Strategy (formerly MicroStrategy) has built a balance sheet dominated by top cryptocurrencies using equity, convertible debt, and preferred stock, making it the most widely traded Bitcoin agency on the public markets.
However, with Bitcoin trading around $68,000 and Strategy stock hovering below $130, investors are paying close attention to how the company can continue to buy BTC without becoming a forced seller.
Industry experts such as Bloomberg Intelligence strategist Mike McGlone have warned that Bitcoin could fall to $10,000.
Although this drawdown scenario poses challenges for the company, the Michael Saylor-led company appears confident in its ability to overcome these issues, even if BTC falls to $8,000.
But it’s the calendar date and stock price level that raise more serious concerns.
Holders of Strategy’s $1.01 billion convertible notes due in 2028 could be required by the company to repurchase the notes for cash on September 15, 2027, a condition that becomes more threatening if the stock trades below the notes’ initial conversion price of approximately $183.19 per share.
For years, Strategy has benefited from a market structure that has prevented many investors from easily purchasing spot Bitcoin in the US ETF wrapper.
This dynamic supported a period when the stock was trading at a premium to the implied value of its Bitcoin holdings per share, providing a cushion that lowered the cost of raising new capital.
Now that Bitcoin spot ETFs have been established, it has become difficult to maintain that premium, making it clearer that the company relies on stock issuance as strategic funding.
Strategy’s proprietary dashboard highlights how quickly the equity base has expanded. As of February 16, the company reported 333,755,000 basic shares outstanding and 366,114,000 diluted shares underwritten, and held 717,131 Bitcoin.
These numbers provide the market’s easiest way to track the trade-off between accumulating Bitcoin and diversifying rights into more stocks.
2027 put
Convertible bonds are often referred to as “cheap” financing because of their low coupons.
The strategy’s 2028 converter pays 0.625% interest, but coupon pressure is not the risk investors are focused on. This occurs if the stock option embedded in the note is never exercised.
The bond matures on September 15, 2028, but the put date occurs one year earlier.
If Strategy’s stock price comfortably rises above $183.19 as September 15, 2027 approaches, the conversion feature will have value, and bondholders will have more incentive to convert to stock, or at least less incentive to demand cash.
However, once the stock price falls below $183.19, the cash requirements become more attractive, requiring the company to plan to meet around $1 billion in a market that may be reluctant to fund the leverage-friendly terms associated with Bitcoin.
Strategy’s dashboard shows why that conversion price became a reference point. The company lists the expected stock price impact for each convertible note series, including the 2028 Notes, which are associated with $183.19.
This is more than just an accounting sheet. This is a map of incentives that turns a certain stock price level into a de facto stress threshold.
The company has publicly argued that even a significant sell-off in Bitcoin would not automatically lead to bankruptcy because its balance sheet contains large amounts of assets.
But the market’s more pressing concern isn’t the bankruptcy calculation. This is a set of financing options that protects Bitcoin positions while passing costs on to public shareholders through dilution, especially when stock prices are weak.
Stock issuance as a pressure valve
Strategy’s recent capital raise shows how central stock issuance has become.
The company reported in its fourth quarter 2025 financial results that it raised approximately $5.6 billion in total revenue during the quarter and an additional $3.9 billion from January 1 to February 1, 2026. Most of this was due to sales of common stock through the at-the-market program.
The company reported that it sold 24,769,210 shares for approximately $4.4 billion in the fourth quarter, sold an additional 20,205,642 shares for $3.4 billion in January, and had $8.1 billion remaining in Common ATM as of February 1.
Dilution is not an abstract risk, so the pace is important. This is how it works. As stock prices fall, more shares will have to be issued for each additional dollar raised, permanently diluting the per-share entitlement of Bitcoin holdings that investors believe they are buying exposure to.
Strategy’s basic share count increased from 312,062,000 shares at the end of 2025 to 333,755,000 shares by February 16, according to the company’s dashboard.
This is the core tension for common stockholders. The company positions its approach as maximizing “Bitcoin per share” over the long term.
