. The company began accumulating BTC in August 2020 with an average cost basis of $66,300 per BTC. At Bitcoin’s current price of $87,000, Strategy still holds an unrealized profit of $10.65 billion.

Does Strategy Face Forced Bitcoin Sales?

A deep dive into Strategy’s debt structure reveals whether it could be pressured into selling BTC.

• Total BTC Holdings: 499,096 BTC (all unencumbered, meaning none are pledged as collateral)
• Total Outstanding Debt: $8.2 billion
• Current BTC Value: $43.4 billion

For a forced sale to occur, Bitcoin would need to plummet to $16,500—an additional 80% decline from current prices—before the company’s total debt exceeds its BTC holdings.

Convertible Debt and Future Risks

Strategy’s largest debt obligations come from convertible bonds maturing in 2029 and 2030, which account for $5 billion of the $8.2 billion debt total.

While these bonds are currently trading below their offering price, their long maturity dates provide time for market recovery. If Bitcoin’s price were to fall below the company’s total debt value by the time these bonds mature, and MSTR stock remained below the conversion price, Strategy would likely sell BTC to repay the bonds in cash rather than dilute shareholder value by converting them to stock.

Outlook: No Immediate Risk, But Long-Term Pressures Exist

For now, Strategy’s Bitcoin holdings are worth far more than its outstanding debt, making forced sales unlikely unless Bitcoin experiences a catastrophic collapse. With no near-term debt maturities and potential refinancing options, Strategy has some breathing room. However, if Bitcoin’s price remains under pressure for years, the company could eventually face tough decisions about its BTC reserves.

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