Authored by Zoltan Vardai via CoinTelegraph.com,
Michael Saylor’s Strategy is attempting to calm investor concerns about its balance sheet after the recent Bitcoin market downturn and a sharp pullback in digital asset treasury (DAT) stocks.
Strategy, the world’s largest corporate Bitcoin holder, has rolled out a new credit rating dashboard based on the company’s preferred stock notional value, and claims to have another 70 years’ worth of dividend payment runway to service its debt, even if Bitcoin’s price remains flat.
“If $BTC drops to our $74K average cost basis, we still have 5.9x assets to convertible debt, which we refer to as the BTC Rating of our debt. At $25K BTC, it would be 2.0x,” said Strategy in a Tuesday X post.
The move comes as investors grow increasingly worried that falling crypto prices could force large DAT companies into liquidation, adding more selling pressure to an already weakened market.
Strategy’s BTC Credit dashboard. Source: Strategy.com
Strategy’s dividend runway and “robust” enterprise software cash flow are significantly reducing the liquidation risks for the company, according to Lacie Zhang, research analyst at Bitget Wallet.
“We view MicroStrategy’s 71-year dividend runway claim as realistic under a flat Bitcoin price scenario,” however, long-term projections are dependent on several uncertainties, including “market volatility or regulatory shifts,” Zhang told Cointelegraph.
“I’m not particularly concerned about near-term liquidations for the largest corporate BTC holder, as their diversified funding and hodl strategy positions them well for sustained growth.”
Strategy’s ongoing accumulation, she added, has contributed to broader “industry stability” and supported deeper institutional adoption.
Strategy’s hodl stance may prevent deeper Bitcoin declines, analyst says
Strategy’s ability to avoid forced selling could also help Bitcoin avoid falling below key psychological levels in future downturns, according to Ki Young Ju, founder and CEO of CryptoQuant.
Strategy’s strong financials are a positive signal for the next Bitcoin bear market, as the world’s largest corporate holder is “unlikely to sell,” he said.
This may save BTC from revisiting its realized price of around $56,000 during the next crypto bear market “because players like MSTR are unlikely to sell and those coins are effectively off the market,” wrote the analyst in a Friday X post.
Still, some of the leading DATs suffered significant stock crashes and declines in their market net asset value (mNAV), including Strategy, Bitmine, Metaplanet, Sharplink Gaming, Upexi and DeFi Development Corp.
The mNAV ratio compares a company’s enterprise value to the value of its crypto holdings. An mNAV below 1 makes it more challenging for companies to raise funds by issuing new shares, which may limit their cryptocurrency purchases.
Strategy key metrics, including mNAV. Source: Strategy.com
Strategy’s mNAV stood at 1.16 at the time of writing, meaning the company could still theoretically issue new shares to raise additional capital, according to Strategy’s dashboard.
Loading recommendations…
