PROD Test News 3

Concerns have been raised that Strategy (formerly MicroStrategy) could see its financial soundness shaken if Bitcoin falls to $7,004,000, but leading analysts drew a line, saying bankruptcy risk is an overinterpretation.

According to a report by NewsBTC on the 31st (local time), the Bull Theory analyst assessed that even if Bitcoin declines to $7,004,000—cited as a key support level—Strategy is unlikely to fall into financial distress. They argued that the 'forced selling' and 'liquidity crunch' scenarios recently circulated in parts of the market fail to adequately reflect the company’s financial structure.

Strategy currently holds about 67,002,497 bitcoins, worth roughly $5,870,000,000,000 at market value. By contrast, the company’s total debt stands at about $820,040,000,000. Bull Theory explained that even if Bitcoin drops to $7,004,000, the value of its Bitcoin holdings would still be about $4,970,060,000,000—far exceeding its debt. The view is that the structure does not put the company into insolvency even in that case.

Analysts also stressed that Strategy does not use margin trading like a hedge fund. The company’s Bitcoin holdings are not pledged as collateral, meaning price declines would not trigger margin calls or forced liquidations. Most of Strategy’s borrowings are unsecured convertible bonds, so creditors cannot demand Bitcoin sales solely on the basis of a price drop.

On the liquidity front, short-term pressure is also seen as limited. Strategy has secured about $210,088,000,000 in cash and cash equivalents, an amount that could cover roughly $70,050,000,000 to $80,000,000,000 in annual dividend and interest payments for about 32 months. Analysts said this lowers the likelihood of a near-term funding squeeze.

Still, external factors were cited as a backdrop to Strategy’s recent share-price weakness. Since October, MSCI has been reviewing the possibility of a rule change that could exclude from its indexes companies that hold more than 50% of their assets in Bitcoin, fueling concerns about selling by index-tracking funds. A final decision on the agenda item is scheduled for January 15, 2026.

In addition, JPMorgan raised margin requirements for trading Strategy shares from 50% to 95%, prompting some investors to reduce positions, and analyses suggested the resulting selling pressure weighed on the stock.

However, Bull Theory pointed to 'dilution risk' as a long-term factor to watch. Given that Strategy has repeatedly issued new shares to fund additional Bitcoin purchases, continued capital raises during downturns could erode existing shareholders’ value. In particular, the possibility that additional capital-raising could be constrained if the stock’s price-to-net asset value (NAV) ratio falls to 1 or below was presented as a medium- to long-term headwind.

Meanwhile, at the time of writing, Bitcoin was trading around $8,009,200, up about 1.5% over 24 hours. Strategy shares also rose about 1.25% over the same period, hovering around $15,700 per share.