Strategy (formerly MicroStrategy) has become the public market’s most widely traded Bitcoin proxy, using equity, convertible notes, and preferred stock to build a balance sheet dominated by the top crypto.
However, as Bitcoin trades near $68,000 and Strategy shares hover below $130, investors are paying closer attention to the mechanisms that allow the company to continue buying BTC without becoming a forced seller.
Industry experts such as Bloomberg Intelligence strategist Mike McGlone have warned that Bitcoin could decline to $10,000.
While this drawdown scenario presents challenges for the firm, the Michael Saylor-led firm appears confident in its ability to navigate these issues even if BTC falls to $8,000.
However, it is a calendar date and a stock price level that raise more serious concerns.
Holders of Strategy’s $1.01 billion convertible notes due 2028 can require the company to repurchase the notes for cash on Sept. 15, 2027, a feature that becomes more threatening when the stock trades below the notes’ initial conversion price of about $183.19 a share.
For years, Strategy benefited from a market structure in which many investors could not easily buy spot Bitcoin in a US ETF wrapper.
That dynamic helped support periods when the stock traded at a premium to the implied value of its Bitcoin holdings per share, a cushion that made new fundraising less expensive.
With spot Bitcoin ETFs now established, that premium has been harder to sustain, and the company’s reliance on issuing shares to fund its strategy becomes more visible.
Strategy’s own dashboard underscores how quickly the equity base has expanded. As of Feb. 16, the company reported 333.755 million basic shares outstanding and 366.114 million assumed diluted shares, and held 717,131 Bitcoin.
Those figures provide the market’s simplest way to track the trade-off between accumulating Bitcoin and spreading the claim across more shares.
The 2027 put
Convertible debt is often described as “cheap” funding because the coupon is low.
Strategy’s 2028 converts pay 0.625% interest, but the risk investors are focusing on is not coupon pressure. It occurs when the equity option embedded in the notes is never exercised.
The notes mature on Sept. 15, 2028, but the put date arrives a year earlier.
If Strategy’s stock is comfortably above $183.19 as Sept. 15, 2027, approaches, noteholders have a stronger incentive to convert into equity, or at least less incentive to demand cash, because the conversion feature has value.
However, if the stock is below $183.19, demanding cash becomes more appealing, and the company needs a plan to meet roughly $1 billion in a market that may be unwilling to fund Bitcoin-linked leverage on generous terms.
Strategy’s dashboard shows why that conversion price has become a reference point. The company lists the assumed share impact of each convertible series, including the 2028 notes, which are tied to $183.19.
This is not just an accounting table. It is a map of incentives that turns one stock price level into a de facto stress threshold.
The company has argued publicly that even severe Bitcoin drawdowns do not automatically translate into insolvency because the balance sheet includes substantial assets.
But the market’s more immediate concern is not bankruptcy math. It is the set of financing choices that protect the Bitcoin position while shifting costs onto common shareholders through dilution, especially when the stock is weak.
Equity issuance as the pressure valve
Strategy’s recent capital-raising demonstrates how central equity issuance has become.
In its fourth-quarter 2025 results, the company reported raising approximately $5.6 billion in gross proceeds during the quarter and an additional $3.9 billion between Jan. 1 and Feb. 1, 2026. Most of that came from selling common stock through its at-the-market program.
The company reported selling 24,769,210 shares for approximately $4.4 billion in the fourth quarter and another 20,205,642 shares for $3.4 billion in January, with $8.1 billion remaining under the common ATM as of Feb. 1.
That pace matters because dilution is not an abstract risk. It is the operating method. When the stock trades lower, each additional dollar raised requires issuing more shares, permanently diluting the per-share claim on the Bitcoin holdings that investors believe they are buying exposure to.
Strategy’s basic share count rose to 333.755 million by Feb. 16, up from 312.062 million at year-end 2025, according to its dashboard.
This is the core tension for common shareholders. The company has positioned its approach as maximizing “Bitcoin per share” over time.
