Following the return of Bitcoin to the vicinity of $58,000, the market once again looked at Strategy under Michael Saylor. As corporate stock prices weaken, some investors fear that if bitcoin continues to fall, the company known for its large-scale hold of bitcoin may be caught in a chain reaction of forced currency sales and further stock price pressure.

Pressure test assumptions dropped to $26.6 million

Bitcoin analyst Adam Livingston performed a three-year stress test on Strategy, using an extremely pessimistic scenario. The model assumes that bitcoin fell to $26,611 within six months, that the net asset ratio of the company ' s market value fell 0.50 times, and that capital markets were closed to new financing.

Under this scenario, Strategy will eventually need to sell a portion of the bitcoin to meet the debt-servicing requirements. However, Livingston considered that this did not mean that the company would immediately go bankrupt.

11.57 million BTCs sold within three years

According to this estimate, Strategy will run out of cash in about the ninth month and will then cumulatively sell some 115,727 BTCs over the next three years. Even so, the company will retain approximately 731,636 BTC warehouses, and the mNAV may return to about 1.40 times.

He also estimated that, in this extreme downward scenario, Strategy ' s share price could theoretically fall to about US$ 1.01. The article mentions that this means that the greater pressure on companies may be the compression of valuations and dilution of equity, rather than total insolvency.

STRC dropped to $74

At the time this analysis was published, Strategy-related securities had continued to weaken in the recent past. The STRC Evolving Priority Equity, which had been used to support the company's recent purchase of Bitcoin, had fallen by up to 26 per cent over the $100 nominal value, at one point touching the historical low of $74, and then recovered slightly.

Livingston argues that, despite current market pressures, Strategy ' s financial position is stronger than it was in Bear City in 2022. He stated that the company ' s balance sheet design was more resilient to extreme fluctuations, and that the current downward environment had not yet reached the level of pressure in 2022.