- Strategy dismisses concerns of solvency risk amid Bitcoin Price decline.
- The company’s balance sheet supports significant Bitcoin leverage with manageable obligations.
- Perpetual preferred shares provide permanent capital without refinancing pressure.
- Bitcoin price would need to drop below about $12,700 to raise serious distress concerns.
- Strategy created a $1.44 billion USD reserve to fund at least 12 months of dividends.
Shares of Strategy, a bitcoin treasury company, fell by 4.7% to $168.82 following a recent bitcoin price pullback. Despite this, Benchmark, a Wall Street broker, stated that fears regarding the company’s survival are misplaced. Analyst Mark Palmer emphasized that short-term bitcoin price movements do not indicate true solvency risk for Strategy.
The company holds roughly 650,000 bitcoins, valued at about $55.8 billion, offset by $8.2 billion in low-cost convertible debt and $7.6 billion in perpetual preferred shares. Palmer highlighted that these obligations are manageable, and the firm’s capital structure is more robust than critics suggest.
Perpetual preferred shares are a form of permanent capital that do not require refinancing, which gives Strategy a competitive advantage compared to other digital-asset treasury firms. According to Palmer, bitcoin would need to decline below approximately $12,700—a drop of around 86%—and remain at that level to create serious financial distress. This scenario is considered highly unlikely in the current institutional market.
Palmer reaffirmed a buy rating on Strategy stock with a price target of $705, based on a bitcoin assumption of $225,000 in 2026. The recent bitcoin decline does not change this outlook.
As the digital asset treasury sector faces volatility and liquidity pressures, Benchmark identified Strategy as a leader due to its scalable and yield-generating model combined with structural advantages. The company has also established a $1.44 billion U.S. dollar reserve funded by recent common stock sales. Strategy plans to maintain enough capital in this reserve to cover at least 12 months of dividends, as noted in a press release.
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