Strategy (formerly MicroStrategy)<\/a> has become the public market\u2019s most widely traded Bitcoin<\/a> proxy, using equity, convertible notes, and preferred stock to build a balance sheet dominated by the top crypto.<\/p>\n However, as Bitcoin trades near $68,000<\/a> and Strategy shares hover below $130, investors are paying closer attention to the mechanisms that allow the company to continue buying BTC without becoming a forced seller.<\/p>\n Industry experts such as Bloomberg Intelligence strategist Mike McGlone have warned<\/a> that Bitcoin could decline to $10,000.<\/p>\n While this drawdown scenario presents challenges for the firm, the Michael Saylor<\/a>-led firm appears confident in its ability to navigate these issues even if BTC falls to $8,000.<\/p>\n However, it is a calendar date and a stock price level that raise more serious concerns.<\/p>\n Holders of Strategy\u2019s $1.01 billion convertible notes due 2028 can require the company to repurchase the notes for cash on Sept. 15, 2027, a feature that becomes more threatening when the stock trades below the notes\u2019 initial conversion price of about $183.19 a share.<\/p>\n For years, Strategy benefited from a market structure in which many investors could not easily buy spot Bitcoin in a US ETF wrapper.<\/p>\n That dynamic helped support periods when the stock traded at a premium to the implied value of its Bitcoin holdings per share, a cushion that made new fundraising less expensive.<\/p>\n With spot Bitcoin ETFs now established, that premium has been harder to sustain, and the company\u2019s reliance on issuing shares to fund its strategy becomes more visible.<\/p>\n Strategy\u2019s own dashboard<\/a> underscores how quickly the equity base has expanded. As of Feb. 16, the company reported 333.755 million basic shares outstanding and 366.114 million assumed diluted shares, and held 717,131 Bitcoin.<\/p>\n Those figures provide the market\u2019s simplest way to track the trade-off between accumulating Bitcoin and spreading the claim across more shares.<\/p>\n Convertible debt is often described as \u201ccheap\u201d funding because the coupon is low.<\/p>\n Strategy\u2019s 2028 converts<\/a> pay 0.625% interest, but the risk investors are focusing on is not coupon pressure. It occurs when the equity option embedded in the notes is never exercised.<\/p>\n The notes mature on Sept. 15, 2028, but the put date arrives a year earlier.<\/p>\n If Strategy\u2019s stock is comfortably above $183.19 as Sept. 15, 2027, approaches, noteholders have a stronger incentive to convert into equity, or at least less incentive to demand cash, because the conversion feature has value.<\/p>\n However, if the stock is below $183.19, demanding cash becomes more appealing, and the company needs a plan to meet roughly $1 billion in a market that may be unwilling to fund Bitcoin-linked leverage<\/a> on generous terms.<\/p>\n Strategy\u2019s dashboard shows why that conversion price has become a reference point. The company lists the assumed share impact of each convertible series, including the 2028 notes, which are tied to $183.19.<\/p>\n This is not just an accounting table. It is a map of incentives that turns one stock price level into a de facto stress threshold.<\/p>\n The company has argued publicly that even severe Bitcoin drawdowns<\/a> do not automatically translate into insolvency because the balance sheet includes substantial assets.<\/p>\n But the market\u2019s more immediate concern is not bankruptcy math. It is the set of financing choices that protect the Bitcoin position while shifting costs onto common shareholders through dilution, especially when the stock is weak.<\/p>\n Strategy\u2019s recent capital-raising<\/a> demonstrates how central equity issuance has become.<\/p>\n In its fourth-quarter 2025 results, the company reported<\/a> raising approximately $5.6 billion in gross proceeds during the quarter and an additional $3.9 billion between Jan. 1 and Feb. 1, 2026. Most of that came from selling common stock through its at-the-market program.<\/p>\n The company reported selling 24,769,210 shares for approximately $4.4 billion in the fourth quarter and another 20,205,642 shares for $3.4 billion in January, with $8.1 billion remaining under the common ATM as of Feb. 1.<\/p>\n That pace matters because dilution is not an abstract risk. It is the operating method. When the stock trades lower, each additional dollar raised requires issuing more shares, permanently diluting the per-share claim on the Bitcoin holdings that investors believe they are buying exposure to.