Bitcoin Price Slumps, Pulling Strategy (MSTR) Stock Down With It

Bitcoin (BTC) price has skidded from its December 2024 peak of $108,000 to a shaky $88,000-$97,000 range

The price of Bitcoin has fallen from a December 2024 peak of $108,000 to a range of $88,000-$97,000 by February 25, 2025, marking a decline of up to 19%. As a result, investors are feeling uneasy.

Among the major investors, Strategy (formerly known as MicroStrategy), the biggest corporate Bitcoin holder, has seen its stock (MSTR) plummet over 55% from recent highs. This downturn has come amid a broader decline in the cryptocurrency market, leaving traders wondering if Strategy’s $43.7 billion Bitcoin stash can survive this storm.

A Deeper Dive

As of February 10, 2025, Strategy held 478,740 BTC, which is valued at approximately $91,250 per coin today. The company, headed by Michael Saylor, acquired these coins for a total of $27.954 billion at an average price of $62,473 per Bitcoin.

This investment yields a hefty unrealized gain of $15.746 billion. However, the market isn’t celebrating. According to reports from the Kobeissi Letter on X, Bitcoin’s recent slide and the decline in MSTR stock signal trouble for Strategy’s bold play.

The company’s Bitcoin holdings are subject to a 19% leverage ratio, and the conversion prices for its debt are set lower than the current share price, which gives Strategy some room for maneuver. However, if Bitcoin continues to fall and stays at lower levels for an extended period, it will become more difficult to raise fresh capital.

According to an analysis from the Kobeissi Letter, the structure of Strategy’s debt is a crucial factor in comprehending the risks involved.

Liquidation Fears: Are They Real or Overblown?

There has been talk of a “forced liquidation,” which might lead to Strategy having to sell off its Bitcoin holdings. However, as the Kobeissi Letter points out in a February 2025 thread, this scenario is unlikely.

Saylor controls 46.8% of the voting power, and any shareholder wishing to push for a drastic move like liquidation would require his approval, which isn’t easily obtained.

Moreover, the debt has a long maturity date of 2028, and to force Strategy to sell its Bitcoin holdings, there would need to be a fundamental change in the company, which Saylor has the power to block.

The Importance of Bitcoin Price and MSTR Stock

The price of Bitcoin has been fluctuating between $88,000 and $97,000 as of February 25, 2025. While this price range is still above Strategy’s average entry point for its Bitcoin holdings, which is $62,473, the gap is narrowing if the slide continues.

On the other hand, MSTR stock has experienced a decline of over 55% since reaching its peak, resulting in the loss of billions of dollars in value. This decline is due to investor concerns that if the price of Bitcoin continues to fall for an extended period, it could impair Strategy’s ability to issue new shares or debt.

The company’s model depends on market confidence to raise cash, buy Bitcoin, and repeat the cycle.

Analysts are divided in their opinions. Some view Strategy’s massive Bitcoin bet as a masterstroke, especially if the price of Bitcoin rises again to reach $100,000 or higher levels. In that scenario, the 478,740 coins in Strategy’s possession could increase in value significantly.

However, others highlight the potential downside. If the price of Bitcoin were to drop by 50% to reach $45,625, for instance, then the value of Strategy’s Bitcoin holdings would fall below the amount of debt it has taken on or the price at which it bought the coins.

The analysis from the Kobeissi Letter emphasizes this tension, but it also notes that there is no immediate threat of collapse. Nevertheless, the mood among investors is changing rapidly.

What’s Next for Strategy?

It appears that Strategy has managed to survive previous crypto winters, but this time, the company is facing a deeper dip, which might test its limits. With the price of Bitcoin at $91,250, the company is still in the green, but only just.

The 55% decline in the company’s stock price signals that investors are becoming restless, and Strategy’s lifeline is the possibility of raising more capital. However, if the price of Bitcoin falls below $62,473 for a sustained period, then that lifeline will begin to fray.

As the Kobeissi Letter on X, dated February 2025,