According to a report by brokerage firm Bernstein, MicroStrategy (MSTR) may need to liquidate its bitcoin (BTC) holdings only in the event of significant price corrections, particularly as its debt is set to expire in mid-2025.
The report highlights that higher bitcoin prices would strengthen MicroStrategy’s balance sheet, increase its stock price, and make debt repayment easier, eliminating the need to sell its cryptocurrency holdings. Additionally, a robust Bitcoin price and higher stock value would enable the company to raise new debt or equity and redeem existing convertible notes.
Conversely, if bitcoin experiences a severe decline and reaches extremely low prices, and if the value of MicroStrategy’s cryptocurrency assets fails to cover its debt and certain covenants beyond June 2025, the report suggests that the company’s corporate structure could face pressure from debt agreements that could accelerate debt repayment to 2025/2026.
The analysts at Bernstein note that due to Bitcoin’s volatility, using debt as a strategy always carries risks, and there is always a possibility of one-off forced liquidations.
MicroStrategy holds around 152,000 BTC
MicroStrategy currently holds approximately 152,000 bitcoin, acquired at an average price of around $29,600, with a total cost basis of about $4.5 billion. These cryptocurrency assets represent around 0.78% of the total bitcoin supply and account for approximately 20% of the daily average BTC trading volume.
According to a report from investment bank Berenberg, MicroStrategy’s capacity to refinance its debt maturities would be greatly improved if the company’s share price and the value of its bitcoin holdings were to see substantial increases.
It is important to note that these assessments provide an analysis of MicroStrategy’s financial situation and its reliance on Bitcoin’s performance, but the actual outcome will depend on various market factors and the volatility of the cryptocurrency market.
