Strategy (formerly MicroStrategy) has become the most traded Bitcoin proxy on the public market, using stocks, convertible bonds and preferred stock to build a balance sheet dominated by the top cryptocurrencies.
However, with Bitcoin worth nearly $68,000 and Strategy stock hovering below $130, investors are paying more attention to the mechanisms that allow the company to continue buying BTC without becoming a forced seller.
Industry experts like Bloomberg Intelligence strategist Mike McGlone have done just that warned that Bitcoin could fall to $10,000.
While this pullback scenario poses challenges for the company, the Michael Saylor-led company seems confident in its ability to weather these issues even if BTC falls to $8,000.
However, it is a calendar date and the share price level that raise more serious concerns.
Holders of Strategy’s $1.01 billion convertible notes due 2028 can require the company to repurchase the notes for cash on September 15, 2027, a feature that becomes more threatening when the shares trade below the notes’ initial conversion price of about $183.19 per share.
For years, Strategy has benefited from a market structure in which many investors could not easily purchase spot Bitcoin in a US ETF wrapper.
That dynamic helped support periods when the shares traded at a premium to the implied value of their Bitcoin holdings per share, a cushion that made new fundraising cheaper.
Now that spot Bitcoin ETFs have been established, that premium is harder to sustain, and the company’s reliance on issuing shares to fund its strategy becomes more visible.
Strategy is inherent dashboard underlines how quickly the equity base has expanded. As of February 16, the company reported 333.755 million basic shares outstanding and 366.114 million deemed diluted shares, and owned 717,131 Bitcoin.
These numbers provide the easiest way for the market to track the trade-off between accumulating Bitcoin and spreading the claim across more stocks.
The 2027 set
Convertible debt is often described as “cheap” financing because the coupon is low.
Strategy’s 2028 converts will pay 0.625% interest, but the risk investors are focusing on isn’t coupon pressure. It occurs when the stock option included in the notes is never exercised.
The notes mature on September 15, 2028, but the put date arrives a year earlier.
If Strategy’s stock price is comfortably above $183.19 on September 15, 2027, bondholders will have a stronger incentive to convert into stock, or at least less incentive to demand cash, because the conversion feature has value.
However, if the stock is below $183.19, demanding cash becomes more attractive, and the company needs a plan to fund roughly $1 billion in a market that may be unwilling to finance Bitcoin-linked leverage on generous terms.
Strategy’s dashboard shows why that conversion price has become a reference point. The company lists the assumed equity impact of each convertible series, including the 2028 notes, pegged at $183.19.
This is not just an accounting table. It’s a map of incentives that turns one stock price level into a de facto stress threshold.
The company has publicly argued that even severe Bitcoin declines do not automatically translate into insolvency because its balance sheet includes significant assets.
But the market’s most immediate concern isn’t bankruptcy math. It is the range of financing choices that protect the Bitcoin position while passing the cost on to common shareholders through dilution, especially when shares are weak.
Issuing shares as a pressure valve
The recent capital increase by Strategy shows how central share issuance has become.
In its fourth quarter 2025 results, the company made reported Approximately $5.6 billion in gross revenues were raised during the quarter and an additional $3.9 billion between January 1 and February 1, 2026. Most of that came from the sale of common stock through the at-the-market program.
The company reported that it sold 24,769,210 shares for about $4.4 billion in the fourth quarter and another 20,205,642 shares for $3.4 billion in January, while $8.1 billion remained under the mutual fund as of February 1.
That pace is important because dilution is not an abstract risk. It’s the method. When stocks trade lower, each additional dollar raised requires the issuance of more shares, permanently diluting the per-share claim on the Bitcoin holdings that investors believe they are buying exposure to.
Strategy’s base share count rose to 333.755 million as of Feb. 16, up from 312.062 million at the end of 2025, according to the dashboard.
This is the core tension for common shareholders. The company has positioned its approach as maximizing “Bitcoin per share” over time.
