Strategy Corporation confronts mounting financial pressure as Bitcoin’s recent decline threatens the sustainability of its debt-funded acquisition strategy. The software company turned crypto treasury vehicle must navigate $120 million in preferred stock dividends due by year’s end while holding just $54 million in reported Q3 cash reserves. The timing challenges the Strategy’s aggressive capital raising model. The firm has relied on selling equity and convertible debt to purchase Bitcoin during price rallies. This approach worked during Bitcoin’s expansion phases, but now faces scrutiny as cryptocurrency markets contract. Dividend Obligations Strain Cash Position Strategy’s immediate challenge centres on servicing preferred share dividends without disrupting its core strategy. The company may need to tap proceeds from its Euro-denominated STRE preferred shares to meet obligations. This represents a shift from using all raised capital for Bitcoin acquisitions. The preferred share structure now appears less sustainable than during Bitcoin’s bull run. The strategy could delay some dividend payments to preserve liquidity. Another option involves issuing STRC preferred shares with higher promised yields, though this would increase future financial burdens. Beyond immediate dividend concerns, Strategy faces a potentially larger threat from index rebalancing. The MSCI review scheduled for mid-January could trigger significant selling pressure. Passive funds currently hold over $9 billion worth of Strategy shares. Index removal could force nearly $2. 8 billion in immediate sales, with additional pressure continuing for months. Strategy maintains control of 649, 870 Bitcoin, with most holdings identifiable through blockchain wallet addresses. The treasury faces no immediate risk of liquidation. The company will not carry any Bitcoin-backed loans in 2025, thereby eliminating forced selling scenarios if prices decline further. Debt Maturity Timeline Creates Long-Term Uncertainty Strategy holds approximately $8 billion in convertible debt with maturity dates spanning 2028 to 2032. Most convertible notes already trade out of the money at current stock prices. The company generates minimal free cash flow from its legacy software business, making it dependent on access to capital markets. Annual dividend obligations total roughly $700 million. Strategy must service this debt load while waiting for potential Bitcoin price recovery. The business model requires either sustained access to capital markets or significant appreciation in cryptocurrency before major debt comes due. The strategy amplifies Bitcoin returns during upward price movements but magnifies losses during downturns. Strategy stock recovered modestly to $172. 19 after touching $166, tracking broader cryptocurrency market sentiment. At the time of writing, Bitcoin is trading at $86, 941, representing a 0. 61% increase over the past 24 hours. Bitcoin price chart, Source: CoinMarketCap.
https://bitcoinethereumnews.com/tech/why-strategys-8b-debt-problem-is-worse-than-it-looks/
Tag Archives: strategy
Strategy Supporters and BTC Community’s JP Morgan Boycott Gains steam
The backlash against financial services company JP Morgan from the Bitcoin (BTC) community and supporters of BTC treasury company Strategy continued to swell on Sunday as calls to “boycott” JP Morgan grew. The anger from the Bitcoin community followed news that the MSCI, formerly Morgan Stanley Capital International, an index company that sets criteria for index inclusion, is likely to exclude crypto treasury companies from its indexes in January 2026. JP Morgan shared the MSCI news in a research note. “I just pulled $20 million from Chase and suing them for credit card malfeasance,” real estate investor and Bitcoin advocate Grant Cardone said in response to a call to boycott the financial services giant. “Crash JP Morgan and buy Strategy and BTC,” Bitcoin advocate Max Keiser said, as the online boycott movement gained steam. The exclusion of crypto treasury companies from stock indexes could trigger an automatic sell-off of their shares from funds and asset managers that are mandated to buy specific types of financial instruments, and could negatively impact crypto markets. Related: Saylor shrugs off suggestion Wall Street ‘hurt’ Bitcoin amid latest crash Strategy founder Michael Saylor breaks his silence and responds to MSCI Strategy entered the Nasdaq 100, a stock market index of the 100 largest companies by market capitalization on the tech-focused stock exchange, in December 2024 This allowed Strategy to reap the benefits of passive capital flows from funds and investors holding the Nasdaq 100. Strategy founder Michael Saylor responded to the proposed MSCI policy change on Friday, saying, “Strategy is not a fund, not a trust, and not a holding company.” “Funds and trusts passively hold assets. Holding companies sit on investments. We create, structure, issue, and operate,” Saylor said, adding that Strategy is a “Bitcoin-backed structured finance company.” The proposed MSCI listing criteria change would force any treasury company with 50% or more of its balance sheet in crypto to lose its index status. These companies would then face one of two choices: reduce crypto holdings to be below the threshold to qualify for index inclusion, or lose the passive capital flows from the market indexes. A sudden sell-off from crypto treasury companies impacted by the proposed MSCI change could force digital asset prices down, according to analysts.
