MicroStrategy Keeps Holding BTC, But Risks Lurk in the Shadows
BitMEX Research analysts recently declared that MicroStrategy’s massive Bitcoin holdings are “highly unlikely” to face forced sales, at least not with its current debt setup. MicroStrategy, the heavyweight corporate hodler, sits on a stash of 252,220 BTC, valued at over $17 billion—a stash that cost them around $9.9 billion to amass.
The company’s stock hit a 25-year high of $235.89 on Thursday, marking a 10% surge in one day, according to TradingView. BitMEX analysts noted that MicroStrategy’s market cap now sits at $43.6 billion, far above the net asset value (NAV) of its BTC holdings. This substantial premium has stirred some chatter, especially as it recalls the once-similar premium enjoyed by Grayscale Bitcoin Trust before its conversion to a spot BTC ETF.
MicroStrategy’s Infinite Funding “Glitch”
MicroStrategy has pulled off what some are calling an “infinite money glitch.” By leveraging its premium share price, it’s managed to issue five equity offerings since 2020, raising a cool $4.25 billion to keep fueling its Bitcoin-buying strategy. With each new raise, MicroStrategy boosts its book value per share, all while stashing more BTC into its treasury.
Benchmark analyst Mark Palmer weighed in last week, calling MicroStrategy’s high premium to NAV “intelligent leverage.” Michael Saylor, the company’s Bitcoin-pumping founder, seems steadfast in his approach, reiterating that he has no intentions to sell Bitcoin. But with such massive exposure to BTC’s volatility and a healthy stack of debt, some investors wonder if a hard selloff could ever become inevitable.
Flexible Bonds Make Forced Sales a Long Shot
BitMEX Research outlined that there’s no simple answer, thanks to MicroStrategy’s intricate bond structure. Bondholders can convert to MSTR shares or request cash based on factors like the stock’s performance or bond maturity. If MSTR trades at a premium, MicroStrategy can settle in cash, while bondholders might prefer shares when Bitcoin prices trend strong. Either way, forced sales to cover debts seem far off, say the analysts.
And even if Bitcoin took an 80% nosedive to $15,000—a typical bear-market move—MicroStrategy’s bonds aren’t maturing anytime soon. Spread between 2027 and 2031, these dates buffer the firm from immediate BTC liquidation pressure.
What Could Trigger a Bitcoin Sell-Off?
The analysts argue that if MicroStrategy’s stock flips from premium to discount relative to its BTC NAV, selling some Bitcoin could become advantageous. But with the stock at a premium for now, there’s little motivation to dump Bitcoin. If debt obligations pile up, however, or if MSTR trades closer to BTC NAV, the risk of a forced sale could rise.
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