🌎 Strategy’s Bitcoin Holdings Under Threat Amid Liquidation Fears

Forced Liquidation Fears Surround Strategy, But How Real Is the Threat?

Strategy, formerly MicroStrategy, has been at the forefront of the corporate Bitcoin adoption wave. However, with the company’s stock price tumbling and debt piling up, concerns about a potential forced liquidation have begun to emerge.

Forced Liquidation Fears Explode

Strategy’s stock price has plummeted 52% from its peak in November 2024, with a staggering 19% drop in the past week alone. Meanwhile, Bitcoin’s price has struggled to hold key support levels, hovering around $86,000, about 21% below its all-time high. Despite this, Strategy remains committed to its Bitcoin-first approach, having recently purchased an additional 20,356 BTC for nearly $2 billion.

With this latest acquisition, Strategy now holds a staggering 499,096 BTC, nearly 2.4% of Bitcoin’s total fixed supply, cementing its position as the largest corporate Bitcoin holder. However, some are warning of an impending “forced liquidation” event, suggesting that if Bitcoin falls further, Strategy could be in serious trouble.

The Reality Behind Strategy’s Liquidation Fears

While the theory of forced liquidation isn’t entirely off the table, it would require a worst-case “mayday” scenario. Strategy’s debt is primarily structured through convertible notes, which provide more flexibility than traditional loans. The company’s leverage ratio is 19%, with most of its debt obligations not maturing until 2028.

However, if Bitcoin’s price were to fall by over 50% from current levels and remain there for an extended period, refinancing or rolling over this debt could become extremely difficult. Additionally, the possibility of an early redemption call on Strategy’s notes poses a significant risk.

Michael Saylor’s influence is critical in this scenario, as he personally controls 46.8% of the company’s voting power, making it virtually impossible for any forced liquidation to occur without his approval.

Can Strategy Keep Raising Capital in a Bear Market?

The bigger challenge for Strategy may not be liquidation but whether it can continue securing fresh capital to sustain its aggressive Bitcoin acquisition model. The company’s “21/21” initiative aims to raise $42 billion by 2027 through a mix of equity and fixed-income securities.

However, the appetite for Bitcoin-backed corporate strategies is highly dependent on market conditions. If Bitcoin’s price remains volatile or enters a prolonged downturn, convertible note holders may demand higher yields or stricter terms, and equity investors may become less willing to absorb dilution from new share offerings.

Would a Strategy Liquidation Break Bitcoin?

If Strategy were ever forced to liquidate a portion or all of its Bitcoin holdings, the immediate and long-term effects on the crypto market would be severe. The most direct impact would be a sharp decline in Bitcoin’s price, potentially triggering a downward spiral.

The psychological impact on the market could be just as damaging, weakening confidence among institutions and publicly traded firms that have followed Strategy’s model. Beyond the initial price shock, Bitcoin’s long-term path would depend on how the market absorbs such an event.

Bitcoin has survived every major crisis thrown its way, from exchange collapses to regulatory crackdowns. The real question is: if one of its biggest believers is ever forced to exit, will Bitcoin stumble — or will it simply prove, once again, that it belongs to no one?