But in the short run, dilution can outpace perceived gains if capital must be raised under weak conditions, or if the stock’s premium to the implied Bitcoin value compresses and remains compressed.
Strategy’s cash reserve trade-off
There is a direct counterargument to the 2027 alarm. Strategy has built liquidity and outlined a reserve policy that, on paper, could cover a cash repurchase without selling Bitcoin.
The company reported $2.3 billion in cash and cash equivalents as of Dec. 31, 2025, and said the increase from the prior year reflected the establishment of a $2.25 billion “USD Reserve.”
The company stated that the reserve was designed to cover 2.5 years of preferred dividends and debt interest, and that it was funded with proceeds from the sale of common stock through the ATM.
Strategy also stated that its current intention is to maintain the reserve at a level sufficient to fund two to three years of those payments, while reserving the right to adjust it based on market conditions and liquidity needs.
In practice, using the reserve to cover a Sept. 2027 cash put would merely shift the problem rather than resolve it.
If Strategy spends down a large portion of a buffer it designed for recurring obligations, it may face harder questions about how it maintains preferred dividends and interest coverage in a weak tape.
If it chooses to rebuild the reserve, it will likely return to the same tool that originally built it: selling more common stock. If the stock is still weak, rebuilding can lead to issuing more shares at lower prices, thereby compounding dilution.
The third path is refinancing the bonds. That preserves the reserve but still relies on the capital markets’ willingness to fund the strategy’s structure at the time.
For a company whose identity is bound to Bitcoin, the key risk is not only where Bitcoin trades. The question would become whether investors remain willing to finance leveraged Bitcoin exposure through corporate securities when simpler ETF exposure is available.
Strategy’s preferred funding and rising costs
Meanwhile, Strategy’s financing stack is not limited to convertibles and common stock.
The Michael Saylor-led firm has also recently issued preferred securities that it describes as part of a “Digital Credit” platform, including a variable-rate preferred known as STRC.
In its fourth-quarter results, Strategy highlighted a rules-based dividend adjustment framework intended to keep STRC trading near its stated $100 price.
The framework contemplates increases in the dividend rate if STRC trades below specified levels.
For example, the company stated that it intends to recommend a 50-basis-point or greater increase in the dividend rate if the monthly volume-weighted average price is below $95, and a 25-basis-point or greater increase if it trades between $95 and $98.99, subject to board approval.
For common shareholders, that structure embeds a second kind of reflexivity. If risk appetite declines and preferred prices weaken, dividend rates may increase to defend pricing. Higher funding costs can increase the need to raise additional capital.
If the company leans on common issuance to do it, dilution becomes the pressure valve again.
This is why the stress debate has shifted. The question is less about whether Strategy is forced to sell its 717,131 BTC tomorrow. The question is how expensive it becomes to avoid selling Bitcoin over time.
What to watch between now and 2027
Industry forecasts for Bitcoin price remain wide, with Standard Chartered warning that Bitcoin could slide toward $50,000 before recovering and has cut its end-2026 target to $100,000.
For Strategy, the key is not which number wins the forecast battle. It is how each path affects two variables that drive the dilution question.
The first is whether the stock can reclaim levels above $183.19 as Sept. 15, 2027 approaches, which changes noteholder incentives and reduces the chance of a cash demand.
The second is the amount of equity Strategy must issue to maintain its cash-coverage stance, including the $2.25 billion reserve, which is estimated to cover about 2.5 years of preferred dividends and debt interest, while leaving options open for the 2027 put.
A sideways Bitcoin market can still be painful if it keeps the stock weak and pushes the company to raise capital at unfavorable prices. A rebound can ease dilution pressure even if Strategy continues to raise funds, because each dollar raised would require fewer shares.
Analysts cited by the Wall Street Journal have said they see no immediate financial risk given prior capital raising and reserves.
For common shareholders, the forward-looking question is narrower and occurs on a timeline.
Can Strategy bridge to Sept. 15, 2027 without turning its Bitcoin strategy into a multi-year dilution strategy, even if Bitcoin never gets close to $8,000?
