MicroStrategy (MSTR) is under pressure to liquidate its Bitcoinholdings due to its long-term debt-raising plan, Bernstein said in a note.
But only in the event of an extreme price correction, especially around the mid-2025 debt maturity.
ETH -0.69%-prices-rise-after-latest-u-s-inflation-report/">Rising Bitcoin prices mean MicroStrategy has a stronger balance sheet, a higher stock price and easier debt repayments without having to sell its cryptocurrency holdings, the report said.
Additionally, strong bitcoin prices and a higher stock price allow the company to raise new debt or equity and redeem existing convertible notes.
Conversely, if Bitcoin plummets, reaching an absolutely depressed price, the value of MicroStrategy’s cryptocurrency holdings cannot cover debt and certain covenants after June 2025, and the corporate structure will be under pressure from the prepayment clause.