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>>Liquidity test threatens strategy as Bitcoin’s decline strains the treasury model

Liquidity test threatens strategy as Bitcoin’s decline strains the treasury model

crypthub

about 4 hours ago

Financial Pressure and Dividend Obligations

Strategy Corp faces a cash squeeze as Bitcoin’s recent fall weakens its debt‑funded acquisition model. It must pay $120 million in preferred dividends this year while holding only $54 million in cash. Tapping Euro‑denominated preferred shares or issuing higher‑yield preferred stock may preserve liquidity but raise future costs.

Index Rebalancing Risk and Bitcoin Holdings

Passive funds hold over $9 billion of Strategy shares, and a mid‑January MSCI review could force up to $2.8 billion of sales if the stock is removed. The firm controls 649,870 BTC and has no Bitcoin‑backed loans for 2025, eliminating mandatory sell‑offs. Share price has modestly recovered to $172.19 despite broader market pressure.

Debt Maturity and Long‑Term Outlook

Strategy carries about $8 billion of convertible debt maturing 2028‑2032, largely out‑of‑the‑money at current prices. Minimal free cash flow makes it dependent on capital‑market access and a Bitcoin rally. Annual dividend commitments of roughly $700 million add to the financing burden, requiring sustained liquidity or crypto appreciation.