Author: Ashley
Led by Michael Saylor, Strategy, formerly MicroStrategy, as the single largest corporate holder of Bitcoin in the United States, is facing difficulties due to the dual pressures of falling Bitcoin prices and massive debts. According to an 8-K filing submitted to the SEC on April 7, Strategy stated that it may be forced to sell its Bitcoin holdings if it cannot address its current financial challenges.
Financially Struggling Strategy
The current financing and cryptocurrency purchasing strategy relies on the market’s long-term bullish expectations for Bitcoin. If the price of Bitcoin enters a prolonged period of volatility or decline, the company will face dual pressures: having to pay interest on existing debts while also dealing with the dilution risk from stock issuance.
According to the 8-K filing, Strategy currently holds 528,185 bitcoins with a total value of more than $40 billion, with an average purchase cost of $67,458 per bitcoin. Since transforming into a “Bitcoin Enterprise” in 2020, the company has continued to increase its position through financing, becoming a benchmark for cryptocurrency investment in the U.S. stock market. However, Strategy’s finances are being put to the test as the price of Bitcoin retreats from a high of $100,000 at the end of 2024 to around $76,400, combined with a $8.22 billion debt burden.
! [If MicroStrategy is forced to sell BTC, how much selling pressure will it put on the market in extreme cases?] ](https://img.gateio.im/social/moments-305f97bc8f501e6c78099b05e38bd33d)
Strategy’s Bitcoin strategy was once the engine behind its soaring stock price, but now it has become a Damocles’ sword hanging over its head. SEC documents clearly state that Bitcoin accounts for a “substantial majority” of the company’s balance sheet, and its price volatility directly determines the company’s financing ability and debt repayment prospects. If certain key factors spiral out of control, selling Bitcoin may become a reality that must be faced.
The biggest risk comes from the continued decline in Bitcoin prices. If the price falls below the cost price of $67,458, or even slides towards the recent low of $74,500, the company’s asset value will significantly shrink. The document warns that if Bitcoin falls below its book value, Strategy may find it difficult to raise funds through the issuance of stocks or bonds. Since Trump’s victory in November 2024, the company has purchased 275,965 Bitcoins at an average price of $93,228 each, costing $25.73 billion, and has now incurred a floating loss of $4.6 billion. Worse still, in the first quarter of 2025, the unrealized loss on Bitcoin could reach as high as $5.91 billion, exacerbating the risk.
At the same time, the cash flow crisis has also put the company on thin ice. Strategy’s core business, data analytics software, has failed to generate positive cash flow for several consecutive quarters. However, the company also had to pay $35.1 million in debt interest and $146 million in dividends annually, for a total of $181.3 million. If external financing can’t keep up, selling Bitcoin is almost the only way out. The document mentions that the US$8.22 billion debt (as of the end of March 2025) puts a mountain of repayment pressure, and if market conditions deteriorate, the company may even be forced to sell at a “loss” below cost.
! [If MicroStrategy is forced to sell BTC, how much selling pressure will it put on the market in extreme cases?] ](https://img.gateio.im/social/moments-d071ade07667eb8c0d074d4252a2a1a2)
Finally, market and security factors may become unexpected triggers. If a Bitcoin custodian (such as a bank or third-party custodian) goes bankrupt or suffers a cyber attack leading to asset loss, Strategy may be forced to sell remaining holdings to cover losses. The document specifically mentions that its insurance only covers a small amount of Bitcoin, highlighting the reality of this risk.
Of course, the strategy is not to sit idly by. The company plans to alleviate pressure by issuing new shares or new bonds, having spent a staggering $7.7 billion in the first quarter of 2025 to increase its Bitcoin holdings at an average price of $95,000 each. However, entering April, with the market declining, this aggressive buying strategy has noticeably slowed down. If funding channels are blocked, selling coins becomes the last lifeline.
What is the impact of potential selling pressure on the market?
Strategy’s Bitcoin holdings account for about 2.5% of the total Bitcoin supply, and it may be difficult for the market to calm down in the event of a sell-off. The size of the sell-off depends on the specific needs of the company, and the impact is cascading.
