Bitcoin’s decline has renewed focus on Strategy’s capital structure and debt schedule. The company, led by Michael Saylor, has built one of the largest corporate Bitcoin holdings in history. Yet falling prices have raised concerns about potential forced sales.
Strategy’s average purchase price for Bitcoin stands near $76,000. With BTC trading below that level, the company is in an unrealized loss position. However, unrealized losses do not create immediate payment obligations.
Understanding Strategy’s Debt Structure
Strategy raised capital through preferred stock and convertible notes. Preferred stock instruments include STRK, STRF, STRD, STRC and STRE. Only STRK is convertible into common stock.
Dividend payments on preferred shares range between 8% and 10%. However, these payments are legally optional. If cash becomes constrained, Strategy is not required to sell Bitcoin to meet these dividends.
Convertible notes represent the primary legal obligation. The company owes about $8 billion across several maturities extending to 2032. These notes require coupon payments and repayment or conversion at maturity.
Unlike margin loans, these notes do not trigger automatic liquidation if Bitcoin falls. There are no margin calls tied to BTC price movements. This structure reduces short-term forced selling risk.
What Happens if Bitcoin Price Falls to 55K
If Bitcoin declines to $55,000, Strategy’s Bitcoin holdings would decrease in market value. However, asset value alone does not determine forced liquidation.
At current holdings of 714,644 BTC, the portfolio would still be valued above $39 billion at $55,000 per coin. This remains well above total convertible debt levels.
The key variable would be Strategy’s stock price relative to the note conversion prices. If the stock trades above conversion thresholds at maturity, noteholders may convert into equity. This avoids cash repayment pressure.
If the stock remains below conversion prices, Strategy may pursue refinancing. The company could issue new debt, sell equity, or offer additional preferred shares. These options depend on market access and investor demand.
Saylor’s Position on Forced Liquidation Risk
Michael Saylor has earlier stated that the company can manage extreme volatility. He recently said that Strategy could withstand Bitcoin falling 88% to $8,000.
He also reiterated his long-term conviction, stating, “If it’s not going to zero, it’s going to a million. $BTC.” The remark reflects his view that Bitcoin remains a high-upside asset despite volatility.
At $8,000 per BTC, total holdings would be worth about $6 billion. That amount would approach the company’s net debt level. Saylor argues this still creates roughly a 1.0x coverage ratio.
He said the firm’s debt design reduces long-term risk. The notes carry low interest rates and extended maturities. This structure gives time to refinance or convert obligations.
Saylor also noted that equity sales used to buy Bitcoin do not create repayment liabilities. Therefore, the average purchase price does not create a legal requirement to sell.
BTC Market Critics and Downside Scenarios
Bitcoin critic Peter Schiff has warned of further downside risk. He said a break below $50,000 could lead to deeper selling pressure. Schiff has maintained a bearish stance on Bitcoin’s outlook.
If Bitcoin declines toward $55,000, the strategy would face market scrutiny. The company’s refinancing ability would depend on stock performance and capital market conditions.
At present, there are no automatic triggers requiring Bitcoin sales at $55,000. Forced selling would likely occur only if refinancing options closed and conversion was not viable at maturity.
