ANALYSIS: MicroStrategy’s Bitcoin Position Cost Rise and Risk Evolution (as of January 29, 2025)
MicroStrategy’s “Bitcoin Leveraged Equity” model has amplified risks as costs rise, but its financing flexibility and market protection ability remain key cushions. 50,000 is more of a psychological barrier, and true systemic risk will only be realized if it falls below $35,000.
1. **Size of Positions and Rising Costs**
— As of January 26, 2025, MicroStrategy held **471,107 BTC** at a total cost of approximately **$30.4 billion**, with the average cost rising to **$64,511 per coin**.
— **Higher holdings have pushed up the cost**:
Recent purchases of 10,107 BTC (at a cost of $1.1 billion) at an average price of **$105,596/coin** resulted in the overall average cost rising from approximately $63,000 in December 2024 to current levels.
— **Position represents 2.2%** of total Bitcoin, making it the largest corporate holder in the world.
2. **Financing Strategy Upgrade**
— Hybrid Securities Registration Application (Form S-3): plans to continue to expand its bitcoin position by raising capital through the issuance of stock, preferred stock, and debt securities.
— 2025 has already raised funds through stock issuance, e.g., $243 million from the sale of 710,000 shares on Jan. 6 for coin purchases.
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#### **II. Logic and Exposure to Higher Prices of Additional Holdings**
1. **Strategic Intent Analysis**
— **Long-term bullish bet**: CEO Michael Saylor insists that Bitcoin is “digital gold” and urges companies to replace bonds with cash reserves.
— **Market protection effect**: MicroStrategy bought against the market when the price of Bitcoin plummeted to $89,329 (January 2025) in an attempt to stabilize market confidence.
2. **Cost pressures and risk thresholds**
— **Vulnerability of high price positions**:
If the price of Bitcoin were to fall to **$50,000** (an assumed ~50% decline from the current market price), its book loss would widen to **(64,511–50,000) × 471,000 ≈ $6.82 billion**.
— **Liquidity Stress Test**:
— The company’s cash reserves are only about $45 million (end of 2023 data) and may be forced to sell BTC if it needs to pay off debt maturing in 2025 (e.g. $612.5 million in convertible debt).
— At a price of $50,000, approximately **12,250 BTC** (2.6% of position) would need to be sold to pay off debt, potentially triggering a market panic.
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#### **III Key Risk Scenarios Extrapolation**
1. **Chain reaction to a drop in the Bitcoin price to $50,000**
— **Negative feedback between stock price and BTC price**:
MicroStrategy’s stock price has a correlation of over 0.9 with the Bitcoin price, and if BTC falls to $50,000, the stock price may fall to the waist, causing convertible bond holders to reject the conversion and demand cash repayment, exacerbating the liquidity crisis.
— **Risk of credit rating downgrade**:
If book losses persist, rating agencies may downgrade its credit rating, pushing up refinancing costs (current bond rates of 1%-2% may be difficult to maintain).
2. **Market confidence and strategic sustainability**.
— **“Faith premium” shaken**:
The high price increase behavior relies on the market consensus on the long-term appreciation of Bitcoin. If BTC remains below cost for an extended period of time, investors may question the soundness of their strategy, leading to a withdrawal of funds.
— **Regulatory Policy Risk**:
Although the Trump administration has stated its support for cryptocurrencies, specific policies have not yet been put in place, and if regulation is tightened (e.g., restricting corporate holdings of BTC), it will have a direct impact on the MicroStrategy model.
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#### **IV. Risk Mitigation Mechanisms and Potential Outlets**
1. **Debt maturity structure advantages**
— Most bonds have maturity dates after 2028, with no centralized repayment pressure in the short term.
— The low interest rate feature of convertible bonds (e.g., 2.25% for 2028 bonds) reduces cash flow pressure.
2. **Financing capacity and market narratives**
— **Continuously issue additional shares or bonds**: replenish the capital pool through hybrid securities financing (e.g., preferred shares) to delay the need to sell off BTC.
— **Reinforcement of the “Bitcoin Parity” narrative**: Enhance transparency to maintain investor trust by publicizing position addresses (96% coverage) with platforms such as Arkham.
3. **Bottom line in extreme scenarios
— **Bitcoin ETF liquidity support**: if BTC falls to the $35,000 cost line, avoid an outright sell-off by pledging BTC to an ETF issuer (e.g. BlackRock) in exchange for liquidity.
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### **CONCLUSION: Risk thresholds shifted upwards, but systemic risks remain manageable**
1. **Is $50,000 the tipping point? **
— **Short-term no blowout**: $50,000 does not trigger forced liquidation due to no pledge leverage, but liquidity pressure rises significantly.
— **Long-term margin of safety**: $35,000 is the ultimate line of defense (a fall below would result in a breakdown of strategic logic), with a current price buffer of **(64,511–50,000)/64,511 ≈ 22.5%**.
2. **Monitoring Indicator Recommendations**
— **On-chain data**: track MicroStrategy wallet movements through Arkham to predict sell-off behavior.
— **Financing dynamics**: keep an eye on the size of hybrid securities issuance and the use of funds.
— **POLICY SIGNALS**: the progress of the Trump administration’s cryptocurrency regulatory rules landing.
**Summary**: MicroStrategy’s “Bitcoin Leveraged Equity” model has amplified risks as costs rise, but its financing flexibility and market protection ability remain key cushions. 50,000 is more of a psychological barrier, and true systemic risk will only be realized if it falls below $35,000.
