Outside Source
Shares in the business intelligence and Bitcoin investment firm have tanked more than 11% over the past day in a fall to $250 in after-hours trading, according to Google Finance.
Moreover, company stock (MSTR) is down 13.5% since the beginning of this year, battered recently by a crypto market rout that wiped out more than $270 billion over the past couple of days.
Strategy founder Michael Saylor even joked about having to get a second job to acquire more Bitcoin as the asset crashed to a three-month low of $86,000 on Tuesday.
Considering a second job to acquire more Bitcoin. pic.twitter.com/IkXLlqnr95
— Michael Saylor⚡️ (@saylor) February 25, 2025
Forced Liquidation Potential?
On Feb. 26, the Kobeissi Letter reported that Strategy stock had fallen more than 55% from its all-time high and pondered the possibility of a “forced liquidation.” This scenario could become a reality if Bitcoin prices fall below the firm’s average cost to acquire it, which is currently $66,380 per BTC.
Strategy’s 499,096 BTC stash is currently worth $44.3 billion and is still in profit by almost 34% despite its last twelve purchases and every Bitcoin buy since Nov. 25 currently being at a loss.
However, the company has been buying BTC for years, and there have been multiple bear markets since then, including 2022, when the asset fell from around $69,000 to $16,000.
Strategy’s system is largely contingent on the ability to raise additional capital, but this ability could deteriorate if their liabilities rise significantly higher than their assets, it noted before adding, “This doesn’t necessarily mean forced liquidation.”
Most debt is in convertible notes with conversion prices below the current share price, and the majority of debt doesn’t mature until 2028. A forced liquidation would require a fundamental change at the company needing shareholder approval or corporate bankruptcy, it observed.
Since Bitcoiner Michael Saylor holds 46.8% of voting power, shareholder-driven liquidation is highly unlikely.
The MicroStrategy liquidation:
As MicroStrategy, $MSTR, falls over -55%, many are asking about “forced liquidation.”
The company now holds $44 BILLION worth of Bitcoin, could they be forced to sell it?
Is liquidation even possible? Let us explain.
(a thread) pic.twitter.com/GcDZVu2gVa
— The Kobeissi Letter (@KobeissiLetter) February 25, 2025
Market Meltdown Natural
Meanwhile, Bitwise Invest CIO Hougan said the market was currently digesting the end of the meme coin boom and the Lazarus Group using memecoins to launder stolen ETH.
However, the good news is there are already things ready to replace it, “including the institutional adoption of Bitcoin, stablecoins, tokenization, and a rebirth in DeFi,” he said before adding:
“But until they start making their presence felt, the loss of energy will create a drag on the market.”
Crypto markets have settled at around $3 trillion in total capitalization after a brief dip below it on Tuesday. Bitcoin remains weakened, trading at around $88,600 following a 4% slump on the day.
This article first appeared at CryptoPotato
