Strategy’s Bitcoin Bet Faces Pressure as Market Dips
March 28, 2025 — Strategy (NASDAQ: MSTR), formerly MicroStrategy, finds itself at a potential crossroads as Bitcoin’s recent correction threatens to push the company’s average BTC holdings into the red.
Under the leadership of Executive Chairman Michael Saylor, Strategy has acquired over 506,000 BTC—a stash now valued at approximately $44 billion. But with Bitcoin down nearly 20% from its peak above $109,000, the firm’s average purchase price of $66,000 is suddenly closer to a breakeven point than ever before.
To finance this accumulation, Strategy employed a mix of equity sales, convertible bonds, and recently, preferred stock with 8%–10% dividends. While effective in raising capital, these instruments come with future obligations that could strain the company’s financial flexibility—especially if Bitcoin prices continue to weaken.
“It’s unlikely Strategy faces forced liquidation,” said Quinn Thompson, founder of Lekker Capital. “But issuing more shares to pay dividends could hurt the stock’s valuation.”
The company’s software business contributes little cash flow, meaning Strategy may need to continue issuing MSTR stock to cover dividend and interest payments. Analysts warn that sustained dilution could drive the stock to trade below the value of its Bitcoin holdings—echoing the discount once seen in Grayscale’s GBTC before it converted to an ETF.
In addition, leveraged ETFs like MSTX and MSTU, which double exposure to MSTR, have amplified volatility. These funds now hold more than $3 billion in MSTR exposure. Any large outflows could result in sudden sell pressure on Strategy’s stock.
Meanwhile, Saylor has built a multi-pronged capital strategy to attract diverse investor classes. According to Jeffrey Park of Bitwise, Strategy’s capital stack resembles a “seesaw” that balances equity holders and preferred investors, depending on market sentiment.
Still, rising dividend obligations, a lower Bitcoin price, and reduced control by Saylor following ongoing equity issuances, all pose medium-term risks to the company.
While Strategy remains structurally sound today, the path forward could prove volatile—especially if crypto markets continue to lose momentum.
