Strategy Insures Bondholders: Bitcoin Reserves Cover Debts Nearly 6x

The company’s “BTC Rating” estimates coverage at 5.9x, with BTC at $74,000 and still around 2.0x even in a severe crash to $25,000.

Business intelligence firm Strategy (MSTR) has said its Bitcoin (BTC) reserves are more than enough to cover its debt obligations.

The company claimed that even if the price of the flagship were to drop to the average purchase price of $74,000, its assets would still be valued at almost six times the value of its convertible notes.

Navigating Market Turbulence

Strategy’s disclosure is a direct message of stability to bondholders amid a sharp decline in both the stock price and the crypto market.

In a post on It declared that this ratio is 5.9x if BTC is at $74,000 and would still be a solid 2.0x even in a severe crash scenario where the king crypto is trading at $25,000.

This calculation is backed by a huge treasure, which according to BitcoinTreasuries amounts to almost 650,000 BTC, worth more than $57 billion, that the company has accumulated over the past five years.

The company’s confident attitude is being tested by recent market events. Its shares fell sharply and on November 25 it was once again excluded from the S&P 500 Index.

This was further exacerbated by reports of institutional investors distancing themselves from the shares. According to analyst Shanaka Anselm Perera, institutions drawn $5.4 billion from Strategy in the third quarter alone.

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Furthermore, a major ruling expected by MSCI early next year could determine whether companies with the majority of their assets in cryptocurrencies belong in stock indices, a decision that could lead to $8.8 billion in forced sales, according to JPMorgan analysts.

That assessment sparked a backlash against the bank, with parts of Crypto Twitter accusing the bank of masterminding a targeted hit on Strategy after taking a huge short position that could see the Wall Street giant lose billions if MSTR shares rise.

An investigation into SEC filings by Perera revealed that JPMorgan is not shorting MSTR stock, although it has sold shares and has put options.

A Changing Landscape for Bitcoin Proxies

The broader context shows a significant change in how major institutions are choosing to gain exposure to Bitcoin. As Perera noted on November 24, the same quarter that JPMorgan cut its MSTR position also saw major institutions like Harvard University build a $443 million position in BlackRock’s Bitcoin ETF.

It suggests that Wall Street is not abandoning Bitcoin, but is increasingly bypassing the leverage of corporate proxies in favor of the ETF structure itself.

According to market observers, this rotation is wiping out Strategy’s once-important equity premium. For the first time in five years, the company’s market valuation has traded at a discount to the value of its Bitcoin holdings.

Nevertheless, Bitwise’s Matt Hougan recently explained that digital asset treasuries (DATs) often have valid reasons to trade at a discount due to factors such as operational costs and risks, making a premium difficult to maintain.

Despite this, Strategy has continued its aggressive acquisition lately move more than 58,000 BTC to Fidelity Custody and has raised $21 billion to date to fund further purchases, demonstrating its unwavering commitment to its Bitcoin-focused plan.