Strategy Stock Drops 11% as Bitcoin Falls Below $90K, Raising Liquidation Concerns

Strategy stock dropped 11% on February 25 as Bitcoin fell below $90,000, sparking concerns about the company’s massive Bitcoin exposure potentially leading to a forced liquidation. Strategy is the largest corporate Bitcoin holder, with 499,096 Bitcoin worth approximately $44 billion, making its financial stability heavily tied to Bitcoin’s price fluctuations.

The decline in Bitcoin’s value raised speculation that Strategy might face liquidation. However, analysts from The Kobeissi Letter reassured that such fears are overblown. The company holds $8.2 billion in debt, with a leverage ratio of about 19%. Most of this debt is structured as convertible notes with conversion values set below the current stock price, helping to mitigate the risk of an immediate default.

Liquidation concerns aren’t new for Strategy. In 2022, during Bitcoin’s drop from $70,000 to $15,000, similar worries emerged, but Strategy continued to accumulate Bitcoin. The company’s strategy involves raising capital to buy more Bitcoin and treating these holdings as assets rather than liabilities. However, a prolonged drop in Bitcoin’s price could make it harder for the company to raise capital and may affect investor confidence if Bitcoin dips below its average purchase price of $66,350.

A forced liquidation would likely require a major corporate event, such as bankruptcy or a shareholder vote, both of which seem unlikely. Strategy’s founder, Michael Saylor, has downplayed liquidation fears, emphasizing the company’s long-term commitment to Bitcoin. In 2025, Strategy has already purchased over 50,000 Bitcoin and holds around 2% of the cryptocurrency’s total supply.

As of February 26, Bitcoin is trading at about $88,500, down over 5% in the past 24 hours and nearly 20% below its all-time high of $109,000.