PANews October 25 news, according to The Block, BitMEX Research analysts believe that based on MicroStrategy's current debt structure, the company is "extremely unlikely" to be forced to sell its Bitcoin holdings, but considering the volatility of cryptocurrencies, "everything is possible." MicroStrategy currently holds 252,220 BTC, currently worth more than $17 billion, with a total cost of approximately $9.9 billion. As of close, MicroStrategy shares rose more than 10% on Thursday to a 25-year high of $235.89. Analysts said the company's $43.6 billion market value is "hugely premium" compared to the net asset value of its underlying Bitcoin assets. MicroStrategy founder and executive chairman Michael Saylor previously said he had no intention of selling the company's Bitcoin. However, given MicroStrategy's large holdings in this volatile asset and its high debt levels, some have questioned whether the company will be forced to sell, causing it to dump its Bitcoin holdings into the market, triggering a downward price spiral.
Analysts at BitMEX Research said there is no easy answer to this question. The bonds come with complex conversion options that allow bondholders to choose to convert to MSTR shares or request a cash redemption, depending on conditions such as stock performance and bond maturity. Most bonds allow MicroStrategy to make cash redemptions when the stock price is at a premium, while if the price of Bitcoin is strong, bondholders may choose to convert to shares, which makes forced sales of Bitcoin less likely. They explained that while interest payments could theoretically put pressure on MicroStrategy, cash flow from its software business should be sufficient to cover these costs without having to sell Bitcoin, even if prices fall. Since MicroStrategy's bonds are not currently a major part of its capital structure, it is still unlikely that it will be forced to sell Bitcoin to meet bond obligations. Even if Bitcoin falls 80% to about $15,000 in a typical bear market and the company can no longer borrow, the bond maturity dates and bondholder option dates are spread out over a specific time period from 2027 to 2031, reducing the pressure of immediate liquidation. However, if MicroStrategy's stock premium exceeds its net asset value and the bonds need to be repaid, it may be beneficial for shareholders to support the sale of Bitcoin. As a result, they warn that while stocks trade at a premium, there is little incentive to sell Bitcoin, but if debt increases, so does risk and the likelihood of a forced sale during a Bitcoin downturn could rise.
