Strategy’s Bitcoin Bet Faces Pressure as Stock Drops 55%—Is a Forced Sale Possible?

As Bitcoin’s price slump continues, an old question resurfaces: Could Michael Saylor’s Strategy (MSTR) be forced to sell part of its nearly 500,000 BTC holdings?

MSTR Stock Sees Sharp Decline

While Bitcoin’s sell-off has been the focal point of recent headlines, Strategy’s stock (MSTR) has been in a prolonged downtrend. Currently trading near $250, MSTR has lost 55% of its value since peaking at $543 on November 21.

Leveraged funds tied to MSTR have suffered even more:

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

Despite these declines, Strategy’s Bitcoin investment remains profitable. The company began accumulating BTC in August 2020 at an average cost of $66,300 per BTC. With Bitcoin currently trading at $87,000, Strategy still holds an unrealized profit of $10.65 billion.

How Low Would Bitcoin Need to Drop for Forced Selling?

A key question is whether Strategy’s debt obligations could force it to sell Bitcoin to stay afloat.

• Total BTC Holdings: 499,096 BTC (all unencumbered, meaning no BTC is pledged as collateral)
• Total Outstanding Debt: $8.2 billion
• Current BTC Value: $43.4 billion

At present, Strategy’s Bitcoin holdings far exceed its debt, making a forced liquidation unlikely. For a crisis scenario to emerge, Bitcoin would have to crash to around $16,500—a staggering 80% decline from current levels—before its debt would outweigh its BTC reserves.

Debt Maturity and Potential Risks

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

While these bonds are currently trading below their issuance price, their long maturities provide ample time for Bitcoin to recover. However, if BTC were to remain depressed, and MSTR stock stayed below the bonds’ conversion price, Strategy might opt to sell Bitcoin to repay its debt in cash rather than issuing stock to bondholders—avoiding shareholder dilution.

No Immediate Threat, But Long-Term Uncertainty Remains

For now, Strategy faces no immediate risk of being forced to sell Bitcoin—its BTC holdings are worth over five times its total debt. However, if Bitcoin were to enter a prolonged bear market, Strategy could eventually face tough decisions. The company’s ability to manage its debt and market volatility will be crucial in the years ahead.