Strategy is reassuring investors that its towering Bitcoin stash still dwarfs its debtโeven as its stock price keeps falling faster than a hardware wallet dropped off a balcony.
Summary
- Strategy says its Bitcoin holdings far exceed its debt, claiming a 5.9x asset-to-liability ratio at its average purchase price and a 2.0x ratio even in a severe crash.
- The firmโs stock has slumped, leading to its removal from the S&P 500.
- IStrategyโs market valuation is below the value of its own BTC holdings for the first time in five years.
Michael Saylorโs company said its Bitcoin holdings would be worth nearly six times its outstanding convertible notes if the cryptocurrency fell back to Strategyโs average purchase price, a metric it now proudly calls its โBitcoin Rating.โ
Even in a doomsday-level market plunge, Strategy says the ratio would hold at a still-comfortable 2.0x, based on figures compiled by BitcoinTreasuries.
The upbeat math arrives at an awkward moment: Strategyโs share price has tumbled in recent weeks, culminating in its removal from the S&P 500 on November 25.
Adding to the pressure, MSCI is expected to rule early next year on whether companies that hold most of their assets in cryptocurrency should even appear in equity indices. JPMorgan analysts warned the decision could spark forced selling, prompting parts of the crypto community to accuse the bank of attacking Strategy to profit from a supposed short position.
Perera, however, found no evidence of a JPMorgan short in SEC filingsโonly share sales and some put options.
Institutions arenโt abandoning Bitcoinโjust Strategy
Analyst Shanaka Anselm Perera reported that institutional investors pulled significant capital from the company in the third quarterโapparently deciding there are safer ways to gain Bitcoin exposure.
As JPMorgan trimmed its stake, heavyweight players like Harvard University moved into BlackRockโs spot Bitcoin ETF, a shift analysts say helped erase Strategyโs long-standing premium over its underlying Bitcoin.
For the first time in five years, the companyโs market cap now sits below the value of its BTC holdings.
Bitwise analyst Matt Hougan noted that crypto-heavy companies typically trade at discounts anyway due to operational costs and perceived risk. Strategy, undeterred, continues scooping up Bitcoin, moving more into custody and raising additional capital to buy even more.
