Shares of Strategy (NASDAQ: MSTR) have plummeted over 55% from their November 24 high of $543 to around $250, raising concerns about whether the company might be forced to liquidate its massive Bitcoin holdings. With approximately 499,096 BTC worth $44 billion, investors are questioning whether a major sell-off could shake the market.
Is a Forced Bitcoin Liquidation Possible?
According to The Kobeissi Letter, which analyzed the situation:
- Strategy’s Bitcoin holdings: 499,096 BTC (~$43.7 billion).
- Average cost basis: $66,350 per BTC.
- Debt burden: $8.2 billion in convertible notes, representing a 19% leverage ratio.
- Convertible notes mature around 2028, meaning no immediate repayment pressure.
Could Strategy be forced to sell BTC?
- The only way liquidation could occur is through a “fundamental change” at the company, such as:
- Corporate bankruptcy or early debt redemption.
- A shareholder vote to dissolve the company (unlikely given its structure).
- Michael Saylor controls 46.8% of voting power, allowing him to block any forced liquidation scenarios.
Why This Time Isn’t Different
- Strategy has survived multiple Bitcoin crashes, including the 2022 bear market, when BTC fell from $70K to $15K.
- The firm has historically raised capital through convertible debt, rather than being forced to sell BTC.
- As long as Bitcoin’s price remains stable or rises, the risk of liquidation remains low.
Market Implications and Future Outlook
- If Strategy were forced to sell, a $44B BTC liquidation could shock the market, causing significant price volatility.
- Bitcoin’s price stability above Strategy’s cost basis (~$66K) is key to preventing concerns from escalating.
- Leverage remains manageable, meaning the probability of forced liquidation is minimal unless a major financial crisis hits.
The Bottom Line: A Non-Issue for Now
While MSTR’s 55% drop is alarming, fears of a mass Bitcoin liquidation are overblown. Strategy’s structure, Michael Saylor’s influence, and its debt strategy make a forced BTC sell-off unlikely—unless a major financial shift occurs.
While Bitcoin remains the key asset on Strategy’s balance sheet, the real risk isn’t liquidation—it’s the firm’s reliance on leverage. If interest rates rise or debt markets tighten, raising new capital could become more difficult, forcing Strategy to pivot its BTC accumulation strategy in the long run.