The firm’s “BTC Rating” puts coverage at 5.9x with BTC at $74,000 and still about 2.0x even in a severe crash to $25,000.
Business intelligence firm Strategy (MSTR) has said that its Bitcoin (BTC) reserve is more than sufficient to cover its debt obligations.
The company asserted that even if the flagship cryptocurrency’s price fell to its average purchase amount of $74,000, its holdings would still be valued at nearly six times the worth of its convertible notes.
Navigating Market Turbulence
Strategy’s disclosure is a direct message of stability to its bondholders amid a sharp downturn in both its stock price and the crypto market.
In a post on X, the company elaborated on what it calls its “BTC Rating,” a measure of its Bitcoin assets against its convertible debt. It stated that this ratio stands at 5.9x if BTC is at $74,000 and would still be a solid 2.0x even in a severe crash scenario where the king crypto trades at $25,000.
This calculation is backed by a massive hoard, which, according to BitcoinTreasuries, stands nearly 650,000 BTC, worth over $57 billion, that the company has accumulated over the last five years.
The firm’s confident stance is being tested by recent market events. Its shares have fallen sharply, and on November 25, it was once again excluded from the S&P 500 Index.
This has been compounded by reports of institutional investors moving away from the stock. According to analyst Shanaka Anselm Perera, institutions pulled $5.4 billion from Strategy in the third quarter alone.
You may also like:
Furthermore, a key ruling expected from MSCI early next year could determine if companies with most of their assets in crypto belong in equity indices, a decision that JPMorgan analysts estimated might trigger $8.8 billion in forced selling.
That assessment triggered a backlash against the bank, with sections of Crypto Twitter accusing it of engineering a targeted hit on Strategy after taking on a huge short position that could see the Wall Street giant lose billions if MSTR stock rallied.
However, an examination of SEC filings by Perera revealed that JPMorgan does not hold a short position in MSTR stock, though it did sell shares and holds put options.
A Shifting Landscape for Bitcoin Proxies
The broader context shows a significant change in how large institutions are choosing to gain exposure to Bitcoin. As Perera noted on November 24, the same quarter that saw JPMorgan reduce its MSTR position also featured major institutions like Harvard University building a $443 million position in BlackRock’s spot Bitcoin ETF.
It suggests that Wall Street is not abandoning Bitcoin but is increasingly bypassing leveraged corporate proxies in favor of the ETF structure itself.
According to market watchers, this rotation is erasing Strategy’s once-commanding stock premium. For the first time in five years, the company’s market valuation has traded at a discount to the value of its Bitcoin holdings.
Nonetheless, Bitwise’s Matt Hougan recently explained that digital asset treasuries (DATs) often have valid reasons to trade at a discount due to factors like operational expenses and risk, making a premium difficult to maintain.
Despite this, Strategy is continuing with its aggressive acquisition, recently moving over 58,000 BTC to Fidelity Custody and raising $21 billion year-to-date to fund further purchases, demonstrating its unwavering commitment to its Bitcoin-centric plan.
