{"id":47940,"date":"2025-02-26T14:00:25","date_gmt":"2025-02-26T14:00:25","guid":{"rendered":"https:\/\/mycryptomania.com\/?p=47940"},"modified":"2025-02-26T14:00:25","modified_gmt":"2025-02-26T14:00:25","slug":"strategy-mstr-crashes-55-is-a-44-billion-bitcoin-liquidation-possible","status":"publish","type":"post","link":"https:\/\/mycryptomania.com\/?p=47940","title":{"rendered":"Strategy (MSTR) Crashes 55%\u2014Is A $44 Billion Bitcoin Liquidation Possible?"},"content":{"rendered":"

Shares of Strategy (NASDAQ: MSTR) have dropped by over 55% from the November 24 high at $543 to around $250. With the software intelligence firm now holding approximately 499,096 Bitcoin\u2014worth around $44 billion at current prices\u2014market participants are wondering whether the company could ever face a forced liquidation of its massive Bitcoin treasury.<\/p>\n

On Tuesday, analysts from The Kobeissi Letter (@KobeissiLetter) took to X to provide a comprehensive thread<\/a> analyzing this scenario. Here\u2019s what they had to say: \u201cThe MicroStrategy liquidation: As MicroStrategy, MSTR, falls over -55%, many are asking about \u2018forced liquidation.\u2019 The company now holds $44 BILLION worth of Bitcoin, could they be forced to sell it? Is liquidation even possible?\u201d<\/p>\n

Is A Forced Bitcoin Liquidation Possible?<\/h2>\n

According to The Kobeissi Letter, MicroStrategy\u2019s Bitcoin holdings total approximately 499,096 BTC<\/a>, currently worth $43.7 billion. The firm\u2019s average cost basis sits around $66,350 per Bitcoin. This naturally raises concerns about what happens if Bitcoin\u2019s price were to drop significantly below MicroStrategy\u2019s average entry point.<\/p>\n

\u201cLet us begin by stating that this isn\u2019t the first time liquidation is mentioned. MSTR has been buying Bitcoin for years and there have been MULTIPLE bear markets since then. This includes the 2022 bear market<\/a> when Bitcoin fell from ~$70K to ~$15K. Is this time different?,\u201d the analysts write.<\/p>\n

Critically, MicroStrategy\u2019s operations rely on raising capital\u2014often through convertible notes\u2014to buy more Bitcoin. The Kobeissi Letter points out that MicroStrategy currently carries about $8.2 billion in total debt for its $43.4 billion Bitcoin holdings, representing a roughly 19% leverage ratio. Much of this debt is held in convertible notes maturing around 2028.<\/p>\n

\u201cJust about the only way a \u2018forced liquidation\u2019 occurs if there is a \u2018fundamental change\u2019 at the company. This COULD require MSTR to liquidate Bitcoin holdings if an early redemption is called on the notes,\u201d the experts from The Kobeissi Letter argue.<\/p>\n

A \u201cfundamental change\u201d could include corporate bankruptcy, or a vote by shareholders to dissolve the company\u2014both scenarios that The Kobeissi Letter stresses are remote under the current structure. Michael Saylor<\/a>, MicroStrategy\u2019s Executive Chairman and prominent Bitcoin advocate, holds 46.8% of the company\u2019s voting power, meaning he could effectively block decisions leading to liquidation.<\/p>\n

Despite the steep share price decline, The Kobeissi Letter suggests that an outright forced liquidation is \u201chighly unlikely.\u201d The structure of the convertible notes and MicroStrategy\u2019s ability to raise capital give the firm significant flexibility. Even so, if Bitcoin were to experience a protracted and severe price drop\u2014well below its current levels\u2014MicroStrategy might face challenges in servicing its debt and raising fresh capital:<\/p>\n

\u201cHowever, what if these convertible bonds remain below the conversion price at maturity, beginning in 2027+? For this to happen, Bitcoin would need to fall well over 50% from current levels and remain there.\u201d<\/p>\n

Michael Saylor has repeatedly brushed off the liquidation scenario. According to The Kobeissi Letter: \u201cMichael Saylor was asked about liquidation recently. His answer was that even if Bitcoin fell to $1, they still would not get liquidated. They would \u2018just buy all of the Bitcoin.\u2019 While this sounds good in theory, the convertible note holders cannot be forgotten.\u201d<\/p>\n

MicroStrategy\u2019s business model\u2014raising funds to buy Bitcoin, potentially driving the price higher, and then issuing new shares at a premium\u2014depends on investor confidence. If shares continue to falter, or if Bitcoin dives well below MicroStrategy\u2019s average entry price, the firm\u2019s ability to attract capital could be severely tested: \u201cWe are now witnessing the first \u2018bear market\u2019 in MicroStrategy since it gained popularity in 2024. The question becomes: will investors continue to buy the dip here? Michael Saylor says \u2018Bitcoin is on sale.\u2019\u201d<\/p>\n

However, with Saylor\u2019s voting power and the long-dated convertible notes, a forced liquidation seems highly unlikely in the near term.<\/p>\n

At press time, BTC traded at $89,245.<\/p>","protected":false},"excerpt":{"rendered":"

Shares of Strategy (NASDAQ: MSTR) have dropped by over 55% from the November 24 high at $543 to around $250. With the software intelligence firm now holding approximately 499,096 Bitcoin\u2014worth around $44 billion at current prices\u2014market participants are wondering whether the company could ever face a forced liquidation of its massive Bitcoin treasury. On Tuesday, […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-47940","post","type-post","status-publish","format-standard","hentry","category-discovery"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/47940"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=47940"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/47940\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47940"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47940"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47940"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}