The Strategy’s leadership is pushing back against this growing concerns that the world’s largest corporate holder of Bitcoin (BTC) could face serious financial stress if the cryptocurrency’s price continues to fall.
After the company announced its fourth-quarter results, CEO Phong Le sought to reassure investors that the company remains well-positioned even as Bitcoin fell nearly $60,000 on Thursday.
Bitcoin sell-off tests the strategy’s financial resilience
Bitcoin fell about 50% since hitting an all-time high of $126,000 last October, a period when Strategy, formerly known as MicroStrategy, was aggressively accumulating digital assets.
The sell-off has weighed heavily on the company’s share price. Shares of Strategy, trading under the ticker MSTR, fell to around $104 on Thursday, the lowest level since August 2024, after falling more than 17% during the session.
Related reading
For now, investors are focusing on two key factors: the price of Bitcoin itself and Strategy’s ability to meet its financial obligations if the downturn deepens. Those questions loomed large over founder Michael Saylor and CEO Phong Le addressed analysts during the company’s earnings call.
Much of the focus has been on how Strategy would weather a prolonged ‘Bitcoin winter’, should one occur. Saylor has already taken steps to increase the company’s financial flexibility, including raising a $2.25 billion cash reserve to cover preferred dividend payments totaling $888 million annually.
However, investors remain concerned about the company’s $8.2 billion in low and zero interest rates convertible bondswhich could see early redemptions starting in September 2027, especially as MSTR shares have fallen sharply.
Politics, leverage and valuation in focus
Saylor reiterated that the company is keeping its options open, including the ability to sell Bitcoin if market conditions require it.
He also described crypto investments as inextricably linked to politics, citing that of President Donald Trump pro-crypto stance and notes that Kevin Warsh, Trump’s nominee for chairman of the Federal Reserve (Fed), is seen as a proponent of digital assets.
Still, Bitcoin fell to post-2024 election lows on Thursday, reflecting skepticism that the federal government will actively support Bitcoin purchases. Treasury Secretary Scott Bessent reinforced these doubts this week by telling Congress that he does not have the authority to save the Bitcoin markets.
On the balance sheet front, CEO Phong Le addressed concerns about Strategy’s influence. He said the company operates with about a third of the leverage of a typical high-yield company.
Related reading
According to Le, Bitcoin for Strategies should fall by about 90% Bitcoin reserves to merely match the value of its convertible debt. Even in that extreme scenario, he said, the company would explore restructuring options if it could not convert debt into equity.
Strategy’s own disclosures show an enterprise value of about $49.95 billion, compared to about $45.33 billion worth of Bitcoin on its balance sheet. Enterprise value includes the company’s market capitalization, preferred stock and convertible bonds, minus cash.
If Bitcoin falls near $63,000 again, Strategy’s market cap of $35.57 billion would need to fall about 13% from its recent closing price of $106.99 to eliminate the valuation premium on its Bitcoin holdings.
However, since Thursday’s crash, both Bitcoin and Strategy stock have recovered significantly. Bitcoin, for example, has risen to around $69,256. MSTR has recovered above $130, marking a 20% gain in less than 24 hours and providing short-term relief.
Featured image from OpenArt, chart from TradingView.com