Will MicroStrategy, With $17 Billion Bitcoin Wealth, Sell BTC in the Future? Here is the Theory

According to BitMEX Research analysts, huge Bitcoin It is “highly unlikely” that MicroStrategy, the commercial IT company known for its assets, will be forced to sell its Bitcoin despite BTC fluctuations.

The firm, led by Chairman Michael Saylor, currently owns approximately 252,220 BTC, valued at over $17 billion, for a total acquisition cost of approximately $9.9 billion.

MicroStrategy’s shares rose more than 10% on Thursday, hitting a 25-year high of $235.89, analysts said. This gain increased the firm’s market capitalization to $43.6 billion, allowing its Bitcoin holdings to trade at a “huge premium” to net asset value (NAV). The increase in stock price compares with previous cycles when the Grayscale Bitcoin Trust was also trading at a premium before being converted into a spot Bitcoin ETF.

Analysts noted that MicroStrategy’s premium stock valuation allowed the company to leverage stock offerings to further increase its Bitcoin position. The firm has raised $4.25 billion through five stock offerings since launching its Bitcoin strategy in 2020, increasing its book value per share and enabling what some have called the “infinite money glitch.”

Saylor argues that MicroStrategy has no intention of selling Bitcoin. However, the company’s significant debt load and Bitcoin’s inherent volatility have raised questions about whether the firm could be forced to liquidate its assets under certain circumstances.

BitMEX Research’s report examined MicroStrategy’s debt structure, explaining that the bonds contain complex conversion options. These options provide flexibility to bondholders, allowing them to convert the bonds into MSTR shares or seek cash repayment based on stock performance and bond maturity. Analysts noted that many of these bonds allow MicroStrategy to redeem them with cash if shares continue to trade at a premium, while bondholders are likely to convert into shares if Bitcoin prices remain strong. This structure makes forced Bitcoin sales less likely.

Although MicroStrategy faces interest payments on its debt, analysts argue that cash flow from its software business should cover those obligations even in a bear market scenario. Additionally, the bonds have staggered maturity dates ranging from 2027 to 2031, easing immediate financial pressure and reducing the likelihood of forced liquidation.

But analysts warned that it could become strategically advantageous for shareholders to advocate for Bitcoin sales if MicroStrategy’s stock premium shifts to a discount and bond repayments come due. They noted that there is little incentive to sell Bitcoin while the stock is trading at a premium. Still, if the company takes on more debt, risks could increase, potentially leading to forced sales in the event of a downturn in Bitcoin prices.

Analysts, crypto para Stating that they have confidence in MicroStrategy’s current position despite the unpredictable nature of the market, he said, “For now, the leverage is low and the risk of liquidation is low.”

*This is not investment advice.