The post The MicroStrategy Liquidation: Could They Be Forced to Sell Bitcoin? appeared on BitcoinEthereumNews.com.

Understanding the MicroStrategy Liquidation Concerns MicroStrategy ($MSTR), the largest corporate holder of Bitcoin, has seen its stock price plummet by more than 55% recently. With over 499,096 BTC valued at around $43.7 billion, concerns about a potential forced liquidation have resurfaced. The key question remains: Is liquidation even possible? And if so, under what conditions?   MicroStrategy’s Bitcoin Holdings and Acquisition Strategy MicroStrategy’s average Bitcoin acquisition cost stands at $66,350 per BTC. The company’s aggressive accumulation of Bitcoin has positioned it as a proxy for Bitcoin exposure in the stock market. However, its ability to sustain this model depends heavily on the following factors: Capital raising through convertible notes The price of Bitcoin relative to their average purchase price Market confidence in MicroStrategy’s financial health Given this framework, a significant drop in Bitcoin’s price could have serious implications for MicroStrategy’s financial position.   The Role of Debt in MicroStrategy’s Strategy MicroStrategy has $8.2 billion in total debt, while holding $43.4 billion worth of Bitcoin. Their leverage ratio currently sits around 19%, which is not dangerously high compared to traditional financial leverage models. Most of MicroStrategy’s debt is structured in the form of convertible notes, with conversion prices below the current share price. Additionally, the majority of these notes do not mature until 2028, giving the company some breathing room. Key Question: Does This Debt Structure Lead to Forced Liquidation? The short answer: Not immediately. A “forced liquidation” scenario would require MicroStrategy’s debt holders to call for early redemption, which can only happen under specific conditions.   Can MicroStrategy Be Forced to Sell Its Bitcoin? To understand whether MicroStrategy could be forced to liquidate its Bitcoin holdings, we need to analyze its credit agreements and potential triggers for liquidation. The main risk factor would be a “fundamental change” in the company.…

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Filed under: News - @ February 26, 2025 7:24 am