Bitcoin nudged back above $89,000 on Tuesday, testing the $90,000 resistance as the market staged a modest rebound. That rally hasn’t erased a growing chorus of worries about what a deeper pullback could mean for Strategy (the company formerly known as MicroStrategy) — and whether its large Bitcoin position could leave it exposed.
Bull Theory analysts asked a pointed question: would a slide in BTC to $74,000 put Michael Saylor’s Strategy in financial jeopardy or force the company to sell its holdings? Their answer: no — the company’s balance sheet looks far stronger than some of the alarmist scenarios suggest.
Why insolvency fears are overstated
- Strategy currently holds 672,497 BTC, a stash valued at roughly $58.7 billion on the balance sheet.
- Total company debt is about $8.24 billion. Even if BTC fell to $74,000, the dollar value of Strategy’s Bitcoin would still be around $49.76 billion — well above its liabilities.
- Crucially, Strategy’s borrowings are not collateralized by Bitcoin. The company does not operate like a margin-funded hedge fund facing automatic liquidations; its debt comes from unsecured convertible notes. Lenders cannot simply seize Bitcoin because the price drops, so price declines don’t trigger forced sales in the way margin loans would.
Liquidity and runway
- Strategy also holds a $2.188 billion USD reserve. That cash pile covers roughly 32 months of the company’s dividend obligations, which run about $750–800 million per year. That buffer further reduces the likelihood the company would need to liquidate BTC to meet near-term obligations.
So why has MSTR’s stock slumped?
Analysts say recent selling pressure has more to do with shifting institutional mechanics than with insolvency risk:
- On Oct. 10, the MSCI proposed a rule that could remove companies with more than 50% of assets in Bitcoin from certain indexes, raising fears of forced index selling. A final decision is scheduled for Jan. 15, 2026.
- JPMorgan increased margin requirements for trading Strategy shares from 50% to 95%, prompting some investors to trim exposure and amplify selling pressure.
Ongoing risks to watch
- Dilution: Strategy has repeatedly issued new shares to buy more Bitcoin. While that has been a deliberate growth strategy, continued issuance during market downturns can dilute existing shareholders and weigh on per-share metrics.
- NAV pressure: Excessive dilution could push Strategy’s net asset value (NAV) ratio below 1, which would limit the company’s ability to raise capital by issuing new stock — constraining one of the firm’s primary acquisition levers.
Market snapshot
- Bitcoin: ~$89,200, up about 1.5% in 24 hours at the time of writing.
- Strategy (MSTR): ~$157 per share, up roughly 1.25% over the same period.
Bottom line: While headline scenarios that portray Strategy as on the brink of collapse make for dramatic copy, the company’s unencumbered Bitcoin holdings, relatively low debt compared with BTC value, and a multi-month cash reserve argue against an immediate solvency crisis. That said, dilution and changing institutional rules remain legitimate long-term risks investors should monitor.
(Featured image: DALL·E; chart: TradingView)
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