Strategy’s Bitcoin Holdings Under Pressure as Stock Sinks 55%—Will It Be Forced to Sell?
With Bitcoin’s latest downturn, investors are once again asking a key question from past bear markets: Could Michael Saylor’s Strategy (MSTR) be forced to sell part of its nearly 500,000 BTC stash?
MSTR Stock Takes a Major Hit
While Bitcoin’s price drop has dominated the headlines, Strategy’s stock (MSTR) has been in a steady decline for over three months. Currently hovering around $250, MSTR has plunged 55% from its November 21 peak of $543.
Leveraged MSTR-related funds have been hit even harder:
- Defiance Daily Target 2x Long MSTR ETF (MSTX) has plummeted 90%
- T-REX ETF (MSTU) has fallen 85%
Despite the stock’s struggles, Strategy’s Bitcoin investment remains firmly in the green. The company began buying BTC in August 2020 at an average cost of $66,300 per coin. At Bitcoin’s current price of $87,000, Strategy holds an unrealized profit of $10.65 billion.
Could Strategy Be Forced to Sell BTC?
The possibility of a forced sale depends on whether Strategy’s Bitcoin holdings can continue to cover its outstanding debt.
- Total BTC Holdings: 499,096 BTC (all unencumbered, meaning none are pledged as collateral)
- Total Outstanding Debt: $8.2 billion
- Current BTC Holdings’ Value: $43.4 billion
At present, Strategy’s Bitcoin holdings far exceed its debt, making forced sales highly unlikely. However, if Bitcoin were to crash to around $16,500, an 80% decline from current levels, the company’s BTC value would drop below its total debt, potentially triggering sales.
Convertible Debt and Potential Risks
The biggest concern lies in Strategy’s convertible bonds, particularly its 2029 and 2030 maturities, which make up $5 billion of its $8.2 billion total debt.
- These bonds are trading below their offering price, but with maturities still years away, there’s room for market recovery.
- If Bitcoin’s price remains depressed when the bonds mature, and MSTR stock trades below the bonds’ conversion price, the company may choose to sell Bitcoin to repay bondholders in cash, avoiding heavy dilution.
No Immediate Danger, But Long-Term Pressures Remain
For now, Strategy is not at risk of forced Bitcoin sales, as its BTC reserves vastly outweigh its debts. However, if Bitcoin enters a prolonged bear market, the company could face tough choices.
As long as Bitcoin stays above $16,500, Strategy’s position remains secure—but investors will be closely monitoring any signs of distress in the months ahead.
