Emma Nelson 
MicroStrategy Stock Plummets 55% – Is Its 499,096 BTC Stash at Risk of Liquidation? Strategy (formerly MicroStrategy) is under scrutiny as its stock has dropped by over 55% from its November high. With continued market volatility affecting both stock prices and the crypto ecosystem, investors are concerned that MicroStrategy’s massive Bitcoin holdings might be at risk of liquidation.
The MicroStrategy Bitcoin Business Model Under Pressure
According to a recent analysis by The Kobeissi Letter, MSTR stock has declined 55% from its 60-month high of $473.83. As a company that leverages its stock against Bitcoin investments, this drop in valuation poses significant risks.
Currently, MicroStrategy holds approximately 499,096 BTC, acquired at a total cost of $43.7 billion. Following a $2 billion debt offering earlier this month, the company’s average cost per BTC stands at $66,350.
With Bitcoin’s price currently at $89,445, the company’s position remains profitable. However, a drop below the average cost could force MicroStrategy to sell off its shares to cover the shortfall in its debt obligations.
MicroStrategy
Despite this risk, The Kobeissi Letter notes that the likelihood of forced liquidation is low, given MicroStrategy’s unique business model. The company’s strategy involves:
- Borrowing through 0% convertible notes.
- Buying BTC to drive the price higher.
- Selling new shares to raise capital.
- Buying more BTC, thus reinforcing a cycle of accumulation.
However, with Bitcoin recently dropping as low as $86,008.23 following an 8% decline, MicroStrategy’s ability to leverage its shares for BTC purchases is becoming increasingly constrained.
Is MicroStrategy’s Bitcoin Holding at Risk of Liquidation?
According to The Kobeissi Letter, for MicroStrategy to liquidate its Bitcoin holdings, BTC’s price would need to fall below $66,000 and stay below that level for an extended period.
Since initiating its Bitcoin acquisition strategy in August 2020, CEO Michael Saylor has maintained a long-term bullish outlook, accumulating Bitcoin even during significant price crashes.
Despite multiple market downturns, MicroStrategy has never sold any of its BTC holdings. Notably, the firm holds $8.2 billion in debt against $43.4 billion worth of Bitcoin, strategically positioning itself to withstand short-term price volatility.
MicroStrategy’s debt structure also provides a cushion against immediate liquidation risks. Most of its convertible notes mature in 2027, giving the company ample time to weather any short-term market corrections. The underlying belief is that Bitcoin’s price will recover before the debt maturity date, protecting the company from forced sales.
Bitcoin Market Dynamics: Not Like Previous Crypto Winters
While some analysts, including BitMEX co-founder Arthur Hayes, have predicted further price declines, the overall outlook for Bitcoin remains bullish.
Unlike previous crypto winters, the current market is influenced by institutional investors adopting Bitcoin reserve strategies. For instance, Rezolve Ai recently announced a $1 billion Bitcoin plan, with an initial $100 million investment in BTC.
Additionally, several nation-states are now incorporating Bitcoin into their sovereign wealth strategies, creating a robust demand base for the cryptocurrency.
On the back of these developments, analysts project that Bitcoin’s price could reach new all-time highs, surpassing the current $109,000 mark. This optimistic outlook supports MicroStrategy’s long-term accumulation strategy, making a forced liquidation scenario increasingly unlikely.
What’s Next for MicroStrategy and Bitcoin?
Despite the 55% drop in MSTR stock, MicroStrategy’s Bitcoin strategy remains unchanged. The company continues to accumulate BTC, demonstrating confidence in Bitcoin’s long-term value.
However, the coming weeks will be crucial as Bitcoin navigates key support levels. Should BTC’s price fall below the $66,000 threshold, market speculation about MicroStrategy’s potential liquidation will likely intensify.
For now, Michael Saylor remains steadfast in his Bitcoin conviction, betting on Bitcoin’s continued growth and widespread adoption. Investors are closely watching MicroStrategy’s stock performance and Bitcoin’s price movements, as these will determine the company’s next strategic moves.
With institutional demand on the rise and macro factors influencing market sentiment, MicroStrategy is positioned at the intersection of traditional finance and crypto innovation. As such, it remains a key player to watch in the evolving cryptocurrency landscape.
