Strategy’s Bitcoin Leveraged Bet Under Stress: What a Prolonged BTC Correction Could Mean

tamir
Thu, 20 Nov 2025 08:30:35 +0000
Crypto Winter, Investor Briefing, Michael Saylor, MicroStrategy, Strategy

Strategy (ex-MicroStrategy) has transformed itself into the world’s biggest listed Bitcoin treasury company, holding about 649,870 BTC acquired for roughly $48.4 billion at an average cost above $74k per coin. bitcointreasuries.net+2bitget.com+2 After Bitcoin’s recent fall from six-figure highs to around $91k, the market is again debating whether a deeper correction could push Strategy toward solvency stress or even bankruptcy.

Strategy (ex-MicroStrategy) has transformed itself into the world’s biggest listed Bitcoin treasury company, holding about 649,870 BTC acquired for roughly $48.4 billion at an average cost above $74k per coin. After Bitcoin’s recent fall from six-figure highs to around $91k, the market is again debating whether a deeper correction could push Strategy toward solvency stress or even bankruptcy (Source: TIKR.com).

On 10 November, Michael Saylor reiterated on X that “we hodl 641,692 BTC” and promptly added more, underlining his conviction despite rising volatility.

Strategy’s Position in a Sustained BTC Downtrend

Strategy finances its BTC stack with a mix of convertible notes, secured loans and equity issuance, with total debt estimated around $10–11 billion (Source: BitMEX). Independent analyses suggest a theoretical debt-coverage/“liquidation” level in the low-$20k BTC range, far below current prices, meaning that even a 60–70% drawdown from here would likely leave the company solvent on paper (Source: 21shares).

The real risk in a prolonged correction is different:

Equity collapse: MSTR trades as a geared BTC proxy. A deep bear market would hammer the stock, raising capital-markets and refinancing risk (Source: Investopedia).

Refinancing & covenants: Lower equity value and wider credit spreads could make rolling or retiring debt materially harder and more expensive.

Accounting & sentiment: Large mark-to-market losses could trigger impairments, downgrades and negative feedback from wary shareholders and lenders.

Bankruptcy is still a tail scenario but can’t be ruled out if BTC collapsed toward or below the $20k area and stayed there while credit markets seized up.

Impact on the Broader Crypto Market

Strategy controls more than 3% of all BTC that will ever exist (Source: The Block). Any forced liquidation or distressed restructuring would be systemically bearish:

direct selling pressure,

loss of a key bullish narrative (“corporate BTC standard”),

tighter lender risk appetite for BTC-backed borrowing and structured products.

Even without bankruptcy, a prolonged Strategy drawdown would chill institutional appetite and likely widen the next crypto winter.

Link to an AI Bubble Bust

As FinTelegram has argued in its AI-bubble doomsday briefing, a sharp AI-tech crash would likely trigger a broad risk-off phase. Strategy is doubly exposed: it is listed as a tech stock and fully tied to BTC, which increasingly trades like a high-beta macro asset. An AI bust with tightening liquidity, higher real rates and falling tech valuations would greatly increase the probability of a deep BTC bear phase – and, by extension, of serious stress at Strategy.

Working hypothesis: bankruptcy remains a low-probability tail risk, but the combination of an AI-driven equity crash and a 60–80% BTC drawdown would push Strategy close to that edge and would be structurally negative for the entire crypto segment.