Although Strategy's stock fell over 11% on Tuesday, analysts believe the likelihood of the company being forced to liquidate its massive Bitcoin holdings is very low.

Stocks plummet – Market worries about Bitcoin liquidation

📉 Shares of Strategy, the company holding the largest amount of Bitcoin among publicly traded firms, fell over 11% on Tuesday morning, raising concerns about a large-scale liquidation.

💰 Strategy currently holds 499,096 BTC, valued at approximately $44.4 billion, accounting for 2.3% of the total circulating Bitcoin supply. Meanwhile, the company has $8.2 billion in convertible debt, including low-interest and zero-interest bonds, maturing from 2028 to 2030.

⚠️ The cryptocurrency market crash last week wiped out $3.7 billion in Bitcoin value for Strategy, but analysts assert that a forced liquidation is nearly impossible.

Why is the risk of liquidation very low?

🔍 The financial structure of #strategy plays a protective role:

  • The company raises capital through convertible notes, allowing conversion to shares instead of immediate cash payment.

  • This helps avoid immediate dilution of shares and reduces liquidity pressure.

  • An example is the $2 billion bond maturing in 2030, which can be converted into shares at $433.43/share.

📊 The Power of Michael Saylor:

  • Michael Saylor, co-founder and chairman of Strategy, holds 46.8% of the voting rights.

  • This means that no decision to liquidate Bitcoin can be made without his consent.

💵 Strong fundraising ability:

  • Strategy raised $1.8 billion in 2022 during Bitcoin's deep decline.

  • If necessary, the company can still continue issuing shares or raising capital to maintain its Bitcoin position.

📌 Even if Bitcoin drops 50% to $33,000, Strategy still has assets greater than liabilities by over 100%, according to The Kobeissi Letter.

Strategy's approach: Long-term Bitcoin betting

📈 Strategy's business model is to buy Bitcoin using raised capital:

  • Issuing shares -> Buying Bitcoin -> Increasing net asset value -> Continuing fundraising.

  • Despite the high risk, the company remains committed to a long-term investment strategy in Bitcoin.

📉 However, the company is still suffering significant losses:

  • Q3/2024: Software revenue of $116.1 million, but a net loss of $340.2 million due to Bitcoin valuation adjustments.

⚠️ The only risk that could trigger liquidation is insolvency, not being called for margin (#margincall ).

Conclusion: No immediate risk of Bitcoin liquidation

⏳ If there is no "Black Swan" event, Strategy does not need to sell Bitcoin until the bonds mature in 2028-2030.
💎 Michael Saylor still controls the situation, and the company has the ability to raise funds if necessary.
🔥 Despite the drop in stock price, Strategy's strategy is still aimed at long-term goals with Bitcoin.#anhbacong

🚀 Is this the right path, or is it a risky bet? ⏳