<\/p>\n Strategy\u2019s basic share count rose to 333.755 million by Feb. 16, up from 312.062 million at year-end 2025, according to its dashboard.<\/p>\n This is the core tension for common shareholders. The company has positioned its approach as maximizing \u201cBitcoin per share\u201d over time.<\/p>\n But in the short run, dilution can outpace perceived gains if capital must be raised under weak conditions, or if the stock\u2019s premium<\/a> to the implied Bitcoin value compresses and remains compressed.<\/p>\n There is a direct counterargument to the 2027 alarm. Strategy has built liquidity and outlined a reserve policy that, on paper, could cover a cash repurchase without selling Bitcoin<\/a>.<\/p>\n The company reported $2.3 billion in cash and cash equivalents as of Dec. 31, 2025, and said the increase from the prior year reflected the establishment of a $2.25 billion \u201cUSD Reserve.\u201d<\/a><\/p>\n The company stated that the reserve was designed to cover 2.5 years of preferred dividends and debt interest, and that it was funded with proceeds from the sale of common stock through the ATM.<\/p>\n Strategy also stated that its current intention is to maintain the reserve at a level sufficient to fund two to three years of those payments, while reserving the right to adjust it based on market conditions and liquidity needs.<\/p>\n In practice, using the reserve to cover a Sept. 2027 cash put would merely shift the problem rather than resolve it.<\/p>\n CryptoSlate Daily Brief<\/span><\/p>\n Market-moving headlines and context delivered every morning in one tight read.<\/p>\n 5-minute digest<\/span> 100k+ readers<\/span><\/p>\n<\/div>\n Free. No spam. Unsubscribe any time.<\/p>\n You\u2019re subscribed. Welcome aboard.<\/span><\/p>\n<\/div>\n<\/div>\n If Strategy spends down a large portion of a buffer it designed for recurring obligations, it may face harder questions about how it maintains preferred dividends and interest coverage in a weak tape.<\/p>\n If it chooses to rebuild the reserve, it will likely return to the same tool that originally built it: selling more common stock. If the stock is still weak<\/a>, rebuilding can lead to issuing more shares at lower prices, thereby compounding dilution.<\/p>\n The third path is refinancing the bonds. That preserves the reserve but still relies on the capital markets’ willingness to fund the strategy\u2019s structure at the time.<\/p>\n For a company whose identity is bound to Bitcoin, the key risk is not only where Bitcoin trades. The question would become whether investors remain willing to finance leveraged Bitcoin exposure through corporate securities when simpler ETF exposure is available.<\/p>\n Meanwhile, Strategy\u2019s financing stack is not limited to convertibles and common stock.<\/p>\n The Michael Saylor-led firm has also recently issued preferred securities that it describes as part of a \u201cDigital Credit\u201d platform, including a variable-rate preferred known as STRC<\/a>.<\/p>\n In its fourth-quarter results, Strategy highlighted a rules-based dividend adjustment framework intended to keep STRC trading near its stated $100 price.<\/p>\n The framework contemplates increases in the dividend rate if STRC trades below specified levels.<\/p>\n For example, the company stated that it intends to recommend a 50-basis-point or greater increase in the dividend rate if the monthly volume-weighted average price is below $95, and a 25-basis-point or greater increase if it trades between $95 and $98.99, subject to board approval.<\/p>\n For common shareholders, that structure embeds a second kind of reflexivity. If risk appetite declines and preferred prices weaken, dividend rates may increase to defend pricing. Higher funding costs can increase the need to raise additional capital.<\/p>\n If the company leans on common issuance to do it, dilution becomes the pressure valve again.<\/p>\n This is why the stress debate has shifted. The question is less about whether Strategy is forced to sell its 717,131 BTC tomorrow. The question is how expensive it becomes to avoid selling Bitcoin over time.<\/p>\n![\"bitcoins](\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2026\/03\/playnance-desktop-leaderboard.jpg\" "\\"bitcoins\\"")
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Bitcoins The 2027 put<\/h2>\n
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Bitcoins Equity issuance as the pressure valve<\/h2>\n
Bitcoins Strategy’s cash reserve trade-off<\/h2>\n
Daily signals, zero noise.<\/h3>\n
Bitcoins Strategy’s preferred funding and rising costs<\/h2>\n
Bitcoins What to watch between now and 2027<\/h2>\n