If the purpose is just to cover short-term expenses, such as paying annual interest and dividends totaling $181.3 million, it would require selling about 2,318 bitcoins. This accounts for less than 0.5% of its total holdings of 528,185 bitcoins, which would have a relatively limited impact on the market and may only trigger minor fluctuations that investors might not panic over. However, if Strategy needs to repay part of its debt, such as $1 billion, the scale of the sell-off would expand to about 12,800 bitcoins, accounting for 2.4% of its holdings. In an environment where the daily trading volume of the bitcoin market is only $10-30 billion with low liquidity, such a sell-off could push prices down by 5% to 10%, enough to put significant pressure on the market.
A more serious situation is that if Strategy must repay the entire debt of 8.22 billion dollars in one go, the scale of the sell-off will surge to approximately 105,000 bitcoins, which is equivalent to 20% of its holdings. Such a massive sell-off would be almost impossible to absorb in the current market, and is likely to trigger a price flash crash, especially considering the sensitivity of the bitcoin market to large transactions—recently, the flash crash from 83,000 dollars to 74,500 dollars has fully demonstrated this.
In the most extreme scenario, the company goes bankrupt or is forced into liquidation, which could mean selling all 528,185 BTC, worth more than $40 billion. This would be a devastating blow to the market, potentially halving the price of Bitcoin, or worse. However, such a full-blown sell-off is unlikely, unless the company suffers a systemic crisis, such as a debt default and regulatory liquidation. Either way, Strategy’s move could be an important turning point in the Bitcoin market and is worth keeping an eye on.
Another aspect of market impact is the chain reaction. If Strategy sells off, other institutions or retail investors may follow suit, leading to a vicious cycle in Bitcoin prices. The tariff policies implemented after Trump’s rise to power have intensified the selling sentiment for risk assets, and Strategy’s actions could become the “last straw” that breaks the market.
What has sparked even more discussion is that this matter also involves the credibility of Michael Saylor himself. As a staunch supporter of Bitcoin, Michael Saylor has repeatedly stated in media outlets such as CNBC that he would “never sell his coins” and even mentioned that he would bequeath his Bitcoin to organizations that support this asset after his death. However, the wording in the SEC documents: “may sell Bitcoin at a price below cost” seems to break this promise.
Will it really sell off Bitcoin?
The Bitcoin strategy of Strategy began in 2020, when Saylor positioned it as “digital gold” to combat inflation. By issuing convertible bonds, preferred shares, and ATM expansions, the company has cumulatively invested $35.6 billion in purchasing Bitcoin, with floating profits reaching as high as several billion dollars at one point. However, the recent decline in Bitcoin prices coupled with debt pressure has led the company to fail to make a profit for three consecutive quarters.
In fact, the sell-off risk mentioned in this SEC filing is not the first time it has been brought up. Strategy submitted a total of 25 Form 8-K filings this year, with those labeled “Operating Results and Financial Condition” typically submitted at the beginning of each month. The monthly reports on “Operating Results and Financial Condition” are standard practice. As early as the Form 8-K filed on January 6, there was a mention of the risk of “possibly selling Bitcoin”; however, the filings for February and March did not mention it. This time, after a three-month gap, the risk warning has been cited again in the Form 8-K. However, the straightforward wording in this Form 8-K, stating “may sell at unfavorable prices,” reflects the increasing pressure to some extent, likely related to the recent significant drop in Bitcoin and the $5.91 billion unrealized loss.
Looking back at the last bear market, Strategy also faced a severe test, with a negative net worth, but was not forced to sell Bitcoin. This was mainly due to two key factors: the distant maturity of the debt (as early as 2028) and the fact that founder Michael Saylor held 48% of the voting rights, making it difficult for the winding-up proposal to pass. Therefore, even if Bitcoin falls below the cost price, the likelihood of triggering a sell-off “death spiral” is low. Compared to the last bear market, Strategy now has a variety of tools to deal with it: issuing bonds, issuing additional shares, or financing with a $40 billion Bitcoin holding.
In addition, from a macro trend perspective, Bitcoin is gaining recognition from an increasing number of sovereign funds and institutions, with a positive long-term outlook. Although short-term price fluctuations may bring financial pressure, the Strategy has a longer debt maturity, and with an improving market environment, the actual risk of sell-off is limited.
Related reading: “Michael J. Saylor’s Strategic Bet: Bitcoin’s Premium Issuance and Capital Manipulation”
In the short term, the market will closely monitor its quarterly report and subsequent financing plans. As for whether there will be a sell-off, the market will hold its breath. The next step for this company is not only related to its own survival but may also affect the future landscape of Bitcoin.
