Michael Saylor’s company Strategy, formerly known as MicroStrategy, has seen its stock price plummet by over 55% since its peak in November 2024. The firm, which is the world’s largest corporate holder of Bitcoin, has been heavily investing in the cryptocurrency. With Bitcoin’s price dropping sharply over the past 24 hours, concerns are growing about Strategy’s ability to meet its long-term debt obligations.
The company has an outstanding debt that it is not required to repay until around 2028. According to The Kobeissi Letter, a financial analysis firm, a forced liquidation of Strategy’s Bitcoin holdings would only occur if there is a “fundamental change” at the company. This could happen if an early redemption is called on the notes, but it remains “highly unlikely” unless there is a bankruptcy or a vote by the board to change the company.
Michael Saylor, Strategy’s chairman, controls 46.8% of the company’s vote. However, if Bitcoin drops more than 50% from its current price, concerns could become more pressing.
Bitcoin concerns impact Strategy’s stock
Strategy is not the only company affected by Bitcoin’s recent price drops. Leveraged exchange-traded funds (ETFs) that aim to amplify Strategy’s gains, such as the Defiance Daily Target 2x Long MSTR ETF (MSTX) and the T-Rex 2X Long MSTR Daily Target ETF (MSTU), have also seen declines. Despite the recent drop in Strategy’s stock price, some metrics suggest that it might be oversold.
CryptoQuant CEO Ki Young Ju has observed that the Bitcoin Holdings Premium, which compares the total stock capitalization to the value of Bitcoin holdings reported by Strategy, has returned to levels last seen in January 2024. This metric indicates whether the stock is oversold compared to its underlying asset, suggesting potential room for upside. Strategy currently holds 499,096 Bitcoins, valued at over $42.15 billion, which represents 2.377% of the total Bitcoin supply.
In comparison, Mara Holding Inc. (MARA) holds 45,659 Bitcoins or 0.217% of all existing Bitcoins. These dynamics present an interesting landscape for investors looking to gain exposure to Bitcoin through stock investments without directly holding the cryptocurrency.
