Key Takeaways
- MicroStrategy holds 3% of all bitcoin, financed by $7.2 billion in debt.
- Analysts warn a price drop could force asset sales, risking a market cascade larger than Mt. Gox or 3AC.
- Critics say such centralization threatens bitcoin’s decentralized ethos and raises systemic risk.
MicroStrategy, the largest corporate holder of bitcoin, is drawing warnings from analysts over the risk its $71 billion position poses to the broader market.
Current holdings
The company currently holds 597,325 BTC, representing approximately 3% of bitcoin’s total supply.
This massive holding has been financed through $7.2 billion in convertible debt since 2020, with an average purchase price of around $70,982 per bitcoin.
According to Leshka.eth, an investment strategist:
“Everyone’s celebrating while this creates crypto’s biggest liquidation risk.”
Leverage
The concern centers on MicroStrategy’s leveraged approach and lack of cash buffers, unlike spot bitcoin ETFs, making the company’s balance sheet acutely sensitive to bitcoin price declines.
Should the price fall below the company’s average purchase price, significant paper losses could materialize and force asset sales to cover liabilities.
Leshka further emphasized:
“This is not just a high-beta Bitcoin play—it’s a leveraged bet with very little margin for error.”
Loop
The feedback loop is fragile—MicroStrategy’s stock often trades at a premium over its net asset value (NAV), enabling further bitcoin purchases.
However, a reversal in investor sentiment could lead to a collapse in this premium, restricting access to new capital and potentially forcing the company to liquidate bitcoin holdings.
Leshka warned that such a sell-off could be “bigger than Mt. Gox or 3AC.”
Core business
The company’s core software business has weakened, with 2024 software revenue at a 15-year low and headcount down 20% since 2020.
Critics argue that the centralization of 3% of the bitcoin supply in one company poses a threat to the network’s decentralized ethos.
For historical data on MicroStrategy’s bitcoin holdings, see the MicroStrategy bitcoin treasury tracker.
Some analysts note that MicroStrategy’s convertible bond maturities stretch into the next decade and see little risk of near-term forced liquidations unless bitcoin’s price drops sharply below $30,000.
Still, the risk of a market cascade remains if optimism and capital inflows dry up.
