MicroStrategy, the software company led by Michael Saylor, is currently experiencing a significant financial downturn. Its stock has dropped over 55% since the start of 2025, raising concerns that the company may have to sell some of its substantial Bitcoin holdings, valued at $43.7 billion, to cover its mounting debt.
MicroStrategy holds approximately 499,096 BTC, with an average purchase price of $66,350 per Bitcoin. Given that Bitcoin’s price is currently trading below $90,000, concerns about the company being forced to liquidate its Bitcoin holdings have risen. If the price of Bitcoin falls below the company’s average purchase price, MicroStrategy could face liquidity issues and be compelled to sell some of its Bitcoin to cover its debt obligations.
Despite these concerns, an analysis from The Kobeissi Letter suggests that such a liquidation scenario is unlikely in the near future. MicroStrategy’s business strategy involves borrowing money at low interest rates, using the funds to buy Bitcoin, and subsequently selling shares to finance further Bitcoin purchases. This strategy, even during periods of price dips like Bitcoin’s recent drop to $86,008, has helped reduce the risk of a forced sell-off.
The risk of MicroStrategy having to sell its Bitcoin holdings depends on two main factors: a prolonged and significant decline in Bitcoin’s price and the company’s ability to secure additional capital. According to The Kobeissi Letter, MicroStrategy would only be forced to liquidate its Bitcoin if the price stays below $66,000 for an extended period. Despite several significant Bitcoin price declines since 2020, the company has never sold its Bitcoin holdings and has managed to stay afloat.
Michael Saylor, the company’s founder and outspoken advocate for Bitcoin, remains confident in the firm’s position. He has publicly stated that, even if Bitcoin’s price were to drop to $1, MicroStrategy would simply buy more. While Saylor’s commitment to Bitcoin remains strong, analysts caution that a major event, such as a shareholder vote or a bankruptcy proceeding, could force MicroStrategy to sell its Bitcoin holdings to meet obligations.
MicroStrategy’s debt situation adds further complexity to the situation. The company currently holds $8.2 billion in debt, with most of its convertible notes maturing by 2027. These notes are backed by $43.4 billion worth of Bitcoin, which gives the company time to wait for Bitcoin’s price to recover from any short-term declines. However, Goldman Sachs analysts warn that if Bitcoin’s price were to fall by 50% and remain low, creditors could refuse to renew the company’s debt, triggering a liquidity crisis.
While Saylor’s optimism about Bitcoin’s future remains high, analysts highlight that the company could face significant challenges if Bitcoin’s price continues to slide, especially as the 2027 deadline for its convertible notes approaches.
Bitcoin’s price has recently experienced a decline, falling below the $90,000 mark after reaching a peak of $109,000 earlier. Some analysts, such as Geoff Kendrick from Standard Chartered, have forecasted a further 10% drop, citing outflows from U.S. Bitcoin spot ETFs as a contributing factor. Additionally, BitMEX co-founder Arthur Hayes predicts more price drops for Bitcoin, although the overall sentiment for the cryptocurrency remains positive.
Despite the current volatility, MicroStrategy’s strategy of holding Bitcoin long-term and its ability to secure capital for the time being have provided the company with the flexibility to weather market downturns. However, the true test will come in 2027, when its convertible notes mature. Should Bitcoin’s price remain depressed, MicroStrategy could face more significant challenges, and the risk of a forced sale of its Bitcoin holdings could become more real.
As MicroStrategy navigates the current market turbulence, its Bitcoin holdings remain a pivotal factor in the company’s financial stability. While the risk of liquidation remains a concern, the company’s strategy of leveraging debt to acquire Bitcoin, combined with its long-term commitment to the asset, suggests that forced sales may not be imminent. However, as the company’s debt obligations come due in 2027, the risk of a liquidity crisis could become more pronounced, making it crucial to monitor Bitcoin’s price movements closely in the coming years.
A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5
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