Bitcoin Price Drop Could Threaten MicroStrategy’s Financial Stability
According to PANews, financial expert David Krause warned that a significant decline in Bitcoin prices could severely impact MicroStrategy, potentially jeopardizing its ability to pay debts and leading to financial distress or bankruptcy, which could trigger a sell-off in its stock. Financial analyst Jacob King noted that MicroStrategy tends to raise funds through debt or equity to buy more Bitcoin when its stock price exceeds the net value of its Bitcoin holdings. This cyclical strategy is only effective if Bitcoin prices continue to rise; however, if Bitcoin prices stagnate or fall, this cycle could collapse.
