From November 2021 to November 2022, Bitcoin crashed from $69,000 to $15,500. If the current 2025 Bear Market repeats a deeper version of that cycle, Michael Saylor’s strategy (previously micro-strategy) could end More debt than Bitcoin.
Already, analysts are calculating how much pain Saylor can take. Bitcoin is a record 23% off, and the premium, where investors in its strategy (MSTR) currently pay out MSTR stocks over its Bitcoin holdings, crashed 47% from 3.4x to 1.8x.
Saylor and strategy wisely eliminated secured debts from his company’s balance sheet, and therefore liquidation risk. But they still have a huge amount of debt: $8.2 billion. These obligations are expected over the next few years.
The biggest pain of strategy
If Bitcoin is defeated well enough, the strategy could be borrowing more from creditors than it is in the assets. Specifically, the total principal of outstanding strategic bonds totals $8.2 billion. That anticipated debt is eased by today’s $41 billion worth of Bitcoin.
However, unless the highly correlated market capitalization of Bitcoin and the company remains within sufficient scope to encourage bondholders to foregregate principal repayments for stock conversions of MST, the strategy must pay bonds in USD.
In other words, if the bear market is persisting, microstrategy could be caught up in more debt than Bitcoin. All Strategic Convertible Notes have provisions that require the election of bondholders to repay the principal or repurchase of bonds.
An additional 80% or $32.8 billion decrease in the company’s Bitcoin value would wipe out the company’s Bitcoin value buffer. It is expressed as the price of Bitcoin. That means $16,800 per Bitcoin. It may seem far from today’s $84,200, but there are many historical precedents for such a decline.
For example, Bitcoin crashed 99% in June 2011. Bitcoin crashed 65% in December 2013 alone. Then it was half again For 12 months. From December 2017 to February 2018, Bitcoin crashed 70%. Bitcoin crashed 63% between February and March 2020. Since November 2021, Bitcoin has crashed 77% for 12 months.
Clearly, Bitcoin has a volatile history. However, prices alone are not enough to shut down the strategy. Timing is important.
Not just prices, but prices on specific dates
Strategic debts are paid on a specific date rather than on a continuous basis. We will not have any major debt obligations until September 15th, 2027, except that we pay less interest of less than 2.3% per year.
If on that so-called put day, MicroStrategy’s market capitalization cannot encourage bondholders to convert bonds into MSTR equity or to continue waiting for principal repayment in 2028, these bondholders may need a strategy to buy back their $10.1 billion loans.
The dates for other series of convertible notes begin in September 2027 as mentioned above and will be extended to the final series in June 2029.
In summary, if Crypto repeats the worsened version of the 2022 style bare market, the strategy has more debt than Bitcoin. Bitcoin fell 77% in the 12 months that ended in November 2022. Adding a few more percentage points to that number this time will put your strategy in a big trouble.
read more: Michael Saylor’s Bitcoin announcement no longer puts MSTR stocks
I want to avoid repeating 2022
Specifically, if Bitcoin has dropped by an additional 80% from today’s price by September 2027, the strategy is borrowing more than it has in Bitcoin, Ceteris Paribus. On September 15th, 2027, sufficient stocks or assets such as Bitcoin must be sold to raise approximately US$1 billion to buy back that convertible note.
This will decrease further below that level, especially after the company’s operation and interest, but will be particularly problematic in 2028. Another $6 billion worth of bonds.
Clearly, such a catastrophic bear market is hard to imagine for anyone who has joined the crypto and strategic investment community within the past few years. But for experienced crypto investors, such numbers are far from unimaginable. Many have lived through these types of drawdown experiences. In many ways, the long-term bear market represents Bitcoin’s volatile history as the world struggles to cherish its destructive technology.