https://bitcoinethereumnews.com/bitcoin/strategy-supporters-and-btc-communitys-jp-morgan-boycott-gains-steam/
Bitcoin Price Drop Tests Strategy BTC Holdings, But Gains Persist
TLDR Strategy’s Bitcoin holdings remain profitable despite Bitcoin’s recent price drop below $92,000. The company’s average purchase price for Bitcoin is significantly lower than the current market price, providing a cushion against volatility. Despite market fluctuations, Strategy continues to accumulate Bitcoin and dismisses the idea of selling during market stress. The CryptoQuant uPnL chart shows that Strategy’s holdings have remained in profit even after past market crashes. Prediction markets are pricing in a further Bitcoin price decline, but Strategy’s Bitcoin strategy remains unchanged. Bitcoin’s recent drop below $92,000 has raised concerns about the sustainability of Michael Saylor’s BTC holdings under the Strategy. Despite the price decline, a CryptoQuant chart shows that the Strategy’s holdings remain in profit, even after multiple market crashes. The company has maintained an aggressive Bitcoin accumulation strategy, dismissing volatility as a temporary concern. However, recent developments are testing investor confidence. Strategy’s Bitcoin Holdings Remain Profitable Despite Market Decline CryptoQuant’s unrealized profit and loss (uPnL) chart, which tracks Strategy’s Bitcoin position since 2020, paints a positive picture. Despite Bitcoin’s recent price drop of over 13% in the past week, Strategy’s holdings still show substantial unrealized gains. The chart shows persistent green bars, indicating that the company’s Bitcoin bet remains profitable even through multiple market dips. During past crashes, such as in 2021 and 2022, there were brief periods of unrealized losses, marked by red zones on the chart. However, these losses were short-lived and quickly reversed. “The company’s average purchase price for Bitcoin is well below the current market price, giving them a significant cushion against volatility,” said an industry analyst. Even with the ongoing sell-off, Strategy continues to hold and accumulate Bitcoin. Michael Saylor has made it clear that his company will not sell its Bitcoin holdings, despite market fluctuations. “Bitcoin is an exponential treasury asset,” Saylor stated. He believes that, in the long run, Bitcoin will outperform other assets, including gold. Bitcoin’s Decline Raises Concerns Over Sell-Off Risks Bitcoin has fallen by more than 16% over the past six months, and recent price action is testing investors’ resolve. The current market downturn has heightened fears among traders. Recent events, including the movement of Bitcoin from the Mt. Gox wallet to Kraken, have sparked rumors of further sell-offs, adding to market uncertainty. The sell-off has contributed to increased volatility and growing concerns about Strategy’s balance sheet. While the company’s BTC holdings are still in profit, the broader market remains under pressure. Prediction markets are now pricing in the possibility of Bitcoin dropping below $80,000, with odds increasing to 38%.
https://blockonomi.com/bitcoin-price-drop-tests-strategy-btc-holdings-but-gains-persist/
What Next For Bitcoin Price as Strategy Raises STRE Offering to $715M?
Strategy has upsized its Stream Perpetual Preferred Stock (STRE) offering to €620 million ($715 million) to support future Bitcoin acquisitions. This move comes as Bitcoin recently dropped below the $100,000 mark amid worsening risk sentiment triggered by the prolonged U.S. government shutdown.
On Friday, Bitcoin’s price fell to intraday lows below $100,000, echoing steep sell-offs across U.S. equities. The decline followed warnings from White House adviser Kevin Hassett about the shutdown’s potentially worse-than-expected economic impact. Despite the market-wide corrections, Bitcoin investment firm Strategy increased its STRE offering from the initial €350 million to €620 million.
CEO Michael Saylor confirmed the upsizing, explaining that the firm raised the capital to bolster liquidity for “general corporate purposes,” which includes acquiring additional Bitcoin. The euro-denominated structure remains consistent with earlier perpetual preferred stock offerings used by the company. Strategy has historically funded its BTC accumulation through debt-backed issuances.
Following its most recent purchase of 397 BTC worth $45.6 million on Monday, Strategy now holds a total of 641,205 BTC. This amount represents approximately 3.05% of the total circulating Bitcoin supply.
**Bitcoin Price Forecast: Signs of a Relief Bounce Toward $105,700**
Bitcoin’s 12-hour chart is showing mild signs of recovery after the steep decline. At the time of writing, the price trades around $100,950, having bounced off the lower Keltner Channel support level at $100,255. The mid-channel resistance lies near $105,729.
Volume Delta readings have turned slightly positive, indicating early accumulation near the crucial $100,000 psychological level. Meanwhile, the MACD histogram suggests easing bearish momentum, with the signal line flattening near -2,004 — signaling the potential for a near-term bullish crossover.
The Bull-Bear Power (BBP) indicator remains negative but is improving, hinting that bearish influence is waning as buyers begin stepping in. A successful daily close above $101,200 could trigger a short squeeze, driving the price toward $105,700.
On the downside, failing to hold the $100,255 support level may open the door for further losses, potentially causing Bitcoin to retest lows near $98,400.
—
Stay tuned for further updates as market conditions evolve.
https://bitcoinethereumnews.com/bitcoin/what-next-for-bitcoin-price-as-strategy-raises-stre-offering-to-715m/