However, in the short term, the dilution could outweigh the perceived benefits if capital has to be raised in weak conditions, or if the equity premium to Bitcoin’s implied value compresses and remains compressed.
Strategy Cash Reserve Tradeoffs
There is a direct counterargument to the 2027 warning. The strategy built liquidity and outlined a reserve policy that, on paper, could cover cash buybacks without selling Bitcoin.
The company reported cash and cash equivalents of $2.3 billion as of December 31, 2025, and said the increase from the prior year reflected the establishment of a “US dollar reserve” of $2.25 billion.
The company said the reserve was designed to cover two-and-a-half years of preferred dividends and debt interest and was funded with proceeds from the sale of common stock through ATMs.
Strategy also stated that it is its current intention to maintain reserves at a level sufficient to cover two to three years of payments, while reserving the right to adjust based on market conditions and liquidity needs.
In reality, using reserves to cover the September 2027 cash put simply moves the problem rather than solving it.
If Strategy uses up most of the buffers it designed for term debt, it could face more difficult questions about how to maintain preferred dividends and interest coverage on a weak tape.
If we choose to restructure the reserve, we will likely return to the same tool we used to build the reserve in the first place: selling more common stock. If stock prices remain weak, a restructuring could result in the issue of shares at lower prices, further exacerbating dilution.
The third option is to refinance bonds. This preserves reserves but is still dependent on the capital market’s willingness to fund the strategic structure at the time.
For companies whose identities are tied to Bitcoin, the key risks are not just where Bitcoin is traded. The question will be whether investors will remain motivated to fund leveraged Bitcoin exposure through corporate bonds when simpler ETF exposure becomes available.
Strategy funding priorities and rising costs
Meanwhile, Strategy’s funding stack is not limited to convertible bonds and common stock.
The company, led by Michael Saylor, also recently issued preferred securities that it describes as part of its “digital credit” platform, including variable rate preferred securities known as STRCs.
In its fourth quarter results, Strategy highlighted a rules-based dividend adjustment framework aimed at keeping STRC trading near its stated price of $100.
The framework contemplates increasing the dividend rate if STRC trades below a specified level.
For example, the company said it intends to recommend an increase in the dividend rate by at least 50 basis points if the monthly volume-weighted average price is less than $95, and by at least 25 basis points if the price is trading between $95 and $98.99, subject to board approval.
For public shareholders, the structure incorporates a second type of reflexivity. If risk appetite declines and preferred prices fall, dividend rates may increase to protect prices. Higher financing costs may increase our need to raise additional capital.
If companies rely on common issuance to do that, dilution becomes a pressure valve again.
This is why the conversation about stress has changed. The question is not whether Strategy will be forced to sell its 717,131 BTC tomorrow. The question is how expensive it will become to avoid selling Bitcoin over time.
What to watch between now and 2027
Industry Bitcoin price predictions remain wide-ranging, with Standard Chartered warning that Bitcoin could fall towards $50,000 before recovering, lowering its end-2026 target to $100,000.
When it comes to strategy, the key isn’t which numbers will win in a guessing game. How each path affects the two variables is what causes the dilution problem.
The first is whether the stock can regain levels above $183.19 as September 15, 2027 approaches, which would change the incentives for bondholders and reduce the likelihood of cash needs.
The second is the amount of stock Strategies must issue to maintain its cash coverage stance, which includes $2.25 billion in reserves estimated to cover about two-and-a-half years of preferred dividends and debt interest, while also retaining a put option for 2027.
There could still be pain if the Bitcoin market remains flat and stock prices slump, forcing companies to raise capital at unfavorable prices. Even if Strategies continues to raise capital, a rebound could ease dilution pressure, as each dollar raised requires fewer shares.
Analysts cited by the Wall Street Journal said they believe there is no immediate financial risk given the prior capital raising and reserves.
For public shareholders, forward-looking questions are more specific and time-based.
Even if Bitcoin never approaches $8,000, can Strategy bridge its Bitcoin strategy to September 15, 2027 without turning it into a multi-year dilution strategy?