As an analyst, I’ve assessed Strategy’s financial setup and believe they’re positioned to handle a significant and sustained drop in Bitcoin prices. They appear confident they can still cover their debt obligations and payouts to preferred stockholders even if the downturn lasts for some time.
Summary
- Strategy says its current structure can fund obligations through 5.8 years of steady Bitcoin declines.
- Company data shows a $3.225 billion cash reserve supporting preferred dividends and debt interest payments.
- The stress test uses Strategy’s internal BTC Rating rather than an independent credit agency assessment.
According to a post on X from July 24th, the company believes Bitcoin could drop by over 11% annually for nearly six years without affecting its internal BTC Rating, which remains at or above 1.0x.
Even if Bitcoin’s value decreases by 11.4% each year for almost six years, the current financial setup allows for continued payment of interest and preferred dividends while keeping a stable credit rating. This applies to MicroStrategy ($MSTR).
— Strategy (@Strategy) July 25, 2026
On July 24th, with Bitcoin trading around $64,463 and shares of Strategy closing at $91.67, an assessment was made regarding their performance. Bitcoin’s price remained lower than what Strategy had paid on average, and MicroStrategy (MSTR) stock had dropped significantly from its high point. This analysis highlighted a consistent decrease over several years, rather than a rapid collapse, and acknowledged that Strategy might not be able to cover all costs in every possible market scenario.
What Strategy’s Bitcoin stress test measures
Strategy uses a metric called BTC Floor ARR to assess its financial health. Essentially, it’s the minimum yearly Bitcoin return needed to cover its debts and preferred stock payments over the life of its financing. This calculation includes interest and dividend payments. Currently, Strategy estimates this floor to be a Bitcoin return of -11.4% over a 5.8-year period.
Strategy estimates that, given its current financial setup, Bitcoin could decrease in value by 11.4% each year for the next 5.8 years – even while the company continues to pay interest and dividends on preferred stock. A ‘1.0x BTC Rating’ simply indicates that the amount of Bitcoin the company holds matches what’s used in Strategy’s calculations; it’s a measure of their current reserves, not a prediction of future Bitcoin prices.
This calculation isn’t like a typical credit rating. Strategy created this metric and shares it as an example, but doesn’t claim it proves Bitcoin will consistently fall in value or that it’s completely protected from all market problems.
Cash reserve and Bitcoin sales support the model
As of July 19th, Strategy held 843,775 Bitcoin, which they purchased for approximately $63.69 billion at an average price of $75,476 per coin. They also have a cash reserve of $3.225 billion after recently raising $263.5 million by selling stock. According to crypto.news, Strategy didn’t make any Bitcoin purchases or sales during that particular week.
This fund covers preferred dividends and interest payments on the company’s debts. Currently, these annual obligations total around $1.7 billion. With its current cash on hand, the company can cover these payments for less than two years before needing to find additional funding, potentially through Bitcoin sales or other financial strategies.
In June, Strategy developed a new plan for managing its digital assets. This plan allows the company to sell up to $1.25 billion worth of Bitcoin to strengthen its cash reserves. It also enables them to use Bitcoin sales to pay dividends, interest, and buy back company stock. As part of this, Strategy increased the annual dividend rate for STRC preferred stock to 12% and authorized separate programs to buy back up to $1 billion worth of both common and preferred stock.
Between June 29th and July 5th, Strategy sold 3,588 Bitcoin for approximately $216 million. This money was used to pay out distributions and rebuild its reserves. As a result of these sales, their total Bitcoin holdings decreased from 847,363 to 843,775.
Strategy warns its BTC Rating is not a credit rating
Our BTC Rating is a tool we developed internally to help with analysis. It’s important to understand that this isn’t an official credit rating from an outside agency, and it doesn’t assess a company’s ability to pay its debts or its financial health. Also, the calculation doesn’t consider what might happen if a company defaults on other loans.
The model primarily uses the standard value of preferred stock, but some investments have agreed-upon payout amounts that are higher. When calculating if dividends can be covered, it also assumes Strategy can renew its current loans with similar conditions without making any principal payments. However, these assumptions might not be accurate if there’s a major disruption in funding or the market.
Strategy’s board needs to sign off on any fixed dividends. The interest rate on STRC can change monthly, and payments aren’t guaranteed. If Strategy faces funding challenges, it might issue more stock, sell Bitcoin holdings, reduce payouts when possible, or renegotiate its debts. Achieving a 1.0x return doesn’t eliminate risks related to refinancing debt, issuing new shares, successful execution of plans, or overall market conditions.
Bitcoin and MSTR remain under market pressure
On July 26th, Bitcoin was trading at approximately $64,463, which is about 49% lower than its highest price in October 2025 of around $126,000. MicroStrategy (MSTR) stock closed at $91.67 on July 24th. Investors were closely watching Bitcoin’s price, as well as MicroStrategy’s cash needs, dividend payments, and how its stock price compared to the value of its Bitcoin holdings.
From my analysis, this company’s financial strategy thrived when MicroStrategy (MSTR) stock traded at a price higher than the value of its Bitcoin holdings. This ‘premium’ allowed them to issue new shares and effectively increase their Bitcoin reserves per share. However, as that premium shrank, issuing more shares became less appealing, so they shifted towards accumulating cash instead of continuing to purchase Bitcoin.
The company is moving away from simply building up its assets to more actively managing its capital. This now includes things like selling shares, holding cash, potentially selling some of its Bitcoin holdings, and buying back shares. According to Crypto.news, a key factor remains the market premium (or mNAV), which influences whether issuing new stock will actually increase the amount of Bitcoin held per share.
This stress test shows how long Strategy believes its current assets can cover its financial obligations if values steadily decrease. It’s not a prediction of where Bitcoin’s price is going, nor does it account for all possible market problems. Future outcomes will be affected by things like Bitcoin prices, the company’s ability to raise money, dividend payouts, loan agreements, and how much Bitcoin Strategy chooses to sell.
2026-07-26 14:40