Strategy Company Legal Risks or Threats to the Bitcoin Bull Market?
On May 19, 2025, Bitcoin broke through the historical high of $107,000, with inflows into the U.S. spot Bitcoin ETF being a major driving force. However, MicroStrategy (now known as Strategy), as one of the largest institutional holders, faces financial and legal risks that could threaten the market.
1. Strategy: Key Driver of the Bitcoin Bull Market
Strategy holds over 500,000 bitcoins (worth $43 billion) and has been continuously increasing its holdings using a 'debt issuance to buy bitcoins' strategy. However, this model relies on the rise of Bitcoin, and once the market adjusts, its highly leveraged positions may face risks. For example, when Bitcoin corrected in February 2025, Strategy's stock price plummeted by 55%, triggering concerns of a sell-off.
2. Legal Risks as a Potential 'Black Swan'
Strategy faces the following challenges:
- SEC Regulation: The compliance of its financing methods (such as convertible bonds) is questionable and may affect future purchases.
- Changes in Accounting Rules: The FASB's adjustments to Bitcoin accounting standards could impact its balance sheet.
- Shareholder Lawsuits: If Bitcoin experiences a major drop, investors may sue over its high-leverage strategy.
If risks materialize, Strategy may be forced to sell its bitcoins, triggering a chain reaction in the market.
3. Market Impact: Short-term Correction Risks
- Price Pressure: If issues arise for Strategy, Bitcoin may test the $100,000 support level.
- Erosion of Institutional Confidence: If Strategy fails, it may undermine other listed companies' willingness to hold bitcoins.
- Leverage Liquidation: The high-leverage derivatives market may exacerbate volatility.
4. Summary: Beware of Major Players Turning into Risks
Strategy is an important support in the bull market, but its high leverage and legal risks may also become vulnerabilities. Attention should be paid to:
- SEC Regulatory Developments
- Key Bitcoin Support Levels (such as $100,000)
- Institutional Capital Flows
If negative news escalates, Bitcoin may experience a deep correction, affecting the overall bull market.
