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Michael Saylor's MSTR Opens Its Bitcoin Credit Playbook To Investors Amid BTC Selling Spree

Strategy (MSTR) executive chairman Michael Saylor announced Wednesday the launch of a public Bitcoin (BTC) Credit model designed to show investors how well the company’s Bitcoin holdings cover its debt and preferred stock obligations.

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Market Context

Bitcoin

BTC

$64,235

+2.23% 24h

Layer Index

Neutral

Layer Index

The model also shows credit spreads, Bitcoin coverage ratios and the price levels at which each obligation would become undercollateralized.

“Our BTC Credit model uses a 10% BTC ARR reference case, color-codes spreads by tier (Investment Grade, High Yield, Distressed), and shows BTC Floor prices below which instruments are undercollateralized,” Saylor wrote in a post on X.

At Bitcoin’s price of around $64,000, Strategy’s model values its reserve at $53.85 billion. Strategy assumes Bitcoin will return 10% annually, but calculates that only a 3.22% annualized return would be needed to meet its obligations.

The lower breakeven rate suggests a cushion, but that cushion could narrow if Bitcoin falls, volatility rises, or if the company adds more debt or preferred stock.

MSTR stock rose as much as 1.5% in pre-market trade. On Stocktwits, retail sentiment around Strategy shares trended in ‘bearish’ territory over the past day, while retail sentiment around Bitcoin fell to ‘extremely bearish’ from ‘bearish’ territory.

Strategy’s Debt Has A Large Bitcoin Cushion

The dashboard showed that Strategy has about $6.71 billion of convertible debt spread across six tranches maturing between 2028 and 2032. And, the model shows a large cushion across all of them.

The nearest-term 2028 convertible has 173.5x Bitcoin coverage, meaning BTC would need to fall by more than 99% from $64,000 level before the model considers the debt undercollateralized.

Even the 2032 convertible, which has the lowest coverage among the debt tranches at 26.1x, has a Bitcoin floor of $2,456. That is roughly 68% below Bitcoin’s current price.

MSTR’s Preferred Stocks Tell A Different Story

The preferred securities have lower Bitcoin coverage than the convertible debt, leaving them more exposed to a decline in BTC.

STRF has the strongest coverage at 16.1x, with a Bitcoin floor of $3,983, or about 23% below BTC’s price. Its 9-basis-point credit spread puts it in the model’s investment-grade category.

At the other end, STRD has just 3.1x Bitcoin coverage. Its Bitcoin floor is $20,587, only about 9.5% below Bitcoin’s current price, while its 173-basis-point credit spread puts it in the model’s high-yield category.

MSTR Opens Credit Playbook Amid Bitcoin Sales

Strategy began selling portions of its Bitcoin holdings in June after years of having a “never sell” stance. It started with a sale of 32 BTC worth only around $77,000 to last week, when the company sold 1,690 BTC for approximately $108.6 million – its fifth sale so far this year. The company’s total holdings have now come down to around 840,447 BTC.

Last week’s sale was the first time that the company used the proceeds to repurchase its STRC preferred stock, rather than adding to its Bitcoin treasury.

Bitcoin’s price has struggled to stay above $65,000 since June. The apex cryptocurrency has fallen over 27% this year and remains nearly 50% below its record high of over $126,000 seen in October.

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