But in the short term, dilution could exceed perceived gains if capital needs to be raised under weak conditions, or if the stock’s premium to Bitcoin’s implied value compresses and remains compressed.
The trade-off between the strategy’s cash reserves
There is a direct counterargument to the 2027 alarm. The strategy has built up liquidity and outlined a reserve policy that, on paper, could cover a cash buyback without selling Bitcoin.
The company reported $2.3 billion in cash and cash equivalents as of December 31, 2025, and said the increase from the previous year reflected the establishment of a “USD reserve” of $2.25 billion.
The company stated that the reserve was intended to cover 2.5 years of preferred dividends and interest on debt, and was funded with proceeds from the sale of common shares through the ATM.
Strategy also stated that its current intention is to maintain the reserve at a level sufficient to fund two to three years of these payments, while reserving the right to adjust based on market conditions and liquidity needs.
In practice, using the reserve to cover a cash put in September 2027 would only shift the problem rather than solve it.
If Strategy spends much of the cushion it has designed for recurring obligations, it could face tougher questions about how it maintains preferred dividends and interest coverage in a weak tape.
If it chooses to rebuild the reserve, it will likely return to the same tool it was originally built with: selling more common stock. If the share price is still weak, the recovery could lead to the issuance of more shares at lower prices, further increasing dilution.
The third path is to refinance the bonds. This maintains the reserve, but is still dependent on the willingness of the capital markets to finance the structure of the strategy at that time.
For a company whose identity is tied to Bitcoin, the biggest risk isn’t just where Bitcoin trades. The question would become whether investors remain willing to fund leveraged Bitcoin exposure through corporate securities when easier ETF exposure is available.
The preferred financing of the strategy and rising costs
Meanwhile, Strategy’s financing inventory isn’t limited to convertible bonds and common stock.
The Michael Saylor-led company also recently issued preferred securities that it describes as part of a “Digital Credit” platform, including a floating rate preferred note known as STRC.
In its fourth-quarter results, Strategy highlighted a rules-based dividend adjustment framework intended to keep STRC near its stated price of $100.
The framework considers dividend rate increases if STRC trades below certain levels.
For example, the company stated that it plans to recommend an increase in the dividend rate of 50 basis points or more if the monthly volume-weighted average price is below $95, and an increase of 25 basis points or more if it trades between $95 and $98.99, subject to board approval.
For common shareholders, this structure involves a second kind of reflexivity. If risk appetite declines and preferred pricing weakens, dividend rates may rise to defend pricing. Higher financing costs may increase the need to raise additional capital.
If the company relies on common emissions to do this, dilution becomes the pressure valve again.
This is why the stress debate has shifted. The question is less about whether Strategy should sell its 717,131 BTC tomorrow. The question is how expensive it will be to prevent Bitcoin from being sold over time.
What you can see between now and 2027
Industry forecasts for the Bitcoin price remain broad, with Standard Chartered warning that Bitcoin could fall to $50,000 before recovering and lowering its end-2026 target to $100,000.
For Strategy, the key is not which number wins the predicted battle. It is how each path affects two variables that determines the dilution demand.
The first is whether the stock can regain levels above $183.19 as September 15, 2027 approaches, changing incentives for bondholders and reducing the likelihood of a cash demand.
The second is the amount of shares the Strategy must issue to maintain its cash coverage policy, including the $2.25 billion reserve, which is estimated to cover approximately 2.5 years of preferred dividends and interest on debt, while leaving options open for the 2027 put.
A sideways Bitcoin market can still be painful if it keeps the stock weak and pushes the company to raise capital at unfavorable prices. A recovery could ease dilution pressure even if Strategy continues to raise money, because fewer shares are required for each dollar raised.
Analysts quoted by the Wall Street Journal have said they see no immediate financial risk given the previous capital raise and reserves.
For common shareholders, the forward-looking question is more limited and takes place on a timeline.
Can Strategy bridge the bridge to September 15, 2027 without turning its Bitcoin strategy into a multi-year dilution strategy, even if Bitcoin never gets close to $8,000?