Strategy (formerly MicroStrategy) has confirmed that if Bitcoin (BTC) were to drop to $25,000, which is notably less than its average purchase price of $74,000, its asset-to-liability collateral ratio would still hold at 2.0x.
This situation arises amid a significant decline in the company’s share price, which has plummeted by 49%. There’s also the looming possibility of being excluded from the MSCI index, with a decision due by January 2026.
(Micro)Strategy’s $16B Debt Stack Is Backed by 3.6x in Bitcoin
In a recent update on X (formerly Twitter), the company stressed the robustness of its balance sheet, particularly noting the “BTC rating” of its convertible notes.
“Even if BTC were to fall to its average cost basis of $74,000, you would still have 5.9x equity against the convertible. This is what we refer to as the debt BTC rating. If BTC reached $25,000, it would be 2.0x,”
The firm claims that even at Bitcoin’s average cost basis of $74,000, the equity value remains 5.9 times that of a convertible bond. Even in a harsher economic climate, should Bitcoin drop to $25,000, the asset-to-liability ratio will stand at 2.0x.
Currently, with Bitcoin priced at $87,812, the company projects a considerably stronger asset-to-liability framework. Information from Credit Dashboard indicates that Strategy holds $8.214 billion in convertible debt, maturing between 2028 and 2032.
Most of these convertible bonds have very high BTC valuations, estimated between 7x and over 50x. The BTC rating on the total convertible debt is 6.9x.
Under its debt structure, the company boasts $7.779 billion in preferred stock across five series (STRF, STRC, STRE, STRK, and STRD). These shares generally have a long duration, usually extending 8 to 10 years or more. They carry a somewhat higher risk profile compared to senior debt.
The preferred stock comes with a BTC rating of 3.6x, indicating decent but limited collateral relative to the convertible debt. Overall, the company’s debt, when combining all forms, reaches $15.993 billion.
With current Bitcoin prices, this debt is supported by a consolidated BTC rating of 3.6x. This suggests the company has more than 3.5 times the value of its outstanding debt in Bitcoin assets.
This level of backing positions the company strongly against Bitcoin price drops, providing it with considerable financial stability and flexibility.
As indicated by data from SaylorTracker, Strategy owns 649,870 BTC valued at approximately $56.99 billion, making it the largest corporate holder of Bitcoin globally.
Strategies for Dealing with Market Declines and Index Uncertainty
This disclosure comes during a challenging period for the company. MSTR stock has seen a more than 49% decrease since early October, reaching levels reminiscent of late 2024.
The firm now faces mounting scrutiny from MSCI, which is evaluating potential criteria to exclude companies whose digital assets exceed 50% of their total assets.
A final decision is anticipated by January 15, 2026. Research from JPMorgan suggests that if more index providers adopt similar measures, it could trigger outflows totaling as much as $8.8 billion. They stated:
“MSCI is currently considering removing MicroStrategy and other digital asset treasury companies from its stock indexes. If MicroStrategy were removed from MSCI indexes, outflows could reach $2.8 billion, and $8.8 billion from all other stock indexes if other index providers choose to follow MSCI.”
The company has also been dropped from the S&P 500, missing another significant opportunity. Adding to its challenges, after six weeks of consecutive Bitcoin purchases, the company halted its buying spree, coinciding with mNAV premiums dropping toward parity.
However, Strategy is making other strategic moves as well. Reports from blockchain information firm Arkham indicate that the company has shifted some of its assets from Coinbase to Fidelity Custody. This suggests a plan to mitigate storage risks by diversifying regulated providers.
“Strategy (MSTR) is diversifying its custodians from Coinbase and has moved 58,390 Bitcoin (currently valued at $5.1 billion) into Fidelity custody over the past two months…a total of 165,709 BTC ($14.5 billion) has been transferred to Fidelity custody,” Arkham said.
In conclusion, despite navigating increased market pressures, uncertainties regarding indices, and sharp declines in stock prices, Strategy remains overcollateralized and structurally sound. Its Bitcoin-backed balance sheets offer substantial cushioning against volatility, and ongoing efforts to diversify storage risks highlight the firm’s commitment to enduring stability, even in turbulent times.
